Do these things if you want to make more profit at the same price as your competitors. In a highly competitive business world, companies are constantly competing with different strategies to gain more market share than their competitors. One of the most commonly used strategies in this competition is to capture the market as a leader in terms of cost leadership. The first step in price leadership is to market yourself to the same quality at a lower price point.
But doing so often intensifies the competition. In addition, you and your main competitor can easily regain market share by lowering the price just like you. Ultimately, reducing competition can lead to price wars, which can lead to more losses on both sides. The second step is to make a net profit on the same number of items you sell, even if your competitors are selling at the same price. For example, a competitor sells one for 100. Suppose you are selling one for only 100.
But if your competitor sells for a net profit of 20 when you sell one and you earn a net profit of 40, you will be able to expand your business by doubling the profit on the same sales volume. Even so, owning one is still beyond the reach of the average person, so even if the price is too low, the net profit will still be 10 kyats when you sell at 70 kyats per share.
So how can this be made to work?
The main concept is to make your business as efficient as possible. Let’s look at an equation. For example, suppose your business spends $200 on three products. So you need to adjust the equation to 200 = 3 to make your business more efficient. It can be more efficient if you can print three for 200$ instead of 200 for three. Alternatively, you can modify the other side of the equation. 200 is 200, but if you can produce 4 products, 200 = 4 is still efficient. If we can correct one side of this equation, we will be able to reap the benefits mentioned above.
1. Do Supplier Analysis or negotiate with Supplier.
Supplier Analysis is about finding new suppliers who can provide the same quality of existing raw materials that is cheaper or more supportive and reduce the cost of raw materials. Even if you can’t find a new supplier, build a relationship with your current supplier and negotiate discounts on how much raw material you take. Negotiation to give credit; And so on.
2. Backward Vertical Integration.
This means that if you have enough resources, you can take on the role of supplier to expand your business and distribute raw materials for your business and other businesses. For example He also bought vineyards and grew grapes from the winery business.
3. Finding ways to reduce COGS.
The cost of selling a product called Cost of Goods Sold is not always reduced by every business. COGS also includes the above-mentioned raw materials. In this section, in addition to the cost of raw materials, it is advisable to find ways to reduce other COGS. For example, reducing the cost of transporting raw materials to your warehouse; How to minimize damage?
Reach WH to reduce raw material waste to reduce waste. How can this be made to last longer? How to systematically use WH systems such as First in First Out (FIFO) and Last in First Out (LIFO)? How to maximize WH storage space? You need to figure out how to set up systems to make it easier and faster to store and retrieve.
4. Minimize Reject Rate or Redo Rate.
In a manufacturing business, there is a Reject Rate, and in the service industry, there is a Redo Rate. A production business can be caused by a machine or a human error. Due to raw material If you are currently producing 100 or more due to any external influences, it will not be as smooth as it used to be. Substandard Damage is now 5 to 10 out of 100, usually in a regular production business. In fact, these rejected products are the biggest waste of the business. So what is the rejection rate of your production business? Why is there so much? You need to constantly evaluate what needs to be fixed.
5. Reduce waste in the workplace.
In the workplace, there are large types of wastes, such as the rejection rate, as well as the types of wastes that can be combined into smaller volumes. You can learn more about this at the link below. This waste to be cost leadership. You also need to be able to reduce
6. Applying technology.
In the old days, it took a lot of people to make a car. But today, when built with robots, a car can be completed in 17 hours. In addition, the robots can work 24 hours a day. Making mistakes; There are no job vacancies. In the past, an admin was assigned to answer questions on a Facebook page. But now, with the advent of chat bot technology, hundreds of thousands of people can answer one question at a time instead of one person at a time. Chat bot technology is being used. So for cost leadership, you need to understand where and how to apply technology to your business.
7. Build your business systematically.
Organize your organization’s organizational structure, determine who will take on what responsibilities, who will lead, and how much decision-making will be made. Finding the best and fastest way for a process at the moment and setting a standard; You also need to be able to do management tasks.
8. Keep employees focused on their work.
This is often called employee engagement. As mentioned above, if you can not reduce the cost of producing 200 = 3, then you have to make 200 = 4. The key is to increase people’s productivity and performance. You need more than luck to succeed in affiliate business and you need more than luck to succeed in affiliate business. Not everyone who is happy will do well, but one who is sad will certainly not do well. So Motivation Employee Relations. Productivity will increase if employees can be employed in a number of ways.
9. Increase the skills or knowledge of employees.
In addition, as employees become more skilled in their work, productivity will increase. For this purpose, relevant refresher courses will be provided to increase the skills and knowledge of employees. Productivity can also be achieved through training and workshops.
Here are some tips to help you make the most of your business and your competitors. These depend on the nature of the business; I stopped sharing, noting that there would be some differences depending on my ability and business size.
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