Become An 800lb Gorilla Or A Guerrilla - The Only Two Business Options

Imagine, a choice between being King Kong and Che Guevara. Neither might be considered an attractive option. But then again, to paraphrase a well known politician. Life wasn’t meant to be pretty.

Recent corporate history reflects the findings of archaeologists. Size does count. Dinosaurs were extinguished because, in relative terms, they were neither big nor small. As the business landscape tends towards duopolies, complemented with a plethora of minnows, the time is nigh for some serious decision making.

Midsized businesses in the future will find themselves caught in “no-man's-land”. They will be caught in the cross fire of two sets of able competitive forces. Sadly, they will be exposed and vulnerable.

Alliances based on regional considerations, buying efficiencies and cost factors will not provide sustainable strategic options.

Evidence is already conspicuous in the sectors of department stores, supermarkets, airlines and accountancy practices. Pharmaceutical wholesaling is following the pattern.

Independence, freedom of choice and self-determination are great attributes and considered by many owners of small to medium sized enterprises to be virtues. But, at what cost?

Greater value and market worth will be appropriately consigned to and determined by the concepts of integration, cohesion and supply chain management. They are familiar terms and concepts whose reality will increasingly be omniscient.

Most businesses would concur with the sentiment that business today demands more team work, greater effort and is rewarded with increased competition, shorter lead times, squeezed margins and falling customer loyalty.

Therefore, two of the available four business development strategies seem unviable and unattractive.

Endeavouring to take on and take out a competitor head-to-head through marketing muscle, comparative volume, price cutting, promotional initiatives or buy outs (or take over) has increasingly proved to be expensive and the success rate has been minimal. Case studies of failed attempts and bruised and brutalised competitors abound.

Similarly, the flanking strategy of entering new markets with or without new products, services and offerings has in recent times been found to be as successful as the early day Australian pioneers and Antarctic explorers. Claiming new ground and developing new opportunities inevitably is more expensive in terms of time, money, and resources than forecast. Resources and capital reserves are soon exhausted.

This leaves two options, defence and becoming a guerrilla.

Protecting one’s own territory, customer base and product/service range demands a commitment to allocating resources to service the needs and expectations of the marketplace. Decreasing instances of loyalty dictate a need for superior service, better value adding, enhanced convenience and the reassurance enjoyed by the peace-of-mind purchasing which flows from recognisable and trusted brand names. To be successful in the intermediate to longer terms one needs bulk and a preparedness to use it. Brand marketing, and developing a sensitivity to that brand among consumers and clients will ensure success in the battle for the mind.

In the contemporary marketplace, share-of-mind does equal share of market. The perception of being a market leader typically results in the reality of market leadership. The presence of a large player in the market place is often sufficient to deter any possible interlopers, who wish to avoid incurring a bloody nose from an unseemly scrap.

For the multitude of independent, untied businesses rewards are enjoyed by those who respect the nature and importance of timing. When one does not enjoy a competitive or comparative advantage based on size, it is important to establish such over a concentrated time span. Counter cyclical strategies enable smaller businesses to benefit from an absence of presence and attention. A “scorched-earth” policy of focussing on market opportunities out-of-season, or during non-traditional periods catches possibly larger competitors off guard and appeals to key market segments.

Smaller, independent toy retailers have been deft in promoting lay-by offers for Christmas purchases in July. The tactic is unexpected, non-traditional and strikingly effective.

A bulk of the Christmas sales are concluded and the profits banked before the mega sized category killers enter the Christmas period market in November. The facts speak for themselves. World For Kids, part of the Coles-Myer Group, is being wound back and collapsed into the K-Mart network. Toys-R-Us can at best be described as surviving.

Hope springs eternal.

The recent Australian Census has reinforced the emerging reality of a society which is polarising. Business inevitably tends to reflect, follow or lead societal life. The big will get fewer in number. Those who chose to remain small will need to think hard, move faster and innovate.

Significantly, there is sufficient scope, demand and opportunities for the two forces to persist compatibly. In both instances, strategic alliances and integrated supply chain management with external collaborators will be fundamental to sustaining success.

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