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How Successful Businesses Stay Relevant

No plan survives contact with the enemy.

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Some companies like Coca Cola, JP Morgan, Dell, Intel etc. have survived different business cycles by applying different business strategies at different stages of their lifecycle, while others have crumbled within space and time.

How did these surviving organizations pull through?

Innovation.

Many firms today have remained relevant by simply being innovative. Successful organizations, as a practice earmark a percentage of their annual budget usually from profits for innovative ventures, to sustain their dominance and protect their trade secrets. However, firms also consider the cost implication, as such, they try to ensure that there is justification for every penny spent on innovation and efficiency.

Organizational Alignment

Before an organization can successfully apply a sustainable approach, it must first put its house in order. It has to align its resources and operations with its proposed strategic objectives, vision, mission, and culture, to avoid internal frictions that could negatively affect it.

Centralization

Small sized companies, with growing resources, that are yet to fully define their vision use a centralized system to maximize their potentials because it minimizes cost for them and ensures efficient control of activities. However, it is not ideal for some blue chips with enormous clientele. From a single secure source decisions are made for the organization and resources are managed to avoid conflicts and resource underutilization.

Decentralization

Bigger companies use a decentralized system to manage of several control hubs, units, centers, and locations, headed by different autonomous principals to manage resources and make decisions. Matrix and project-based organizations run in that manner to manage their resources efficiently, and monitor the results of different project, units or locations. This system encourages autonomy and prevents bureaucratic hiccups that may delay the discharge of duty at different locations .

Combination

This system combines both the centralized and decentralized systems to achieve economies of scale and to reduce idle time. Every constituent unit exercises some level of authority, with critical approvals made by the center. For this strategy to be effective, there must be clear cut responsibilities and resource allocation with a high level of flexibility.

Integration

This strategy is for firms that have attained maturity in their value chain. They start by identifying redundant areas, then they merge those areas for resource optimization. It could be backward or forward integration but basically, vertical. Care should be taken not to jeopardize quality and motivation. However, if there is a need for specialization, integration may not be an option as it may cause some sort of distraction.

Specialization

Companies that cannot handle everything like in the case of vertical integration, specialize. They start by identifying their core specialty which they concentrate on while they outsource their secondary duties, to stay focused and not run into unnecessary losses. Since; they may lack the resources and expertise to manage all of their operations at the same time.

Diversification

Opportunities may decline in some areas of an organization’s business environment but become more evident in other areas of the larger economy. Surviving companies continually study the trend of events within and outside their domain for prospects to exploit, they diversify. Diversification involves an iterative process of data collection and analysis to understand and satisfy a need.

Expansion

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This strategy is used by companies with rapidly growing customer base and high growth prospects, prompting the need for the creation of more units, departments and even branches. Other factors that could trigger expansion are close proximity to market, labor and source of material inputs.

Product Development

You can’t polish a turd, but you can knock a product or service into shape. Here, companies go one better to develop new products and services or upgrade existing ones. They start by engaging their customers frequently to understand their immediate and complementary needs. Then they work towards satisfying those needs and expectations.

Market Development

Businesses fish where the fishes are. They investigate new territories by performing surveys to identify potential customers who are willing to do business with them. Then they create the necessary supply chain to develop the market for their product and services, and increase their market share and revenue.

Market Penetration

Companies re-evaluate their territories and strategies from time to time, to uncover hidden opportunities to exploit. They investigate their existing clients for patterns and preferences to serve them better, and keep their loyalty from their competitors. Here companies use promotions and adverts targeted at existing and new customers to boost patronage.

Cost-Leadership

A penny saved is a penny earned. The price of a company's product or service affects patronage significantly. Firms, consistently look inwards to identify and eliminate non-value-adding components of their value chain to save cost and charge less. They also source production inputs from affordable dealers without impacting negatively on quality and cost.

Differentiation

Variety is the spice of life. Some companies create premium offers; targeted at consumers who are willing to pay more for the added qualities. Differentiation is a marketing strategy that attracts a segment of the market who value distinction. Some companies maintain two or more product/ service varieties. If patronage is low for premium products, revenue from the sale of other varieties will make up for the shortfall. To concentrate on premium offers alone, a company must do thorough research to validate customer willingness to pay more.

Focus

Focus on your strengths, not your weaknesses. Some organizations have used “Niching” to tough it out in the face of fierce competition. They rely on the evidence that man at some point in time craves for affiliation and recognition. These organizations identify their brand with a particular group, then they focus on satisfying this group. They further channel their resources to capture and harness the market that this group controls.

Mergers and Acquisition

“It takes two flints to make a fire” – Louisa May Alcott. Successful organizations merge with similar organizations to enjoy strengths that they don’t have, share obligations, and harness the opportunities that abound. While others acquire other firms like startups to avoid competition.

Also, companies that suffer penalties, stiff competition or cannot cope with the spate of revolution sell of some of their stakes to better firms for better management. This keeps them in business.

Outsourcing

Corporations outsource their secondary responsibilities to specialists who have the requirements to operate in such climes to enable them focus on their primary obligation. They also offshore to business economies with the enabling characteristics for their business to strive instead of packing up.

Competitive Marketing

Firms perform a number of competitive marketing activities to always beat the odds. They usually start with market intelligence, then benchmarking and superior performance. Industry stalwarts use field agents to monitor the below the line activities of competitors to surpass them and attract more patronage.

Branding and Rebranding

Of course, an industry leader is not without a unique identity called brand. Big industry players have brands that evoke emotional feelings in the minds of their customers who could become advocates.

Companies rebrand to revive sales surge when demand begins to decline, to reinstate their presence in the industry, and give their customers something new to satisfy their upgraded needs.

Giving Back

As part of their Corporate Social Responsibility, firms usually identify and fill up gaps that exist within the less privileged. Although, some have argued that the essence is to avoid tax. The thing is, when an organization gives alms to the needy in society, its name spreads like wildfire, and more and more businesses spring up from more and more partners.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

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