Primary Business Teachings of Sun Tzu
Capture Your Market Without Destroying It:
In today’s world, every company and business want to capture the large market share. Some companies and organization trying to capture the market while destroying it but according to the Sun Tzu, companies should capture the market in the way that cannot affect the entire market or destroy entire market. In this growing world, here economical crises increasing day by day, companies want to achieve the competitive advantage no matter what means they are using for example; companies start fighting on the pricing strategy. They began to lower the price and quality of the products so that they can capture the market and can attract the customers.
Companies can capture the market using different kind of ways that cannot attract the competitors’ attention and interest for example; they can use an indirect approach, any low-key approach and subtle approach to attract the market. Moreover, companies can attract the consumers that are being served in the market. When a company lowers its price, it attracts the attention and interest of all competitors working in an industry. By doing this a company no doubt, can achieve the competitive advantage but only for the short time period. For long run, this low price strategy will destroy not only competitors but also the market. For example, a company working in an industry want to lower its price, for this, the company has to lower the quality of its products. If it does so, people may prefer this company’s product on others and can get the competitive advantage. This action will create pressure on other competitors working in an industry and they are being forced to lower the price of their products for this they may also decrease the quality of the goods and services they provide to their customers. When all the companies working in an industry start fighting on pricing strategy, they will get a very low competitive advantage over each other and ultimately they will earn or will get lower profit. In long run, companies may face loss because people may switch to substitute products due to low prices. With regards to quality of the goods and services, if the people cannot get the quality they desire, they will start find some other substitute products that may have high switching cost but will satisfy customers on providing high quality products. Price war not only destroys the companies working in the industry but also destroy the market (Fontinelle, 2010).
However, some companies are low cost leader and won the price war by focusing on low cost of production and are working in an effective and efficient manner. Companies that fall in cost leadership category are; Wall-Mart, McDonald’s, Samsung, and South West Airlines. To win the price war these companies are responding by avoiding it and developing their focus on the demand of customers. They are providing superior value rather than lowering their prices. For example, Samsung has strategies to capture a large market share without destroying the market. They are improving the quality of their devices according to new trends in technology and the demand of customers. They are introducing their middle device to target middle and upper class people. They have range of mobiles for example Samsung galaxy s4 and Samsung galaxy s4 mini. The main difference between these two is the price. People who can afford S4 will buy s4 and people who cannot afford S4 may go for S4 mini. Samsung provides best quality to their customer. They provide free one-year guarantee of their products. Moreover, Samsung has strong research and development department that helps to Samsung to bring in new technology and innovation in their mobile devices. It also helps Samsung to differentiate their products and services from their competitors. This proves that they are mainly focusing on quality of the product and demand of consumer rather than focusing on lowering the price of the product by reducing quality. Samsung Company falls in cost leadership category.
Avoid Your Competitor’s Strengths and Attack Their Weakness:
As said by Sun Tzu, one must focus on the competitor’s weakness; in this case, our company can use it as strength. Competitor’s strength rarely works, but to get competitive advantage, company should know about the other weakness, so resources could be efficiently used. Company can easily eliminate the local competitors by growing stronger. In business, direct attack against the competitor is the strong point, in competitive market the position of a firm’s strength against competitor’s weakness that poses no threat to competitors; there is need of knowledge about competitor weaknesses. The company should also know about it own capabilities, and make the strategies, and should gather or analyze information about competitors. Company should assess or estimate the nature of success and weaknesses and the changing in strategies, the potential reaction of the competitors should also be understand. The competitors could also access by the technology, market assessments and through reputation and image. One blind spot could be misjudging the industry boundaries, Poor identification of the competitors and over emphasis on the competitor competency, could create issue in judging the weakness of the competitors. Faulty assumptions about competitors and overloaded information could also be the reason of misguide. Competitor behaviors could assess for recognizing about lacking. For the satisfaction of the customers, company should be strong. If company wants to retain its customers and want loyal customers, then it should have competitive advantages, by focusing on others weakness, one can strengthen it rapport in the market.
Example, Samsung is a dominated Smartphone industry, which is generating billons of profit, the company could get stronger after compete its competitors and using their weaknesses as its strength. Apple, Microsoft, Nokia etc are the biggest competitors of Samsung. Apple alone took away around, 62 percent of profit in the market. Nokia and Microsoft are also trying to target the market. Samsung should do analysis of its competitor’s weaknesses. Apple major weaknesses are they are higher in the prices than the competition; they have narrow product range, occasionally technical issues also take place and no major improvements in the new product version (Dudovskiy, 2016). Samsung should lower it price than the existing prices so consumer get attract towards Samsung phones, they should focus to increase their product range, and so maximum customer will buy as apple has few products. They should also do the technological improvement in latest or new products. In the case of Nokia; Nokia has poor sales services and lost their huge market share, they have window Lumia range of smartphone, and rivals are Android and iOS. Samsung needs to stay focused on its services, if they want to be the leader in the market. Their android software is their strength, so they should improve it. Nokia products are not affordable to the middle class and lower class people, Samsung, by investing more on lower cost phone ranges, drag the attention of the middle and lower class consumers. Samsung should target market, from different segments, and make their mobile for all classes and for every age group. Microsoft also trying to capture many customers, but they are still lacking in many aspects, their weaknesses are lack of innovations, technical issues with the windows updates, dependence on hardware manufacturer and weak position of the internet, browser applications. Samsung after focus on Microsoft weaknesses could be capable to target them, and make their technologies strong. Samsung internet explorer is well built and strong, so they should continue doing innovations. Samsung should focus on its current strategies and future goals; they can strike against their competitors through pitting their strengths against weaknesses. Samsung need to focus on its major competitors, and should enhance its services for the customers, they need to add innovations in their devices and current portfolio should be about the competitor’s weaknesses and strategies they are following.
You may also study:
- Fontinelle, E. (2010, August 24). The Pros And Cons Of Price Wars. Retrieved March 24, 2016, from investopedia: http://www.investopedia.com/financial-edge/0810/the-pros-and-cons-of-price-wars.aspx
- Dudovskiy, J. (2016, March 7). Apple SWOT Analysis. Retrieved March 24, 2016, from http://research-methodology.net/apple-swot-analysis/