Competition and Creation of Distinction at Two Levels

It has already been explained that the operation strategy has inseparable relationship with competition.

Considering from the point of view of individual enterprise, competition is a menace. Every enterprise would like to have no competition. It could be possible to live a more comfortable life, if there was no competition. Further, if the competition is conducted in absolute genuine manner, it will end up in state where no one would be able to make profit. No amount of efforts would be rewarded. Therefore, in order to survive in the competition, it becomes necessary to create a state where there is no competition in some parts. The basic means for doing so is to create distinction.

Creation of distinction is a step to escape from competition. In order to create distinction, it is necessary to make serious efforts to find out where does the customer puts the value. However, even the creation of distinction is accompanied by competition. The competition in course of distinction brings about development of company and in this society of competition, it can also be said that “people are trying to compete in order to escape from the competition”.

1. Creation of distinction for the product and service
The distinction can be created at two levels. One is the level of individual products and services. This is method through which a difference is created vis-a-vis the products and services of other companies. Some of the examples of competition through creation of distinction at product level are the fight between “Esteem VX” and “Cielo” in the high grade automobile market, the fight between “Pepsi” and “Coke” in the soft drink market and “Surf” of Hindustan Lever and “Ariel” of Proctor & Gamble in the field of detergents.

The competition for creating distinction at this level becomes very conspicuous. In many cases, it becomes a topic of day-to day discussion also. However, the course of distinction of product or service level always has weak points also. First of all, its life is very short. Whenever an enterprise succeed on the basis of creation of distinction, other enterprises which could create the same successfully appear very soon and sometimes the rival enterprises bring a further distinguished product also.

2.Creation of distinction on the basis of business system
Another level of creation of distinction is the distinction in the system of operation. In this level of creation of distinction, difference is created in the operation system on the basis of elements and technology required for development of products or the services, in the system and technology for its production, in the system of sales and distribution, in the consciousness of the people working in the operation and the organization and in the accumulation of image and trust among the customer etc.

This type of creation of distinction is not very conspicuous in visibility. There are many aspects which are not visible when seen from outside. A customer can see only the product or the service, whereas, the system which falls in the background is not to the customer as well as to the competition rivals. Therefore, it becomes difficult to copy the same. Further, this type of system reflects the total efforts of an enterprise and if any other company thinks of duplicating the system, it will have to create the same system and the organisation also, which is a time consuming process. Therefore, creation of distinction on the basis of system is very difficult to copy.

This type of system is called business system. In most of the cases, the creation of distinction on the basis business system is long drawn out policy.

Business System

The competition of product becomes easily conspicuous and the successes brought about by this competition is glaring also. Human eyes always tend to concentrate on the competition at this level. However, the enterprises which have successfully built competition pre-dominance over a long period in the industry have done so by winning on the basis of creation of distinction of business system. The companies like Matsushita Denki, Toyota, Philips, Coca Cola, I.B.M., Xerox, Mercedes Benz etc. have succeeded in demonstrating success continuously on the basis of creation of distinction of business system.

These enterprises could retain the top position in the industry not on the basis of product development only. Sometimes they could lead on the bases of product development, whereas, sometimes they were led by the competition rival. They were capable of catching up even from behind whenever they were led by the rival companies on the basis of product development. In other words, these enterprises were not leading on the basis of product, rather it was a business system, which gave them the leading edge. A company which could not maintain the lead on the basis of business system had no other way but to compete through the distinction of product. However, any distinction of product fades away in very short duration in most of the cases and it was not possible to continue and maintain the success on a long term basis.

Let us try to understand the business system in more concrete form. The management scholars use different terms for business system. For example, Michael E. Porter has called it value chain. Whatever may be the name, a business system covers various activities from the production of value by enterprises in different operation fields upto the delivery of product or services to the customers.

In the case of a manufacturing company, purchase and delivery, manufacturing, dispatch and distribution as well as marketing and the after sales service are the concrete activities. These are not the independent activities, rather they from one system. These activities can be compiled through various system like information system, logistic system, technology development system, personnel and labour system and organization as well as control management system.