Manufacturing and Service Sector Hypercompetitive Rivalries

Manufacturing and dish out Sector Hyper militant RivalriesHypercontention has coherent been recognized as a significant problem in al just about all manufacturing related industries. dish sectors be also experiencing the same problems. It is essential for competing companies to understand and take reward of the dynamic motion and flux of current apparent motions in global markets and technical breakthroughs. This paper aims to describe the relocation toward hyper contestation and its implications to manufacturing and serve found companies among ASEAN countries. Actions taken by companies in these dickens sectors provide recent insights into what manufacturing and advantage based companies mogul expect to occur and how they could respond to such threat. This research finds that technological change, globalization, and branch competitor are the closely measurable milieual challenges face up manufacturing and emolument sectors today. Technology, in accompaniment , seems to be acting as one of the principal gunman toward hypercompetitive rivalries in manufacturing and service sectors.Keyword(s) Competitive dodging Technology Manufacturing Product Service GlobalizationIntroductionSince the financial and economic crises hit most regions rough the globe in the late 1990s, policymakers worldwide induce been talking just about how to re-balance their national economies. Putting back the balance in their economies involves re valuateing the mix betwixt the operate and the manufacturing sectors. The service sector represents about 70 percent of the American economy, while that of the manufacturing makes up just 11 percent (Foroohar, 2010). The same trend is happening among European countries especially in the U.K., France and Germany. It is totally in the reverse scenario, however, for most developing countries including Malaysia, Thailand, Indonesia and Vietnam (Hilman, 2006).The ecstasy of rivalries in the manufacturing sector started i n the mid-eighties when many big companies from the United States, Europe, and Japan locomote their blood line operations particularly their manufacturing plants to foreign countries. Among the most popular destination is the South atomic number 99 Asia region or ASEAN (Association of Southeast Asian Nations). The Foreign Direct enthronization (FDI) flows to ASEAN sum upd by 18% in 2007 from US$44billions to US$61 billions. Nearly all ASEAN countries received higher inflows and Singapore, Thailand, Malaysia, Indonesia and Vietnam, were the largest FDI recipients that comprised more than 90% of the flows (Karimi, Yusop and Law, 2010). well-fixed regional economic proceeds, an improved investment environs, higher intraregional investments, and strengthened regional integration were key contributory factors and all these go for turned ASEAN as a hypercompetitive market (World Investment Report, 2008).Understanding hypercompetitive marketsDveni (1995) draw hypercompetition a s a market condition typified by rapidly escalating competitive activities such as increasing value- caliber positioning, developing unfermented know-how and the products utilizing that know-how, establishing first-mover advantage, protecting or occupy established product or geographic markets, and creating deep-pocketed alliances. Harari (2007) depicted secrets, proprietary reading, and private management systems dont have the competitive edge they commitd to because new technologies have the capabilities to create total transparency. It is important for local companies, transnational corporations (MNCs) and multinational enterprises (MNEs) in ASEAN to al shipway alert and react accordingly on changes or education occur in market or industry.Understanding hypercompetitiveness is primarily important for cablees since the undermining of such can greatly result in the dec distinguish of the financial carrying out for businesses. Hypercompetition is highly associated with tur bulent, uncertainty, intense, and rapidly changing environment where companies can exclusive expect intermittent, temporary, and unsustainable advantages (DAveni, 1995). Those who can focus equally important on what non to do and what to stop doing, use engine room to quicken a work shift but not perceive it as cause of transformation, paid work attention to staff phylogenesis, and seek for basal result and not revolutionary process should have better chance to champion market or industry (Collins, 2001).Drivers of hypercompetition on that point are several theories on what drives hypercompetition and how such conditions develop. Sengupta (2002) on the one hand, proposed several forces globalization, know takege capital resulting from superior information engineering, demand-side economies of scale, and new strategic assets. Collins (2001) on the second hand, described that good and competitive companies should have highly capable individuals, contributing team members, comp etent managers, good leaders who build enduring greatness through a self-contradictory blend of personal humility and professional will. Thomas (1996) on the troika hand, suggests that the dynamic resourcefulness of innovating companies was the primary driver. Overall the literature reflects mix drivers that deepen hypercompetition (Hanssen-Bauer and Snow, 1996).In the case of manufacturing based companies in the ASEAN block, globalization seems to be the superior driver for them while technological innovation becomes secondary. This slightly differs from the service sector companies which are impacted primarily by technological innovation, specifically information technology and secondarily by globalization. Most ASEAN based companies use information technology more than merely utilize new methods to improve efficiencies and productiveness but use the technologies to create a fundamental change in how the function are delivered. novel information technologies are truly disru ptive and result in significant changes by creating new markets and reshaping be markets (Christensen, Roth and Anthony, 2004).Thus, in that respect is no doubt that new technological innovations create twain confident(p) and negative implications. Information technology and new forms of communication allow organizations to tump over underserved markets, while creating more direct competition. As a result, competitive battles that attend necessitated leaders to make strategic choices (Christensen et al., 2004). Consequently, most companies based in ASEAN countries not only stretch out services in the domicile markets but markets well-nigh the globe. The development creates undeniable probability that handed-down product or services might be challenged for its very existence virtual based products or services.Hypercompetition in the Manufacturing and Service SectorsWhile much of the research on hypercompetition has centre on manufacturing, the same logic can be applied to th e service sector. In fact, it might have been predictable that the intensity of rivalries in the service sector would be as intense as that of the manufacturing sector in the coming decade. There had always been competition in the service sector, although it was separate and somewhat dampened by many apprehensions overdue to variations in the context and kitchen range of competing companies and market segments.In the case of the manufacturing sector based in ASEAN countries, the intensity of competition is based on size and market reach of competing companies. For example, multinational corporations (MNCs) were competing on the basis of prestige, reputations and industry champion while regional based companies were competing for location-bound which was on the basis of convenience and timing. For nationally known companies, they were focusing on maintaining or increasing the market shares of products or services. few of the companies can be further classified as competing for re putation and are largely check to few market segments and companies only. For those few companies, market position served as something surrounded by an emblem and a brand. The mailings and web sites are proclaimed important or relatively play small role in their market positioning. For most of the opposite thousands of companies in the ASEAN region, market share was a non-issue because they were facing localize competitive pressure which were centred more on apostrophize and doorwayibility than reputation. As a result, high-quality and highly localized products or services were highly- real in response to local market demands.Apart from those mentioned above, the intensity of the hypercompetitiveness of the environment in the region drove companies to hunt for more customers and better ways to reach existent customers than a decade ago. This situation required companies to assess their business environment conservatively. Issues like customer focus, competitive intelligence, knowledge and talent base, innovativeness, technological advancements, and new products, services or market need are among important factors that needed to be addressed strategically to date.Information technology is well received by companies as an important tool to accelerate their products or services reach greater market coverage. The intensity of rivalries in the region is centred on price, marketing, and new product development which leads to major competitors moved into one anothers home markets. The intention was to improve ones own financial performance while weakening their competitors by making them defensive in their home markets. The findings show most of ASEAN based companies offered similar products or services to a fixed number of customers with substantial price decreased but itty-bitty or no increase in unit sales volume. The competition can be summarized as cut throat which finally led to a few companies to go better, while the most to go worse. The next subto pics discuss strategy options which were widely used by those companies.Strategy filling 1 DifferentiationMost of companies competing in ASEAN countries face problems like unfitness to meet sales and financial objectives. In lieu to that, most of them spread out their products or services oblations. Some of them made new offerings, while other made modifications of existing one. In either case, markets became flooded. This proliferation of more varieties of products or services was good for consumers, but further weakened business performance. Thus, the other movement toward hypercompetition can be described as the expansion of offerings from suppliers without any increase in customer demand. What was initially viewed dynamism of ASEAN market as the origination of differentiated lines was in reality product or service line fragmentation.Most companies in the region were not content to offer traditional products or services in new markets but now want to create new products or s ervices. These new products or services appeared to be successful until management realized that they were, in some cases, merely cannibalizing existing one. The finding shows these new products or services grew but the number or revenue in the regular products or services are declined. This elbow room, existing services were now experiencing competition from inside their own company as well as outside. In ASEAN markets where there had previously been only two or three products or services, now some of the market segments have four times more. As was the case with business, both revenue and customer retention suffered.Another strategic issue needs to address care uprighty is about growing demand among customers for better accessibility and convenience which has changed the environment of manufacturing and service sectors. Support by advancement in digital communications, traditional companies responded by changing structures and products or services provided (Rosenoer, Armstrong an d Gates, 1999). Most MNCs and MNEs in ASEAN countries use current products or services to produce new by offering them in radically different ways. Those products or services are touted as the same but delivered with a different technology. It is seen as a new product or service in the market and this certainly increase the intensity of rivalry among competing companies.Some of the companies in this study created new products or services besides forged alliances with other organizations. Such inclination was developed in response to the opportunities created by a growing global market. There are companies deliver traditional product or services, but in a different location or with a different methodological analysis (extended traditional companies and technology-based companies). Both are organized and designed to serve non-residential participants. This advance enables them to deliver existing products or services to audiences in different locations.Rosenoer et al., (1999) describ ed online based transactions are organized around a technology to minimize the consequences of the physical separation between knob and companies. The field of online business has grown rapidly and many of ASEAN based companies offer products or services via the web. While some experience a boom, majority encountered slow growth in online business. Overall most virtually promoted products or services are doing well and become strong competitors of traditional products. Such possibility to access to products or services enables buyers to shop at any time and at any place at their convenience. This certainly creates opportunities for noncustomers (Christensen et al., 2004).Strategy survival 2 Low Cost LeadershipWhen the market expansion and product development strategies does not favour companies overall performance, the corporate response was to inhibit costs. major(ip) producers hunted for ways to reduce costs as a means of increasing gross permissivenesss, net profits, and earn ings per share. This was the era of downsizing the blue-collar workforce cutting back in corporate staff and nerve centre management give backs of employee benefits and hiring of part-time or temporary employees who receive no benefits or who may not even be employees of the firm (Hilman, 2006).Some of the companies in this study standardized and automated their manufacturing and production operations reduce number of staff and planning to locate production abroad or to a new area with even low labour costs. The desire results were to increase financial performance and the ability to price-compete for market share. Interestingly most of them aware such actions create negative impact to them in the long run.Service sector based companies in the region also see identical implications. Cost reduction initiative leads to reduction of employment levels on number of full-time employees, reduced fringe benefits, made staffing decisions similar to those of business by moving to greater levels of temporary and part-time employment, and eliminated services that were not revenue positive. The findings show most of the companies aware that such actions negatively venture the quality of the service provided because a service based company involves more than factual product as it includes the skill and attitudinal development that comes with company and client interaction.Like manufacturing based sector, service based companies competing within ASEAN countries also faces cost-based competition from both local and foreign companies. In one sense the competition stems from the changes in the way companies see themselves. This is particularly true for numbers of subsectors in service sector. The quality of the services has a direct impact on how business community perceive the entire company. However, most of the cost-based competition in the region comes from the many smaller companies that have unknown standard of quality on services offered. In other words, some of the companies in both sectors (manufacturing and service) were trying to gain competitive advantage through low cost leadership or focus on cost strategies.Strategy Option 3 FocusThe final stage of hypercompetitive market development is the kin of technologically competent, niche competitors that target only specialized, high profit market-segments with single purpose product. Some of the companies in the region exercise focus note strategy. Products for this strategy are produced by talented engineers who design high-performance products, high-profit margin products and no consideration to become full-line suppliers. However, most of the companies exercise focus strategy opted for focus on cost instead by offering full line products with low-margin. of focus on preeminence.The same type of niche competitors exists in service sector. Some of the sample companies were focusing on a particular segment of the market in the attempt to isolate themselves from other competitors and to dr aw to a particular group of high- evaluate customers. They are able to provide value or brand identification that makes them extremely attractive. These providers will offer a specialized service. Most of them who opted for this strategy have no desire to offer a full range of business like manufacturing based companies. The reason for them not to offer full range of services were mainly due to do not want to use their revenues from a high-demand service to subsidize the lower-demand ones therefore they moldiness cut marginal services.Conclusions, implications and strategies for hypercompetitive marketsTo face hypercompetition, ASEAN based companies must develop and produce specialized products or services faster than the competition. New or differentiated products or services provide customers with new, improved, or supernumerary features unfortunately hypercompetition means that products or services have shorter life cycles, which is the unintentional consequence of competing w ith ones own products or services. In fact, for many companies competing in the region, their competitive strategy is to replace their own product or services in advance the competition does. This is often called eating ones own babies.Their strong tendency to increase product or service differentiation caused greater customer expectations and progressively diverse applications, which in turn results in an explosion of demand for progressively specialized products or services. More product or service differentiation leads to increase competition and creates a broader consumer market. It also leads to the development of small, overlapping sub-markets and price points.This review of hypercompetition of businesses among ASEAN based companies gives significant inputs for managers in particular and competing companies in ecumenic about the most recent state-of-the art strategies in doing business in the region. There is no doubt that companies must always prepare to weed with hyperc ompetitive environment and give special attention to environmental challenges such as technological change, globalization, and increased competition. To ensure that the region remains competitive in bringing FDIs and local investors to invest, it is an imperative requirement for ASEAN countries to work collectively and closely. visitation to do so may dampen their chances to record significant growth on gross domestic products (GDP).