Strategies to Succeed In a Period of Industrial Decline II: Determining the Right Strategy

In the global garment industry, all private sector strategies have but a single goal:  To Increase Profit.

There are three interrelated means to reach this goal

Operational; e.g., Reduce costs

Marketing;  e.g.,   Increase sales

Mixed; e.g., Increase margins

The range of possible strategies is to a large degree based on two factors:

a.  What the supplier can bring to the table; i.e., core competency;

b.  What the customer needs; i.e., core competency deficits.

However, these by themselves are insufficient to determine the best (or even a workable) strategy. We are still left with an almost infinite number of possibilities.

At the end of the day, the optimal strategy is based not only on what can be done but equally importantly, what cannot be done.  Every strategic development project begins with client-imposed restrictions each of which limits the number of possible strategies.

Restrictions can be actual, perceived, or self imposed.

For example:

A factory client wishes to increase profits by changing his operation to provide speed-to-market, but has a serious restriction:    

Actual Restriction:  We have a logistics problem. We are located on an island in the middle of  the Indian Ocean.  This is a fact which must be recognized and accepted.

Perceived Restriction: We are located on an island in the middle of  the Indian Ocean and therefore cannot achieve speed to market.  This is not a fact, just a perception.  Logistics is a cost factor.  You can move product from anywhere to anywhere in less than 30 hours, if you are willing to pay for air freight.  If your product is a low value-added basic commodity which cannot carry the cost of airfreight, the restriction becomes actual.  On the other hand if your product is a high value-added fashion item, airfreight becomes viable and the restriction disappears.

In this situation, successful strategies are limited to those involving higher value added products

A factory client wishes to increase profit margins by changing his operation to produce higher value-added fashion products, but has a serious restriction:

Actual Restriction:  Our country faces a nomadic-worker problem. In many countries, typically leave their jobs after six months to work in another factory. This is a fact not a perception.

Perceived Restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products. This is not a fact just a perception. True, it is not cost effective to train workers if they will leave immediately training is complete. However, it is equally true that workers will stay with their current employers if the company makes the necessary effort to keep them.  Developing worker loyalty and motivation begins when management changes their attitude; no longer defining their workers as disposable tools and redefining them as capital assets.

Self-imposed restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products.  Workers are uneducated and generally stupid. We cannot stop them from leaving.  Investing in worker training will simply provide our  competitors with better workers. If management insists on treating their workers as disposable tools — not caring if the workers leave ­— they should not be surprised when the workers do leave.

In this situation, there are no successful strategies.  The factory cannot move up to higher value added products without worker training and no-worker-training is a self-imposed restriction

As you can see from the example above, not all restrictions are rational.

As a general rule, the less rational the restriction, the harder it is to overcome.

Actual restrictions are the easiest.  Here the client recognizes a problem and is paying the  consultant to overcome that problem.

Perceived restrictions are more complex.  Here the consultant must first convince the client that the restriction is indeed perceived and not factual; e.g., geography in itself does not mandate longer lead times.  Once the client recognizes  that the restriction is perceived — not actual — the consultant can then work to create a viable solution.

Self-imposed restrictions.  Are usually beyond solution.

Most are irrational:  The factory owner who believes that workers are a lower order of human being — stupid, coarse and incapable of learning — is trapped in the 18th century.  No argument will convince him otherwise.  Since the supplier cannot move from low value-added commodities to high value-added fashion without long term training, there is no possible strategy.

Many self-imposed restrictions are ego driven:

My brand-importing company requires 52 full time designers — a common claim among companies led by designers, who mistake design is important for design is everything.

My Asian buying office requires 10 expatriate German managers — a common claim among some European companies where management is convinced that their nationals alone have a world monopoly on technical skills.

Some few are totally rational:  Your strategy must not reduce the number of local employees.  This is a special case where the client understands that this restriction will limit the possible strategies and will in any event prove costly, but is willing to pay the price.

Rational, irrational or totally insane, these restrictions are real.   In real life, it is these  limitations which usually determines the right strategy, if one exists.

Share
This entry was posted in Customer Strategies, Factory Strategies, Recesssion and tagged , , , , , , . Bookmark the permalink.

61 Responses to Strategies to Succeed In a Period of Industrial Decline II: Determining the Right Strategy

  1. I just wanted to leave a comment to say that I enjoy your blog. Looking at the number of comments, I see others feel the same way! Congratulations on a very popular blog.

  2. Christopher says:

    I definitely savored every little bit of it and I have you bookmarked to check out new stuff you post.

  3. Peyton says:

    You guys did a great job spending your time to create this article! If I had to explain my emotions about your website in only one word ? it would be WOW! Thank you! P.S. Subscribed for updates!

  4. Claire says:

    Thank you for sharing this information with your readers! I adore your blog! I will surely share it with my blog readers and will come back myself!

  5. Tyler says:

    Thank you so much for sharing your amazing knowledge with all of us. I’m waiting for some updates.

  6. Christian says:

    You guys did a great job spending your time to create this article! If I had to explain my emotions about your website in only one word ? it would be WOW! Thank you! P.S. Subscribed for updates!

  7. Madeline says:

    Keep on updating your site! You have so much available and interesting information! I didn?t even notice how the day passed while reading it! Have a great time! Thank you!

  8. Alyssa says:

    I have really had a good experience in terms of information of you blog. I am sure visitors will also like your creativity.

  9. Hello! Incredible information and very professional! I really enjoy reading information about this Review.

  10. Aaron says:

    I must tell you your webpage is truly valuable. Useful content and awesome design you got here! More power to you!

  11. Paige says:

    Thank YOU for sharing your comments and insights. I really appreciate it! Amazing art on your site!

  12. Gianna says:

    Really good information and facts! Thanks for that awesome posting.

  13. Appreciating the commitment you put into your site and detailed information you disclose here. It’s very insiring to discover a blog in a rare occasion that is not all the same outdated rehashed material. Wonderful job! I’ve bookmarked your site and I’m including your site link to my Google account today. On top of that, I love your site so much that I would like to advertise my own site http://www.emt.co.il on it. I would appreciate you contact me at: everythingrainbowhk (AT) gmail.com with your monthly banner prices. Much appreciated!

  14. Adoring the commitment you put into your site and in depth insight you present here. It’s nice to discover a blog in a rare occasion that is not all the same out of date rehashed material. Great work! I’ve saved your site and I’m adding your RSS feed to my Favorites now. Moreover, I like your site so much that I want to advertise my own site http://www.emt.co.il on it. I will be glad if you contact me at: everythingrainbowhk (AT) gmail.com specifying your quarterly banner rates. Looking forward to your email!

  15. Admiring the persistence you put into your site and detailed insight you offer here. It’s awesome to find a blog in a rare occasion that is not all the same unwanted rehashed information. Wonderful job! I’ve bookmarked your site and I’m including your site link to my Favorites now. On top of that, I respect your blog so much that I am interested to advertise my own site http://www.emt.co.il on it. I will be glad if you write me at: everythingrainbowhk (AT) gmail.com quoting your monthly advertising prices. Much appreciated!

  16. Owen says:

    I have found your blog long ago and continue reading it up-to-date! But now I have decided to register and write a comment for those who are here for the first time! Do not pass by!! Do not look at the site design! The content is surely what you need from this topic! Stay with us and enjoy!

  17. Adam says:

    Hi webmaster, commenters and everybody else !!! The blog was absolutely fantastic!

  18. Nathaniel says:

    Thanks for such a great post. I will be listing this in my monthly newsletter. Many thanks and i hope to help spread the word

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>