What is changed by Competition on earth?
“Principles of competition are all the same. Whether the company is powerful or not, it not only depends on company scale and assets scale, but also relies on sustainable earning ability. It is just the problems that are confronted with by many enterprises in China!” ——— Landing Zhang from CYAMLAN INVESTMENT
Chinese enterprises have become the spot that has attracted the world’s attention for the first decade of this new century due to its unprecedented sustainable growth. At present, China has become the manufacturing center of various products for the world and without any doubts it will play great role in more industries.
When we look the enterprises with successful development and expansion, we often ignore many failed companies even its number has been remarkable to alert us. Besides, it hasn’t included many enterprises at the edge of bankruptcy.
If the company would like to introduce modern management system, many failures could be avoided.
How do enterprises succeed in competition? We believe that the answers are different for every enterprise someone will regard success as focus on the core business; someone will think success is due to unique and special business model; someone will think the real reason for success is due to the extremely diligent of the founder. Successful enterprises have their own successful reasons but the reason of failure for enterprises is only one that you couldn’t get adapted to the fiercer competition in the market.
What’s the essence of competition: survival the fittest?
Truth of competition is based on the qualification and advantage: qualification element can be regarded as the doorsill to enter into market and advantage element can be concerned as the ability for enterprise to win order. Therefore, competition will force enterprises to take actions, on the one hand to “eliminate” advantage elements of its competitors as soon as possible and turn those advantage elements to be qualification elements; one the other hand, the company should keep improving and innovating so as to create new advantage elements that the competitors couldn’t catch up within a short time.
The result is that the advantage element brought by various improvement and innovation will continuously turn into qualification element. If the qualification element couldn’t be achieved by the company, it will begin to loss until it is washed out of the market.
Competition will finally change industrial structure from the following aspects:
Firstly, advantage element will rapidly change into qualification element. It is obvious among the companies with fiercer competition and small products differences. Pushed by competition, qualification element of industrial competition get more and more complicated and the doorsill for entering into the industry become higher as well. New enterprises are hard to enter into the industry. Some former enterprises in the industry couldn’t meet the requirements of higher qualification element and accordingly industrial shuffle get started. The problem confronted by enterprises is that the profit gradually decreases and then turns into loss till being washed out!
Secondly,the time to maintain advantage elements. The advantage maintaining time is shortened to the least by the fierce competition and strong competitors. Though any advantage element will finally be transferred to qualification element, the enterprises still have many tools and methods to expand the maintaining time of advantage element, for example: patent could be used to keep advantage element and also the gradually launching of advantage elements could prevent competitors from surpassing at once! Expansion of maintaining time of advantage element is also a kind of effective way to reduce cost.
At last, enterprises should keep innovation. During the competition, all advantage elements led by every change and innovation are temporary. They would be effective only when competitors haven’t achieved them. This situation will push enterprises to keep on improving and innovation in strategy, business model, technology, operation and so on. Only innovation can create advantage elements for you continuously and make you ahead of competitors so as to really ensure the continue gains.