Sun Tzu, one of the greatest Chinese military strategist once opined that “If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle”… Now, most entrepreneurs will tell you that among the biggest challenges they have to content with is competition. They will tell you that business is a war with casualties and even death of the enterprises and also the entrepreneurs. Taking into consideration the advice from Sun Tzu, we examine some few sources of competition for our businesses. This will be made easy by following the Michael porter 5 forces framework of analysis competition.
1. Industry Rivals
How well do you know your direct rivals? Those entrepreneurs doing just the same things you are doing. How well do you measure up to them? Are you the smallest, in-between or the biggest? How well are you armed with skills, resources e.t.c? If you look around, it is easy to know your place. The thing about knowing your place is to check where you are most competitive and concentrate there and avoid competing on your rival’s competitive advantages. To survive, you then have to innovate, failure to which your biz is dead by tomorrow morning. Almost all the people selling clothes in those exhibition stores in our towns buy the stuff in Kampala probably from the same seller at the same price. When they bring them here they still sell at the same adjacent shops and probably at the same price. However, a few clever guys have realized the power of internet to make them reach as many potential buyers as possible while keeping expenses very low. While you pay for your stall, some guys sell clothes and shoes online from their homes. Just look at your Facebook timelines and see how much of a market it has become.
Alternatives are a silent competitor for most businesses. You must be aware of what your product does and what can substitute it. You do not want to be the camera man who still rides his bike from corner to corner looking for people to take pictures when nowadays everyone has access to a smartphone with camera options with all the attendant advantages. If you must take photos, then know how to beat the camera phone. Events; where you can capture special moments when the people wouldn’t be able to do so as they follow proceedings. What makes someone who still has a phone or even a camera of their own to want take a photo by you? What advantages do alternatives hold over you, is it cost of production, quality, price, processes, ease of use, cross use e.t.c.
How easy is it for your supplier to cross over to your field and dislodge you? What advantages would you have over them? You have seen companies that have opened depots extinguishing wholesalers and dealers. Very common with car and motorcycle manufuctures who chose to open their stores and workshops instead of relying on others. How about Delmonte running depots for their products in all major towns, just like Coca Cola, EABL etc. Most wholesalers have had to convert to supermarkets and are driving down the local shopkeepers anywhere they land. If you are a shopkeeper, you may want to take a peek into the future and see if the future still has opportunity for small shops.
Just a small favour; would you please share this article in your social sites after reading. It is good for your friends too. You never know how it will affect their lives. Thank you
Could your buyers chose to venture into your business? This mostly affects the food industry a lot. It might be based on a strategy to assure stable supply and quality. On a small scale, the guy who buys your milk for their hotel could as well decide to keep their own dairy cows etc. On the large scale you may have seen the many big companies who instead of sitting back waiting on processing they venture into supplying themselves. Most sugar milling factories run their own farms. Kenchick have their own poultry farms etc. This ensures that they are still in control of their fate rather than depend on possible fluctuations in supply quantities, prices, quality etc. Must you then continue in such a business when the big players join in and suffocate everything? What innovations would guarantee you competitiveness?
5. New Entrants
Some industries have very low barriers of entry that anyone can easily start something in line with what you are doing without much struggle. Remember how lucrative the boda boda business was when it was starting a few years back? Is it anymore? All one needed was just to look for around 50-80k and they have a motorbike and ready to do business. Some didn’t even need much training beyond 2 days and could even ride without a riding/driving licenses. This messed up the industry so much and dried the revenues. Guys who would easily make 800/= a day in 2010 now have to work almost 24 hours to make 300/=. How about innovation, does your motorbike have to be for ferrying people? How about customizing it for other transportation needs like ferrying chicken and milk?
>>>Thank you for reading. We would love to hear your ideas on this article. Please leave a comment below. Have any question related to business? We could answer here and benefit even more readers<<<.