Time to redefine competitors<\/p>\n
JAKARTA (JP): Companies are now facing stiffer competition.
\nTherefore, according to business strategist Rhenald Kasali,
\ncompanies must be fit to their environment to stay ahead of
\ncompetition.<\/p>\n
The Jakarta Post's last week interviewed Rhenald, chairman of
\nthe Management Studies Program at the University of Indonesia, to
\nhear his views and suggestions on how companies can survive the
\ntight competition. The following is an excerpt from the
\ninterview.<\/p>\n
Question: What should an Indonesian company do in this time of
\nchange, especially now that economic and political reforms have
\nopened the Indonesian market even wider, and which has resulted
\nin an influx of foreign products into the country?<\/p>\n
Answer: Companies are just like people. People live by the law
\nof nature which is the survival of the fittest. From the time we
\nare born, we have to adjust and be able to fit in with our
\nsurroundings. This is especially so in countries that experience
\nfour seasons. When winter comes, parents prepare their children
\nto live in cold conditions. They use heaters in their homes. When
\nits summer, it is a different story. They use air conditioners to
\ncool their homes. They do other things when spring or fall comes.<\/p>\n
People adjust to their environment, companies have to do so
\nto.<\/p>\n
Companies have to fit with their environment. This concept is
\ncalled strategic fit. Strategically they have to be fit with
\ntheir environment.<\/p>\n
The problem is that the business environment keeps changing
\nfrom time to time. They change because of conjuncture, which may
\nbe cyclical, short term or long term. Companies have to see
\ntrends and megatrends and stay fit with the environment. If
\ncompanies cannot do so, they will die.<\/p>\n
Q: Can you explain in detail what you mean by strategic fit?<\/p>\n
A: Strategic fit comprise several components which include
\ncustomer fit, competition fit, technology fit and culture fit.<\/p>\n
What I mean by customer fit is how we stay fit with our
\ncustomers. People change from time to time. In the old times,
\npeople shopped at traditional markets. But now people shop in
\nair-conditioned supermarkets. Those days people drank coffee made
\nin their own kitchen. But now people like to go to cafes to have
\ncoffee. Back then people bought newspaper once a week, now they
\nbuy it everyday, and some even twice a day. So companies need to
\nknow their customers behavior so that they can stay fit with
\ntheir customers.
\nAs for competition fit, companies must keep their eyes wide open
\non its competitors as competition is dynamic. In business, we can
\nlook old, not because we are getting older but because our
\ncompetitors look younger. Coca Cola has rejuvenated its products
\nwith various efforts, including advertisements that made their
\nproduct look young all the time, while its competitor Pepsi Cola
\nhas not done the same. So Pepsi is looking old.<\/p>\n
As competition is dynamic, companies must also be dynamic, no
\nmatter what their competitors are doing. Sara Lee, for instance,
\nhas changed the image of the mother on its products several times
\nas a mother's image changes according to the times. In the past,
\na mother was usually represented by a fat woman with curly hair,
\nbut now its a lot different. A mother is represented by a slim,
\nfit and fresh looking lady.<\/p>\n
In technology fit, the challenge is to choose technology that
\nwill fit our needs. You cannot just buy any technology. You have
\nto consider many different factors, including cost, the customers
\ncapability of controlling the technology, and their adaptability
\nto the rapid growth of technology. You must avoid buying
\ntechnology that will be obsolete after a few years or months.<\/p>\n
Kompas, for instance, did not do long-distance printing of its
\nnewspaper because of regulation constraints. But now since there
\nis no regulation barriers, it does long-distance printing in
\nBawen, Central Java and in Surabaya, East Java. The Jakarta Post
\nalso does long-distance printing of its newspapers in Bali. To
\npursue these things, companies need to pursue technology fit.<\/p>\n
As for culture fit, we have to produce products that are
\nculturally fit to customers in different parts of the world. The
\nrecent Ajinomoto case in Indonesia serves as a good example.
\nAjinomoto said the product did not contain pork elements, but it
\nacknowledged that it used pig enzymes in the production process.
\nThe company forgot that that's a sensitive issue here.<\/p>\n
Q: Among the four components of strategic fit, which is the most
\nimportant for a company to focus on to survive, especially in
\nthis time of slow economic recovery...<\/p>\n
A: Now we have to prioritize competition fit because of the
\nreformation in Indonesia. The Asean Free Trade Area (AFTA) is
\nawaiting us at our doorsteps. Even now, we are seeing many
\nproducts from Singapore, Malaysia and most of all from China,
\nflooding our markets. We have been especially open since the
\nfinancial crisis. Foreign presence is felt in almost all sectors.
\nAnd this tightens competition for local producers.<\/p>\n
The increase in competition is not only due to foreign
\ncompanies but also from local ones. Just look at your industry,
\nthe media. In the old times, we had to have SIUPP (publishing
\nlicense) to start a newspaper, but now, there is no more SIUPP,
\nso anyone can produce newspapers. This is also the case in the
\ntelevision industry. Anyone with capital can establish a
\ntelevision station. The airline industry is also so open, making
\ncompetition even tighter. These factors make it important for
\ncompanies to pursue competition fit now.<\/p>\n
Competition fit is especially important in this era of
\nglobalization as products can come into the market without going
\nthrough an introductory period. Normally a product goes through a
\nproduct life cycle, beginning with an introductory period to make
\nthe product known to the people. After that, the sales of the
\nproduct normally reaches its peak, and if it is not maintained
\nwell, its sales will decline. Aqua, for instance, spent five
\nyears in the introductory period. However, because of
\nglobalization, some products take the upper position in the
\nmarket without going through an introductory period.<\/p>\n
For instance, when Hard Rock radio station and Kosmopolitan
\nmagazine first appeared in Indonesia, they went straight to the
\nupper position in the industry because of their strong brand
\nnames. They did not need an introductory period as they were
\nalready well-known. When Hard Rock radio station was launched, it
\nstartled Prambors radio station, the longtime radio station in
\nJakarta. Also Kosmopolitan surprised Femina magazine. If MTV, for
\ninstance, launches a radio station in Jakarta, it will compete
\nhead-on with Prambors and Hard Rock. Therefore, Femina,Prambors
\nand the others have to be fit to face competition from
\nKosmopolitan and Hard Rock.<\/p>\n
Q: How do we know that our business is not fit with the
\nenvironment, and what should we do if it is not?<\/p>\n
A: When our business is not fit with our environment, it will
\nsend signals. Just like our body, when it is not fit, we can, for
\nexample, catch a cold, become feverish or suffer stomach cramps.
\nAnd we need to tackle it quickly. So does our business. Our
\nbusiness is not fit with the environment when our customer
\nsatisfaction level drops, morale of our employees drops,
\nemployees' absenteeism increases, internal conflicts increase and
\nso forth. All these indicate that our company is not fit anymore.<\/p>\n
When things go wrong, we must take steps to restore our
\nbusiness's health. They include:<\/p>\n
First, researching our customers behavior to ascertain if
\nthere are changes in their behavior so that we can take measures
\nto make us more customer fit.<\/p>\n
Second, redefining our competitors. Competitors are not solely
\nthose producing the same products, but also those who serve the
\nneeds of our customers. For instance, if we produce instant
\ncoffee, the nearby cafe selling coffee is our competitor. The
\ncafe serves the need of our customers, namely to keep drowsiness
\nat bay.<\/p>\n
Third, making internal improvements, including salaries.<\/p>\n
Fourth, repositioning, redesigning, reworking or relaunching
\nour products.<\/p>\n
-- Riyadi Suparno<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/time-to-redefine-competitors-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }