DARE - Because Entrepreneurs Do

In the nineties and early twenty hundreds, it was common for corporate strategist to consider options of "killing the competition". I remember sitting in, in the strategy meeting of one of India's leading business houses. On the first day no recording or note taking was allowed, So I am repeating from memory . The Chairman, a leading light of his industry ended his opening session by exhorting his senior-most team to "kill off the competition". Fast forward to today, the company in question has multiplied its turnover and profits many times and is still the leading light in its industry. But what about the competition? Have they been killed off? There are more competitors today than there were then. And many of them are in a similar position to the company in question - their turnover and profits too have improved manifold.

Did the company not attempt to kill  off its competition? Did they fail? I am sure that they did attempt to kill of the competition. They tried every trick in the book and then some more. But still the competition survived and thrived. Why?

Because it is no longer possible to kill off all competition. And here are the reasons why this is so.

1. Markets have become too large

There was a time when markets were small and as a natural corollary, there was space for only so much. In such a situation, it was possible for one player to muscle others off the field. Today, the reverse is true. There is enough volumes in the markets for a large numbers of players to take a position and to sustain themselves there. While it is possible for one player to build up a monopoly position, it is impossible to muscle others out of their niches. There is always space for multiple players.

Take for example, the office suite market. Microsoft Office has a an estimated 95% revenue share of this market. Does this drive the others out? No way. KingSoft Office, OpenOffice.org, IBM Lotus Symphony, Apple iWork, KOffice,  Gnome Office, SoftMaker Office, Star Office and many more (not to count the many online office suites) have found their own niches out of which Microsoft will find it difficult to "kill them off".

2. Customers want more choice

Together with the fact that markets have become large is the truth that these markets want more choices. The one color fits all mantra of Henry Ford no longer suites a world where every one is looking for "mera wala pink" - A Hindi advertising line that translates as my personal shade of pink.

It is impossible for one player to cater to all shades of demand, or as a corollary, a player can always find a niche need in the market that the others are not catering to and make a play there.

Let us take up the market for cell phones as an example. How many cell phone models are there in the market at this moment? According to this post, Nokia itself has 79 models ranging in price from from Rs. 1,270 to Rs 32,500! And how many such brands are there in the market? You many not have heard of Karbon or Micromax or Mobell, but some one out there is buying those phones right now. If one of the players attempts to kill of the competition, some one else will just take their place!

3. There is enough and more money waiting to be invested

A (new) player needs investments to make a market play. The good news is that there are enough and more investors willing to put in their money into a supposedly hot areas, inspite of the tough economy. So, what if every one knows that not more than three or four companies will not sustain in the telcom market?  You have more and more players - MTS, Tata Docomo, Uninor, - doing national roll outs every day even as some more are waiting in the wings.  And none of them are facing a problem of money, right?

In many cases, profitability is not the criteria driving investments. The criteria could be anything like valuation, strategic fit, strategic opportunity, available opportunity and so on. And as long as these different criteria exists for determining whether investments will be made or not, there will be no dearth of money... 

4. Everyone and their pet dog will rush into a new opportunity

Just ten years back, Gurgaon was a sleepy stretch of sugar cane farms outside Delhi, through which you could drive through without seeing any living being except a few buffaloes. Then came a few offices that moved out of Delhi. And then some one had the great idea that Gurgaon is ideal for a few malls. When the first few did good business, there was a virtual stampede to build malls in the city. On last count there were 60+ malls planned. So what if most of those built were not fully occupied? What if the multiplexes were running empty on most days? The malls were still being built till the slowdown and the virtual crash of the real estate market brought all construction to a standstill last year.

Or look at organised retail. How many have burnt their fingers on this hot opportunity? Don't we still hear of new plans for organised retail? All that you need is for some study or some survey to declare an opportunity to be hot for every one to rush headlong into it? In such a scenario how can you kill the competition off?

5. Customers have shorter preference cycles

There was a time when a car or a fridge lasted a life time. Now even houses are being rebuilt, if not remodeled every three years, if not sooner. Notebooks are supposed to have a life of less than three years and cell phones are changed every nine months!

With fast consumer cycles and equally fast changing preferences, there will always be new players emerging, virtually out of the woodwork, offering new products and variants that did not exist before.  Things that you thought were dead and gone will make a sudden reappearance, much like dual SIM cell phones are back in fashion today.

In other words, today's customer psyche easy entry points for new players and new variants into the market. That being the case, how can any business strategist reasonably expect to kill of the competition?  

6. The law

Finally, there is the law. Most countries have fairly tough competition laws that seek not just to ensure that anti-competitive practices are reigned in, but even go to the extend of ensuring that competition is kept alive.

And considering that most brands will have international foot prints or aspirations to international footprints, the law in some country or the other will always be there to keep the competition alive