“The principles of competition are the same. Whether a company is strong or not does not rely on the size of the scale of the company or the assets, but the continuous profitability of the company, which is exactly the problem of many domestic enterprises!”
——-Zhang Landing, CYAMLAN Investment
China has become the focus of attention of the whole world in the past ten years of the new century that Chinese enterprises are developing in unprecedented speed. China has become the manufacture center of many commodities in the world. Undoubtedly it will have more contributions in more areas.
When we put our sight on those successfully expanded enterprises, we usually neglect other failed enterprises, even if the number of which is sufficient to arise our attention. In addition, there are many enterprises at the edge of bankruptcy not included.
If company is willing to introduce modern management approaches and flows, a lot of failure could be avoided.
How do the enterprises succeed in competition? It is believed that every enterprise will have different answers. Some enterprises think that success comes from the focus on core business in many years; some consider that the success comes from unique business mode; and some attribute to the great diligence of the founders. Successful enterprises have their different reasons of success, but the ones that failed only have one reason, that is not able to adapt the heated competition in the market.
What is the reality of competition: survival of the fittest?
The fact of competition is to surround qualification factors and advantages factors. Qualification factors can be seen as the threshold of an enterprise entering the market, while advantages factors are the capacity of the enterprise to get orders. Therefore, competition eventually will force an enterprise to take action, on one hand, to “remove” the advantages of competitors as soon as possible and make them qualification factors; and on the other hand, the company will keep improving and innovating to create new advantages so that the competitors cannot reach in short time.
The result of competition keeps transforming the advantages brought by enterprise through various improvement and innovation into qualification factors. If the enterprise is not able to acquire such qualification factors, it will start from losing until being eliminated.
Competition finally changes the pattern of industry, which is mainly shown in the following aspects:
First, advantages factors quickly transform to qualification factors. It is more this way for the heated competition among enterprises with little difference in products. Because of continuous acceleration of completion, the qualification factor for industrial competition is getting higher and higher, and the entrance for the industry is higher and higher. New enterprises are difficult to enter the sector. Some already in the industry are not able to satisfy the qualification factors being improved day by day, so the shuffle in the industry starts. The problem of the enterprises is to start from gradual reduction of profits to loss and even withdrawal.
Next, it is difficult for enterprises to extend the time of maintaining advantages factors. Heated competition and strong competitors make this time even shorter. Although any advantage factors eventually will transform to qualification factors, enterprises still have many tools and methods to extend the maintenance of the advantages factors. For example, to keep such factory by patent, or gradually promote the method of advantages factors to avoid one-time surpass of other competitors. The extension of time in maintaining advantages factors is also an effective method to reduce cost.
At last, enterprises must keep innovating. In completion process, all advantages factors brought by changes and innovation are periodic, only effective when the competitors have not achieved. Because of this, enterprises are forced to keep improvement and innovation, no matter in strategy, business mode, technology or operation. Only innovation can create advantages factors to be in front of the competitors and guarantee the sustainable profitably of the enterprise.