The Business Strategy that will Work Best for YouWritten by Mark Munday
Ultimately, you have to settle for one of three business strategyoptions. And it is important that you are clear on what one you are going for. Your business strategy choices are, at end of day, verysimple. The big question is, how do you want to position yourself in relation to your competition. Basically your options are : 1. To be cheapest 2. To be best 3. To dominate a market niche Many small businesses go for first option, in mistakenbelief that it is only way to survive. The problem is, there will always be someone who can do what you do, more cheaply than you can. A cost leadership strategy is only really suitable for bigbusinesses. Businesses that have substantial economies of scale. They are able to spread their overheads thinly over large volumes, and charge low unit prices. So if you are running a small business, this strategy probably won't work for you. If, as a small business, you build your business reputation onbeing cheapest, you are operating from a position of weakness. Even if you can survive with your low prices, you will not be able to withstand a price war with a bigger competitor. So why take the risk? The second strategy, being best, can be used to build apowerful competitive advantage. It means, however, that you have to have a unique product. Otherwise, you will have to spend a lot of money on R&D to stay ahead of competition. You need deep pockets to win with this strategy. Unless, of course,your product is so specialised that no one else is producing it. And big companies, for whatever reasons, don't want to produce it
| | Is This Really A Recovery?Written by John Finger
Money Matters January 2004 Is This Really A Recovery? Presented by The Money Management Firm, Inc. www.moneymanagementfirm.com EBay I.D. optionsforyou ______________________________________________________________________Bill Gates and General Motors Bill Gates is hanging out with chairman of General Motors."If automotive technology had kept pace with computer technology over past few decades," boasts Gates, "you would now be driving a V-32 instead of a V-8, and it would have a top speed of 10,000 miles per hour. Or, you could have an economy car that weighs 30 pounds and gets a thousand miles to a gallon of gas. In either case, sticker price of a new car would be less than $50." "Sure," says GM chairman. "But would you really want to drive a car that crashes four times a day?" ___________________________________________________________________________ Is This Really A Recovery? Since fall of 2003, we’ve received a mass of good news about economy. First-time jobless claims have fallen and are consistently below 400,000 per week threshold which is considered dividing line between an expanding and contracting labor market. Housing starts in 2003 were at 1.8 million, a level not seen since 1986. Worker productivity has increased substantially. The unemployment rate has dropped to 5.7%. The stock market was on a tear in 2003: S&P 500® gained 26%, while Nasdaq tacked on 50%. With all this good news, what’s problem? If you’re one of 2.7 million people who lost his job over past three years, you’re not seeing benefit of this recovery. The Labor Department released a very disappointing jobs picture for December, noting that economy created only 1,000 net jobs that month. Economists had anticipated a jobs increase of 150,000. My guess is that most of those 1,000 jobs went to economists: they, along with meteorologists, are professions where people make six figures a year for being wrong all time. But that’s a story for another newsletter. During final 5 months of 2003, according to Stephen Roach, only 278,000 jobs were added by non-farm businesses. That may sound okay, but nearly all of jobs came in three areas: temporary staffing, education, and healthcare. Temporary staffing is comprised mainly of low-paying jobs, while education and healthcare are shielded from foreign competition. Speaking of foreign competition, globalization has resulted in U.S. companies shipping many hundreds of thousands of jobs overseas to cheap labor markets like India and China. At first, bleeding was no big deal: most of shipped jobs were sweatshop jobs. But now shipment is getting more serious, involving not only manufacturing but also services. A company can hire six Indian engineers for price of one American one, and company need not worry about skyrocketing health care costs or other benefits. Indian workers don’t demand same kind of benefits as their U.S. counterparts.
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