Saturday, May 21, 2011
Friday, April 29, 2011
HOW TO SUCESS IN IB
Whatever you make in your business, if you make them enough you become better at it. The quality of your product improves as you make more and more of them. Eventually, you start benefiting from economies of scale, thus reducing your cost of production and improving your profits. However, that can be done only if you have an opportunity to make your product a lot of times. This means that you should have access to, and be able to sell to, a large market.
Thus, an opportunity to make and sell your products in large volume has many benefits including lower quality control costs due to improved processes and improved profitability due to economies of scale. Besides, your product becomes a difficult competitor in the market for anyone to beat. Your product cannot be beaten out of the market easily.
On the other hand, if you don't build up your expertise in your product and if they continue to struggle with quality issues, then you are always at risk in the market. If your competitor sells a lot of units and is able to develop the expertise better than you, then you are consistently at risk of being thrown out of the market.
In the global context, this is now an important fact that the US manufacturers have to accept and acknowledge soon. The markets outside USA are growing in terms of the purchasing power of the governments, businesses and individual consumers. A large amount of money is being spent by international development agencies and governments towards building the capacities of the nations that have been struggling for quite some time. This is resulting in great business activities in those countries. GDPs are growing at a great rate and personal incomes are rising thus increasing the purchasing power in general.
In terms of numbers of people, 95.5% of the world's population lives outside USA. If a manufacturer from Europe or China or other parts of the world sells a certain product to a large market that lies outside USA then they are bound to become good at what they are making. If they make a lot of those products, their cost of production will go down and their quality of products will improve. Eventually, if these companies will continue to sell such large numbers outside USA for a long time, they would reach a point where they would become a competitive threat to US manufacturers on their own turfs.
We have had such experience in many industries in the past where foreign manufacturers became good at what they were making and took away a good share of the market inside USA. This was not because our products were not good in the first place. It was most likely because we remained focused on our national markets and never got enough experience and learning to improve our product quality and improve our costs. Eventually, the foreign manufacturers build up their expertise in the huge foreign markets and then were able to compete against our own manufacturers within the US markets.
The manufacturers in USA would benefit much by acknowledging this idea that for their future survival within US markets, and to avoid being chased out of business by foreign competitors, they must export and they must export in a big way.
Thus, an opportunity to make and sell your products in large volume has many benefits including lower quality control costs due to improved processes and improved profitability due to economies of scale. Besides, your product becomes a difficult competitor in the market for anyone to beat. Your product cannot be beaten out of the market easily.
On the other hand, if you don't build up your expertise in your product and if they continue to struggle with quality issues, then you are always at risk in the market. If your competitor sells a lot of units and is able to develop the expertise better than you, then you are consistently at risk of being thrown out of the market.
In the global context, this is now an important fact that the US manufacturers have to accept and acknowledge soon. The markets outside USA are growing in terms of the purchasing power of the governments, businesses and individual consumers. A large amount of money is being spent by international development agencies and governments towards building the capacities of the nations that have been struggling for quite some time. This is resulting in great business activities in those countries. GDPs are growing at a great rate and personal incomes are rising thus increasing the purchasing power in general.
In terms of numbers of people, 95.5% of the world's population lives outside USA. If a manufacturer from Europe or China or other parts of the world sells a certain product to a large market that lies outside USA then they are bound to become good at what they are making. If they make a lot of those products, their cost of production will go down and their quality of products will improve. Eventually, if these companies will continue to sell such large numbers outside USA for a long time, they would reach a point where they would become a competitive threat to US manufacturers on their own turfs.
We have had such experience in many industries in the past where foreign manufacturers became good at what they were making and took away a good share of the market inside USA. This was not because our products were not good in the first place. It was most likely because we remained focused on our national markets and never got enough experience and learning to improve our product quality and improve our costs. Eventually, the foreign manufacturers build up their expertise in the huge foreign markets and then were able to compete against our own manufacturers within the US markets.
The manufacturers in USA would benefit much by acknowledging this idea that for their future survival within US markets, and to avoid being chased out of business by foreign competitors, they must export and they must export in a big way.
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