FEATURE ARTICLE

Global Pricetags
Savvy Selling
Businesses that embrace globalization as a source of sustainable competitive advantage will survive and flourish, writes accomplished educator and businessman Rudy Ang as he points out strategies to tackle open markets.

Distinguishing between local and international companies used to be simple and uncomplicated. International companies had branches in different countries, or were involved in import and export operations. Local companies produced their goods locally and sold these goods in the domestic market.

Today, significant improvements in transportation, in telecommunication, and in infrastructure; coupled with the lowering of trade barriers and restrictions have resulted in tremendous increases in cross-border traffic of people, goods, and financial resources. This has made it impossible for any business to think of itself as purely "local" no matter what its scale of operations.

Establish global market intelligence

Media has made the world a much smaller place and today's world events are felt by local businesses almost instantaneously.

How are local boutiques and retail outlets able to decide what sort of goods to stock up on for the coming selling season? Who decided, for instance, that flared or bell-bottomed pants were "in" again?

Merchandisers and proprietors of the bigger chains will fly to Europe and North America to take a look at whatever is new, and then decide which trends are likely to take off in the Philippines. Smaller entrepreneurs will keep track of what celebrities are wearing on their tv shows. Others will buy imported magazines and see what sort of items are being featured or advertised.

Through various methods, the smart retail store owner will look to see what items are hot and popular overseas and stock up on these to stay one step ahead of competition and to ride the crest of a popular trend. Slackers and laggards who try to catch up with the trend when it is too late, often find themselves left with a lot of unsold inventories because their deliveries arrived at the tail end of a fad.

The escalation of violence in the Middle East might seem very distant to us here in Manila, but military activity in any of the oil-producing countries will always lead to increases in world oil prices. This will inevitably lead to increases in the prices of gasoline and electricity here, eventually resulting in higher inflation.

Our short, medium and even long-term plans are more reliable when we are armed with an understanding of world events, and if we are able to anticipate their likely effects on our business activities.

Respond to open markets

How will the movement towards free trade and open markets affect local businesses?

The Philippines is involved in the worldwide movement towards freer trade and the reduction of trade restrictions. As a result, inexpensive foreign goods have inundated our local markets, and this trend is expected to continue: beef and lamb from Australia, fruits from Taiwan, pharmaceutical products from India, to name a few.

The implications of this are obvious for someone directly involved in any of these lines of business. But will any of this affect me if I don’t grow or sell fruits, if I do not own a bank, if I neither assemble nor sell cars?

No business is exempted from these developments. Foreign companies will see an opportunity in any industry or line of business that has not sought to achieve global competitiveness, and someone will eventually come in to provide competition if no one has yet done so.

In addition, even if no foreign company comes into the market to compete directly in your line of business, you will be up against local companies with global standards, companies that scan worldwide developments and opportunities and take advantage of these to steal a march on competition.

Be globally competitive

What do we need to do, then, to survive in this globalized world?

We need to do the things that we should have done long ago, but never got around to doing simply because we never had to. These are common sense activities that could have helped us to stay ahead of even local competition, but are now essential for survival in the new century's global marketplace.

- Professionalize management. Faced with the best of what the rest of the world has to offer, we need to perform at peak condition. The son or daughter of the owner is not automatically the most qualified to run a business (although in some cases he or she could be). Small to medium sized companies in the Philippines are most often family-owned corporations with key positions held by family members. To hold our own against global competition, we will need to fill each key position with the most qualified person possible. This will require us to look for management talent from a wider pool of candidates, including those outside our families.

- Run your companies as efficiently as possible. Your companies will have to be quicker in responding to your customers’ needs and more cost-effective in manufacturing and delivering your product or service. This requirement is corollary to the first: a more professional management team made up of the most qualified persons possible will likely lead to this result.

- Develop a sustainable competitive advantage. Many companies have relied on being "the only one" or "the first one" to guarantee their market share. As the government pursues its liberalization strategy, there will be fewer and fewer "protected industries" and exclusive licenses or franchises. An advantage based on simply being the first vanishes when newer companies arrive at the scene and do the job better. We need to identify that one thing that our consumers want that we can do faster, cheaper, or better than anyone else, and develop the capability to consistently deliver this benefit to our consumers if we hope to keep their business.

- Keep track of local and world events. Read the international publications and commentaries. Keep track of global events and trends, and try to foresee how this might affect you and your business. And then take action.

These days, there is no such thing as a "local" business, no matter how small it might be. The ones that will survive and flourish in this increasingly competitive environment are the ones who embrace globalization as a source of sustainable competitive advantage.

HIGHLIGHTS:

As the government pursues its liberalization strategy, there will be fewer and fewer "protected industries" and exclusive licenses.

These days, there is no such thing as a "local" business, no matter how small it might be.

ABOUT THE AUTHOR:

Prominent educator, resource speaker, consultant, and businessman, Rudy Ang sees the urgent need for small business owners and SMEs to look beyond local shores if they wish to survive the global market game. Aside from his entrepreneurial efforts in diverse industries, Ang is also an Associate Professor and Chairman of the Marketing and Law Department, School of Management, Ateneo de Manila University.