Being successful and competitive as a small business doesn’t come out of thin air: companies that want to survive against the competition in the long term need the appropriate tools to be able to respond flexibly to new market demands whenever and wherever they crop up. However, what do these tools look like and what should professionals pay attention to when it comes to competitiveness?
Electronic data interchange as a prerequisite for your competitiveness
The increasingly fierce competition in a market environment that is constantly demanding innovations is an enormous challenge for all companies, but especially small and medium enterprises (SMEs).
Have you ever wondered why so many innovations launched by start-ups are so quickly successful? It could be because their relatively small size and flat hierarchies allow them to react flexibly to customer needs and quickly implement new ideas. Every small business needs to become aware of this competitive advantage over large corporations and use it effectively for their own market success. This includes the sensible distribution of internal and external resources.
Experts agree that the secure, reliable, and cost-effective exchange of information among business partners is one of the primary preconditions for growth in the age of digitalization. The necessary methods and tools for electronic data interchange (EDI) have been standard in various industries for many years.
This is why your company’s EDI compliance is so vital. In practice, however, many companies shy away from the associated changes, even if they could be readily achieved by a clever use of outsourcing.
If you still have little or no experience with electronic data interchange, an investment in a professional EDI would be a good decision. You can use our handy guide to find out whether your company already complies with the five principles of successful EDI.
David vs. Goliath: the strength of small businesses
We have already discussed some of the advantages of SMEs, but there is also no doubt that there are also certain disadvantages when it comes to competing with large corporations. Small businesses often lack the internal resources and expertise to operate key processes such as electronic data interchange professionally.
This can make or break your company if potential customers insist on EDI compliance before hiring you. This is comparable to the assumption that companies need to be online nowadays. If you do not join in, you’re going to miss out. If your company fails to meet the requirements of EDI compliance, you will miss out on lucrative business. Thankfully, this can be readily solved by outsourcing your EDI to a professional partner at a relatively low cost.
Make the most of your strengths and eliminate your weaknesses by bringing in the pros. This way, you can keep up with the Goliaths in your industry when it comes to ensuring smooth data transfer and thus secure your competitiveness for the long term.
Competitiveness: what does it mean?
Below, we give you a bit more information about competitiveness and discuss how to ensure that your company is competitive.
If you went to business school, you probably heard the distinction between price competition and other kinds of competition. The first is a company’s ability to sell its products or services on the market at prices that bring a long-term profit. The other kind of competitiveness is based on parameters that can’t be measured quantitatively, such as product quality, the attractiveness of a company for its employees, or its skillful selection of suppliers.
Every small business should therefore keep an eye on both kinds of competitiveness in whatever it does. That’s the only way you’ll survive against the competition. The following two ideas will help you.
1. Competitiveness by being proactive
To remain competitive, small businesses need to tackle the challenges of digitalization head-on. If you’re a manufacturing company, automation, a.k.a. “Industry 4.0”, should be on the top of your agenda. There are a number of initiatives and grant programs out there that are designed to help entrepreneurs and committed decision makers to get a better grip on the various aspects of digitalization and make the right strategic decisions in time. So take advantage of this opportunity, because deciding to invest a lot of capital always turns out better when it’s well thought-out instead of done in a state of panic.
2. Competitiveness by keeping your eyes on the road
A sensible measure to ensure your company’s competitiveness is continuous monitoring of your market and see what the competition is up to. You’re only going to know when a course correction is needed by keeping your eyes on the road.
Back in business school, you probably heard about a variety of models and analytical tools that would help provide a meaningful analysis of the market and your company’s own position. One method is the “Five Forces Model” developed by Michael Porter, which allows you to analyze the attractiveness of an industry. The five forces that play a role are (1) suppliers’ power to negotiate; (2) the buyers’ power to negotiate; (3) the threat of competitive rivalry; (4) the threat of customers finding substitute products for yours; and (5) the general intensity of competition in your industry. If you analyze your business according to this model, you’ll be able to identify when the market begins to change and new threats arise. You can also use this to identify which international markets could be potentially interesting for an overseas expansion. As described in one of our past blog posts, there’s a lot of potential at just this point that could significantly improve your company’s fortunes.
Easier to use are the classic analytical methods such as SWOT analysis. These can help companies make a sober assessment of their own competitiveness, identify potential, and minimize risks. The only way that your business can thrive is for you to assess your situation constantly and identify future opportunities for growth.
Outsourcing to ensure EDI compliance
In conclusion, competitiveness is vital to your company and to your country. Even if you can’t handle EDI in-house, that’s no reason for you to fail. Make the most of your strengths and eliminate your weaknesses by bringing in the pros.
Even if you are capable of handling your own EDI, you can still benefit from our free guide, which you can download here.