| Many industry leaders are faced with a sea of | | | | Whirlpool is up 38% in sales revenues and |
| changes in the marketplace, particularly the | | | | just boosted its 2004 profit outlook. |
| onslaught of many low cost competitors. They | | | | Whirlpool no longer sells vacuum cleaners and |
| are minnows and will grow to become sharks if | | | | diversified into other household appliances. |
| they are not nipped in the bud. Examples | | | | |
| abound on the proliferation of the Chinese | | | | As mentioned earlier, the Port Authority of |
| products in the world market. | | | | Singapore (PSA) also lost its competitiveness |
| | | | when Tanjong Pelepas in Malaysia stole away |
| The way to handle these manufacturers is to | | | | PSA's number one and two customers with |
| try to nip them in the bud. It is like war. | | | | cheaper pricing. The Singapore government has |
| You must not allow your competitions to | | | | learnt this lesson and is responding quickly |
| establish a beachhead. For once they succeed | | | | to the threats of low cost budget airlines |
| in doing so, it will be so much harder to | | | | and regional air hubs. Airlines can also |
| dislodge them. You want to knock them out in | | | | bypass Singapore Changi Airport and fly |
| the waters where they are most vulnerable. | | | | directly from Australia to Europe or Middle |
| When customers try the low cost products and | | | | East to US avoiding stop over in Singapore. |
| they like them, it will be very difficult and | | | | Singapore Airlines is introducing the budget |
| expensive to entice them to switch back to | | | | airline Tiger to compete in this sector as |
| your products. If you cannot beat the low | | | | well as to boost its premier airline image |
| cost competitors in the price game everything | | | | through the offers of new planes and non-stop |
| else being equal, then better to identify | | | | direct flights to the US. Singapore Changi |
| another premium niche. | | | | Airport is building a terminal for budget |
| | | | airlines. The Singapore government came down |
| Johnson and Johnson the health-care | | | | hard on the Singapore airline pilots to |
| multi-national company also faces stiff | | | | ensure that the national airline is not |
| competition and a long wait for the next drug | | | | dragged down by labour disputes. The airport |
| blockbuster. As part of its strategies to | | | | terminals are also undergoing renovation and |
| hold off competition, it has gobbled up 34 | | | | upgrading. The jury is still out as to |
| companies in the past 5 years and will keep | | | | whether all these proactive measures can |
| acquiring. Johnson and Johnson also put | | | | effectively maintain the competitiveness of |
| existing drugs to new uses - epilepsy drug | | | | the air transportation and aviation industry |
| Topomax now treats migraine. Workers are made | | | | in Singapore. However, this is better than |
| to cross the divisional lines to develop | | | | waiting for the low cost competitors to |
| products and drug-delivery systems including | | | | gobble your lunch right under your noses. |
| treatments for stroke, diabetes and | | | | |
| schizophrenia. | | | | Another case in point is the ball-point and |
| | | | fountain pen competition. Ball-point pens |
| Teamwork between pharma and device divisions | | | | were much cheaper, easier and less messy to |
| led to the billion-dollar coronary stent. | | | | use. The fountain pens were beaten face down |
| Cost-cutting on the 200-plus units, merger of | | | | and lost almost all the market share to |
| the back-office operations and centralized | | | | ball-point pens. Then somebody thought of |
| purchasing helped to save $1 billion in two | | | | making the fountain pen a luxury item. The |
| years' funds that it will use in the | | | | fountain pen was sold for US$ 400 and |
| development of badly needed new | | | | positioned as a prestigious and luxurious |
| pharmaceuticals. | | | | item, similar to the jewel wear. The |
| | | | manufacturers of fountain pens such as |
| On the other hand, Hoover, which makes vacuum | | | | Parker, Sheaffer and Mont Blanc have then |
| cleaners since 1907, has shrunk its unionised | | | | comfortably locked into the high-end segment |
| staff strength from 1,800 just over 1,500 in | | | | which the ball-point pens cannot penetrate. |
| 1994. The Chinese competitors have been | | | | |
| selling cheap vacuum cleaners at $79. Hoovers | | | | Today, both the fountain and ball-point pens |
| with price tags of $200 and higher cannot | | | | co-exist each has its own market niches. You |
| compete and was caught unaware. These Chinese | | | | need to be wary and be prepared to thwart off |
| low-end models already have 40% of the | | | | the moves of these low cost competitors. This |
| market. Hoover tried layoffs, new | | | | is why Howard H Stevenson in his book said: |
| vacuum-cleaner features etc, but to no avail. | | | | "Do lunch or Be Lunch. |
| On the other hand, the market leader | | | | |