By M Suyanto
Companies must make changes in order to customize competitive environments. Technology, competitions, economic shocks, social changes, labor forces, and world politics are aspects that stimulate changes. Sophisticated information technology can change the way to enhance competitive advantage. The CEO of Unilever, Floris A. Maljers, said “The biggest challenge that companies face in globalization is the problem of limited human resources not capital”
According to Mark Ingebretsen in his book, Why Companies Fail, companies have to predict future trends by detecting trends that should they face if they want to continue to generate profits. In addition, the company must also design a way to adopt products and services for reaching the consumer group that has not been identified. The most important thing is that a company should be aware of the fact that large-scale change is a norm while the change that shakes the world is a new norm. Therefore, companies must direct the strategies for dealing with changes. Successful leaders act flexibly to cope with changes, and even the leaders should be pleased with the changes concerning themselves.
Most companies are going bankrupt because employees must always follow their employers who have never changed. According to Alfred D. Chandler, Jr., the historian, in his book, Strategy and Structure, the American companies that have got ahead made changes, especially in their management systems. Chandler examined four large American companies, namely General Electric, Du-Pont, Standard Oil company, and Exxon. The willingness to change from the CEOs of the four-companies has made them survive up to now.
Managerial styles cannot be separated from employees. According to Jack Welch, the CEO of General Electric, we’re risking something to our people, therefore we need to empower them, give them resources, and get them out of trouble by using their ways. Jack Welch spent half his time with his employees, trying to know them better, talking with them about the company’s problems, praising their best performance, and chiding their worst performance. He knows about 1000 employees who have good ideas and who have the responsibility for their work. Jack Welch’s personal approach to his employees has provided outstanding results for performance improvement. “When you win, we all win,” said Welch. Therefore, 27 000 employees of General Electric own shares. In 2001, General Electric was selected as “The Most Admired Company in the World” according to Fortune magazine.
“The two greatest corporate leaders of this century are Alfred Sloan from General Motors, and Jack Welch from General Electric. Welch could be bigger than both of them because he’s planning a new paradigm for the corporation, the model of which is used in 21st century”, said Noel Tichy from the University Michigan, the analyst of Welch’s managerial style. Then, will you make changes or become bankrupt?
By M Suyanto
One of the strategies to win the competition in business is a differentiation strategy, which emphasizes the stronger differences of certain brands compared with competitive brands. Product differentiation may derive from a variety of factors, namely product quality, product features, durability, reliability, exceptional product design, reliability, being easy to repair, and style. The quality of a product covers quality performance and conformance. Quality performance refers to the level in which product characteristics operate, that is to say, whether the product is produced from low-level, average, high, or super performance. IBM’s product differentiation strategy is based on the quality of performance. According to Fortune magazine, IBM was the world’s 19th ranked company based on revenue and was the world’s first ranking firm based on computer and office equipment industries. IBM is a company with the principles of respecting individuals, giving the best to customers, and carrying out all tasks with the idea that everything can be achieved by a superior. IBM is a technology company, which is not inexhaustible commitment to quality. IBM Thinkpad Transnote was an award-winning product for “For Technological Excellence” in the category of PCs from PC Magazine in 2001. Then, conformance quality is the level in which all produced units are identical and meet the target specifications as promised. Buyers typically expect the high level of fitness. BMW uses the product differentiation strategy based on the suitability of high quality. Product features are equipped with the characteristics of product functions. Most products are offered with their excellencies. Microsoft uses the product differentiation strategy based privileges. In 2002, Microsoft was the world’s number-three company of the most impressive ones according to Fortune magazine. In 2001, IBM released a new product, namely Windows XP, which used Windows 2000 kernel. Windows XP is the most stable operating systems of Microsoft. The excellence of Windows XP is that it is not only stable, uses a new wizard that allows you to configure settings for Internet and local networks but also has the additional feature of increasingly varied plug and play. In addition, Windows XP includes a software “firewall” for security. In 2001, Windows XP was the winner of the award “For Technical Excellence” in the category of desktop software from PC Magazine . Furthermore, Rolex uses product differentiation strategy based on product durability, which is a measure of the expected age of the product operating under normal conditions and / or weight. According to most users, durability is very important. Does your company want to do product differentiation or to die?
By M Suyanto
In the early 1970s, Jack Trout and All Ries put forward a positioning concept as the basis of a marketing strategy, and since then, the concept has become a popular basis for the development of a creative strategy. The general purpose of a positioning strategy is to make consumers have better images in their minds of products. The proper brand images that form in consumers’ minds from what they see, hear, smell, and feel can become the dominant factors that strongly influence them to make up their mind of doing something with the products. Normally such a concept is oriented towards market leaders.
The company’s advantage of competing is that of communicating, so the problem of competing are that of communicating. As a matter of fact, a positioning strategy is a communication one. Advertising is a form of the communication which, according to the recipient’s point of view, was built in a low award. If you succeed in advertising, you may be successful in a business, a religion, politics, or the other activities that require mass communication. Positioning, the simple concept that makes people face difficulties in understanding strengths, is a concept to change the authenticity of the ad. Positioning starts with products, goods, services, companies, or people, but it is not something you do towards products; however, it is something you do to prospective consumers’ minds, namely placing brand images on their minds, and it is not a matter of the product positioning that physically has something to do with products, and it is also wrong when positioning does not involve any changes, particularly on names, prices, and packaging rather than on the overall products. Basically, there are changes in the appearances that may be conducted with the aim of ensuring more valuable positions in the minds of prospective consumers.
Positioning also constitutes the first thought designed to cope with a hearing problem in our society flooded with information. The only defense owned by a person in a society is a very simple idea. So, the best approach to be taken of someone in a society is a simple message. Like in minimalist architecture, in communication the less but the more accurate a thing is; the better. You have to sharpen the message to put in the mind of each consumer, as Jack Trout and Al Ries proposed that positioning is not done on products, but it is done against consumers’ minds; for example, “The Company for Women” is from Avon, “The Science of You” from the Pond’s Institute, “Passion for Beauty” from L’Oreal, “The Miracle of Science” from DuPont, “Life made smoother” from Teflon, “Get the feeling” from Toyota, “For Life” from Volvo, “Connecting People” from Nokia, “Good Food Good Life” from Nestle, “Being outstanding in Achievement” from Primagama, and “The College Where People Wear Ties” from STMIK AMIKOM.
By M Suyanto
Philip Morris is one of the big, cigarette industries in the U.S., and Marlboro is one of Philip Morris’s trademarks which economically have involved a quarter of U.S. citizens. In 1989, Philip Morris dominated 43% of the U.S. market, so at least it could support the economy of Marlboro Country. However, such a domination ended when the other industries of unbranded cigarettes took over 40% of the U.S market, cutting the market of Marlboro in the U.S. at 30%; and as a result, making its stock collapsed. Michael Miles, Philip Morris’s CEO, tried to do his best to save Marlboro. The strategy Miles undertook was that he lowered prices dramatically; reduced prices on a large scale; and lowered the world’s leading-cigarette prices at 25% of the cost price just to boost the stock price by gambling with a very high risk. Some commentators, observers, and analysts were of the opinion that what Miles had done with his strategy was driven by panic rather than by long-term considerations.
Undertaking his strategy to boosting the stock price, Miles took the opposite view of the theory applied in the 1980s when selling well-known brands succeeded because of high prices. Miles knew that it was unusual and impossible for the company to keep on selling Marlboro cigarettes to its consumers at a premium. Miles might attempt to apply Campaq Company’s strategy, in which it sold its PCs at lower prices and used the power of big brands in order to control the stock market and to be able to compete with Dell Computer and IBM.
At first, the application of Miles’s strategy was not trusted by the market, so Philip Morris’s shares fell sharply at 23% in one day. However, gradually the stock price began to recover, and even grew rapidly. The Company’s total shares of the U.S., cigarette market increased from 42% to 46%. Marlboro shares grew from 22% to 27%. In July 1994, Philip Morris was able to gain profits at 17.6% after the tax payment, or totally 1.23 billion dollars. Even, the most surprising thing was that sales increased to almost 22% in the U.S., so the stock rose to 6.5%. In 2003, shares reached 38.5% of Marlboro cigarettes in the U.S.
Michael E. Porter called Miles’s strategy the total cost leadership strategy, which highlights lower prices than competitors do. This strategy is part of the clearest generic strategy among the other generic strategies. If a company can achieve and maintain a total cost advantage, it will be the company, the performance of which is above average in its industry if it can set the price equal or close to the average price in the industry. With a price that is equal to or slightly lower than competitors’ prices, the low cost position of the advantage of this cost will be realized in the form of higher profits. Miles first began to carry out this strategy on Friday. Michael Miles, who has created the strategy, calls it Marlboro Friday.
By M. Suyanto