Category: The Effective Manager

“Can you believe it that we have got a new competitor on the block,” Naoeme greeted Susan her long time business partner. The two ladies run a restaurant that specialized in hot African buffets. For a long time, theirs was the talk of town as it attracted all the big wigs in town. Patrons loved Super restaurant for sumptuous African foods and the ambiance. But most importantly the charm of the two business ladies brought over customers from near and far.

However, over time competitors seeing the lucrative market in food retail service industry had started to attack. Super restaurant that used to be full to the brim was now on certain days half empty. What hurt most is that a number of customers were migrating to the competitors.

Naomi felt that the new restaurant was yet another uncalled for intruder to their business. Soon she started to fight off competition. One of her favorite tricks was to tempt staff away from the new business by doubling their pay. However, this had an effect of eroding her gross profit and with time Super Restaurant was struggling to meet payroll.

Meanwhile her partner Susan was proposing a different and more proactive strategy.  She offered that, “we save money and buy new furniture since all the new business have better seats.” Another was, “let us take out a loan and hire an expert Chef on contract to improve our menu.” But for Naome this was nonsense. There were better ways to beat competition.  “If you can’t beat them; well, kill them!” was her mantra. She went around and paid a bribe to the utility providers who inflated the bills of their competitors. She even talked to the tax collectors to fine a penalty against her competitors.

But these strategies failed to stop the decline. Even some of the new staff hired started leaving due to delayed salaries. Soon the business was seriously running out of cash and on the verge of collapse.

How to beat competition 

If you have something good and working be sure that someone is watching and get ready for competition. It is only a matter of time. How you react is also going to determine how you beat off competition. Whereas competition is a vote of confidence in one’s enterprise, quite naturally many people resent it. The attitude of Naome is typical of so many.

Coca- cola and change

Around 1981 in the Philippines, Coca-Cola, was lagging behind 2 to I in sales against Pepsi. There was talk of her shutting down and moving elsewhere. In comes Nevile Isdel, an Irish-born native of Zambia, who in his book Inside Coca Cola shares how he beat off competition. Simply, he modernized outdated plants, energized the sales team with better incentives, launched a new local advertising campaign, created more products to meet the different market segments and brought in new talent. And by 1983 Coca Cola had taken the lead, being one of the fastest turn around in the soft drink industry.

In brief, competition is not necessarily bad. It spurs innovation and helps bring the cost of products and services down as companies battle for customers. The one who hates competition is a monopolist but such is only buying time before it is all broken up.

Once the lockdown ended Menvu decided to open up his hotel which had been closed along Bijanjaro road. As expected through the time of closure there were no customers calling. However, with lockdown over, it was time to get the business up and running.

During the first few weeks, Menvu noticed that only a trickle of customers stopped by. He waited for the next week and there was no improvement. A thought then occurred to him that perhaps it was best to call up some of the customers he knew. He was quite surprised with the response he got.

Some of the customers he found were not aware that the hotel had opened, but since they had heard from him now they would visit. There were those who were not sure of the SPOs in place. “If I come,” asked one customer. “Won’t I catch the dreaded disease? How are you going to protect me!”

“We have all the protocols in place!” Menvu assured his customers. He had put in place extensive arrangements such as sanitizers and gun temperatures to ensure the hotel was well covered. The seating in the dining was spread out to limit physical contact. “We have also hired a nurse to make sure none of our customers is affected by someone falling ill!”

“I will come,” several customers offered so, having been assured all was well.

However, Menvu found those who wanted to know if the hotel prices were still the same. “How much are the rooms going?” a customer asked. Menvu had had to increase pricing of his products to cater for the new social protection safeguards. Besides, he had lost business during the lockdown and needed to find a way to recover some of lost income. But then he found his customers were not ready to embrace the new pricing.

To get them back Menvu decided to retain price at the same level. “After all, I am not sure if they will come back!” he reasoned. “Best to first get them in!”

Under this strategy, the hotel recovered. Business started slowly but by the end of the year had fully recovered to previous performance level.

How to recover your business when it has been under closure is a question many business owners are now grappling with. Take the example of a school owner that has been under closure since March, 2020! Should the owner just sit back and wait for his former students to show up. Suppose they do not.

To recover a business one may have to be more ingenious than just assuming that your old customers will pick up from where they left. As we see Menvu has had to make adjustments in order to secure his clients and put also several measure in place. In brief, it is not business as usual.

A very important development has been the use of technology as one way to communicate with customers. In an age where physical distancing is the norm a business may have to incorporate new measures like having meetings online. New services like costumer delivery could help reach out to customers fearful of coming to company premises.