Cost or Quality will not make your Organisation successful?

You may find organisations struggling to make profit, despite their been having best quality producst in a different category. 

Reasons - failure on their part to respond to customer need and ever changing world, complacency to shrug off need to change themselves and the worst, looking for reasons to justify not to change. One of causal relationship in these companies is their ‘inward’ looking approach.

Cost and quality are hygienic factors in business today. No company can survive if it does flirt with quality or cost. At the same time none of these two provide, any base for differentiation and therefore no reason to charge premium. Companies which do not have ‘anything’ in their product or services to charge premium can only make ‘Survival Profit’ for short run. Lucky companies can slower down their speed to death as they luckily got a distinct product category. But question comes how long?

New world has given a more serious threat as they lowered down their cost of production by exploiting Economies of Scale but at the same time maintained high degree of quality standards.

Man does not stop at challenges. Rather, challenges help him in being more creative

Organisations have to build a ‘Culture of Receptivity to new Ideas’ i.e. Culture of Creativity thereby any and every idea being tossed to it formally and informally is put to test before being rejected having no substance. Mind it, ‘ideas are not incubated in labs but in a positive atmosphere of Receptivity to new Ideas'. All studies show, organisations fail when they start avoiding new thinking on one or other pretext.

Organisations therefore, have to look for ‘External Exposure’ to create differentiation in their products or services to look for premium.  We all know, source of profit is value being derived from a product or service by the customer or consumer. It thus, means any activity which can define further the value enhancement in the entire value chain can help organisations in achieving differentiation in their products or services.  Differentiation leads to Premium. Organisations have to look at both ends of its spectrum to enhance the value of its products or services. At one end, they should look for integrating very closely with their supply chain partners, improving their manufacturing processes and at the other end they should optimize customer value across the whole chain, not just their part of it and should also harness technical capabilities of their supply chain partners.

At the end, organisations should create an ecosystem of its own to build either product or service superiority. Mere focus on cost will not guarantee profitability in changing world and down play with quality will wipe the organisation overnight.

So, what stops organisations to be successful, it is only organisations. Do you belong to such an organisation? Change it.

Comments

Post a Comment

Popular posts from this blog

Best Practices for Employer Branding

Amongst various trending topics in HR acreage “Employer Branding” tops the list. Employer branding is the progression of promoting a company (organization), as the employer of choice to a preferred target group whom a company needs and wants to recruit and then retain. The process of employer branding enables the company’s capability in attracting, recruiting and retaining employees (Talent) in hiring and helps to achieve company’s business objectives. Employer branding, moves in line with the growth of economy. In the Indian Job Outlook Survey 2012 conducted by TJinsite, research and knowledge arm of TimesJobs.com that recruiters have to push frontiers to construct brand attractiveness to make skilful talents contemplate on their employment opportunities. Employer Brand is the perception that emanates to the mind when someone hears about your company’s name; hence we can say that the business’s success is strongly associated with the perception of the stakeholders and applicants an...
Read more
Stress Loans: Will banks be unwilling to give loans to 'fair' companies? It is said that business is not done by 'self' investment but by 'borrowed' money from banks and individual investors. It is primarily banks & other financial institutions that extend lending facility as they are meant for this purpose. But they themselves are in a BUSINESS & business, of course, means profit. In last two decades, as the Indian economy opened up, banks & other institutions helped in achieving GDP growth by extending facility to old & new business to expand further. Bust as it is said, every coin has two sides - positive & negative. It is seen of late by published data that some seems to be taking undue advantage of this opportunity. This gets validated by many facts like when one hears that 'someone' did not pay back his loan. It becomes more serious when collateral are not worthy ensuring to recover loans given. If it is due to fai...
Read more

Pricing- a victim of IT Revolution

Businesses have undergone tremendous change due to information revolution. Pricing, which was in the hands of producers has shifted into the hands of customers. Today, marking up profit by simply jacking up prices is no longer possible. Transparency, customer awareness and easy modes to compare have changed the whole mechanism of pricing. In older days, margins were decided whimsically by different decision makers leading to various pricing techniques. I feel that pricing techniques were all depended upon who were deciding them. Cost-Plus Pricing was a long-time favorite to Finance Managers. Likewise, Customer – Driven technique was a favorite of Sales Professionals and Market-Share Pricing Technique was liked by Marketing Managers. Let’s look at, Cost Plus Pricing Technique. It was decided keeping in view primarily Unit Cost. The notion was that if ‘fixed’ cost is allocated to each unit and a margin is added to it that will give a price for a product; without realizing the f...
Read more