Open any business textbook and you will read, “Produce more, make your products better than N does, and you will gain a competitive advantage.” However, nowadays market landscape has changed so dramatically, that even professors of Economics, Rita McGrath from Columbia Business School included, admit that the statement no longer holds true. Overproduction questions the criteria “more”, technological innovations and demand for environmentally friendly products shapes the criteria “better”. Even though an IT-company has earned more profit than its competitors, it does not mean it won a business competition. The success of business depends on totally new factors.
Competition crosses between various industries
Companies are fighting for clients not to sell them one niche product, but rather to define their general choice – what this very consumer is ready to spend their money on. For example, growing iPhones sales in 2007 and 2014 resulted in increased family expenditure on telecommunications, at the same time other expenses went down drastically – people started spending less on theatres, cinema, restaurants, fashion, etc. While cinemas and boutiques are completely different industries, they have to compete for the same consumer’s wallet. Nowadays, you cannot predict who might steal your customers, so you have to be ready to compete with of all of them at once.
Big corporations used to be trendsetters in any industry. Today they face intense competition from hundreds of startups, launched every year in the same industry, who are able to address clients’ needs immediately. While leading corporations still have more financial opportunities, startups are much closer to the end consumer, their pricing is more attractive due to freelance work, also they can benefit from crowd-funding platforms. Thus, competition even in one niche becomes blurred, up to individual business.
New technologies have inevitably changed the way we do business. More and more business processes are being automatised. So, the easier it is to copy new technologies, the more difficult it becomes to use them as a competitive advantage. Today the best way to win competition is all about the ability to attract customers, turning them into loyal clients – in other words, providing excellent client service. Innovations and constant updates help keep your finger on the pulse of your business and remain the best for clients, regardless of which brand you belong to.
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