Don't dismiss the possibility of attack. Keep a wary lookout for the tell-tale signs.
'The threat of competition is both real and
broad in spectrum.'
- Mike Stewart, marketing and sales manager, Mondi Paper
YOU can't do anything to ward off an attack until you identify
a threat. You also need to know the source of the perceived
danger and the direction from which it will strike. In other
words, you need reliable intelligence and the ability to
analyse it accurately.
But the information by itself isn't enough.
To survive, let alone prosper, you need:
to make swift but informed decisions;
he command structure to translate these decisions
into action quickly and efficiently, and
the correct equipment, ammunition and well-trained,
motivated personnel to fight off infiltrators.
THE FALL OF SINGAPORE
The fall of Britain's allegedly impregnable Far East
bastion, Singapore, during the Second World War illustrates my
As 1941 drew to a close, Singapore's main defence
consisted of a battery of 15-inch guns built into emplacements
facing the sea, 88 000 ill-prepared British, Australian and
Indian troops - 15 000 of whom were non-combatants - and 158
operational aircraft, most of them obsolete.
In the early hours of December 8, the Japanese began
landing in force at Kota Bharu, a Malaysian town about 900
kilometres east and to the rear of Singapore. Their plan: to
strike at the city from the rear through dense jungle.
British General Headquarters in Singapore shrugged off
intelligence reports from the field and, at first, falsely
claimed that the Japanese attack had been repulsed
Order of the Day
Then an Order of the Day, released later on December 8,
announced: 'We have had plenty of warning and our preparations
are made. We are confident. Our forces are strong and our
The message served to reinforce the atmosphere of smug
complacency that engulfed the island.
Meanwhile, well-trained and equipped Japanese troops
poured across the Malay Peninsula and overland through rubber
plantations and jungle to overrun one British position after
The vaunted, seaward-facing 15-inch guns were useless.
They couldn't be turned to fire on the enemy coming from the
rear. But still those in authority at British General
Headquarters refused to believe what was happening or take any
action to thwart the Japanese advance.
Britain's wartime leader, Sir Winston Churchill, described
the fall of Singapore on February 16, 1942, as 'the worst
disaster and largest capitulation in British history'.
A lethal combination
Experts attributed Britain's loss of Singapore to a lethal
combination of complacency, poor training, wrong or inferior
equipment, failure by top echelons to react to accurate
intelligence and an unwieldy, autocratic management structure.
These are the factors that could force you to retreat in
the face of foreign advances in your formerly sheltered
So, first and foremost ...
IDENTIFY THE THREAT
If you're in business and you're successful, someone
somewhere is going to cast covetous eyes over your market.
Victor Fish, managing director of Anglo Dutch Office
Furniture, issues this warning: 'All segments of the South
African marketplace are threatened by the expertise, intense
brand awareness and financial support of large, successful
But some organisations, long accustomed to serving a
captive market, complacently shrug off the possibility of a
foreign landing as something that isn't going to happen.
The Beer Division of The South African Breweries (SAB),
for instance, appears to be unfazed by the possibility of
foreigners poaching on its territory. According to public
affairs manager Adrian Botha, it hasn't faced serious
competition from international breweries since 1979.
That doesn't mean it's not going to face it in the future.
The year 1979 is dead and buried. South Africa is no longer
the leper state. Siphoning off some of SAB's market share to
help slake the national thirst may well appeal to major
international brewers. And, although Botha claims SAB 'has
always maintained itself on a 100% competitive footing ...',
the Beer Division can expect to face some deadly foes on its
home ground in the not too distant future. Particularly if
some ominous rumours in the American clear beer sector prove
to be correct.
DON'T BE COMPLACENT.
IT CAN HAPPEN TO YOU
Don't be fooled by the phony war. That period between the
declaration of hostilities and the outbreak of fighting when
nothing happens has lulled many South African businesses into
a sense of false security.
For example, Joe Paul, product manager at Cullinan
Electrical, doesn't appear to be perturbed, although foreign
competitors have already sliced between 2% and 3% off his
share of the market. And as he grudgingly admits, the trend
is likely to grow.
Rather take a leaf out of Nedbank's book. It takes
invasion threats seriously. It alleges that foreign banks
have set their sights on the largest corporations listed on
The Johannesburg Stock Exchange.
And although Standard Bank doesn't expect a foreign
assault on the retail banking in the short term, it doesn't
discount an attack in the longer term.
Standard, knowing full-well the danger attached to
complacency, continually monitors and analyses the situation.
Even if you import all of your products, you're not immune
from cross-border raids in your sales territory. A case in
point is Siltek, which imports 90% of the high-profile
computer and electronic systems it markets.
Brian Streak, marketing director of the listed company,
which turns over R1,4-billion a year, describes the nature of
He says the local information technology (IT) industry
represents about 1% of the international market for components
and less than 10% of the European market.
Before the April 1994 election, internationally imposed
sanctions barred the supply of strategic components to South
Now that barriers have been relegated to history, there's
an enormous and largely untapped South African market for
state-of-the-art IT components. And in view of the expected
demand, foreign suppliers may elect to bypass local dealers
and set up shop for their own accounts.
THE THREAT IS SERIOUS
Larry Bain, managing director of Power Generation
Components, sums up the situation.
'Prior to the elections in April 1994, we didn't take the
threat of foreign competition very seriously. But since
April, foreign investors began to look at South Africa to
expand their businesses. It has now become imperative to look
at overseas competition in a different light.'
Even Sasol, which enjoyed enormous government support to
perfect and exploit its coal-to-oil conversion programme, is
on the defensive. Massive deregulation has forced the
organisation to restructure and re-engineer its processes to
operate competitively in the new 'free South African market'.
That's the gist of the message from J H Little, divisional
manager of Inspection & Planning Services.
'For the past few years, Sasol has become increasingly
aware of foreign attack. We realise that there is no
possibility that our coal-to-oil technology at a cost of $14 a
barrel can directly compete against conventional crude oil
technology at a cost of $2 a barrel.'
You must ...
Particularly if you're a manufacturer. While most retail
stores don't expect to face any serious challenges from
foreign chains, they paint a bleak picture for the South
African manufacturing industry.
Martin Rosen, marketing and advertising director of Pick
'n Pay, sets the scene.
'When you look at the local market and you look at all the
industries in that market, there is not one industry that has
any need to concern itself with protecting its market because
there is very little to protect.'
To drive home his point, he adds that South African
industry is 'so hopelessly uncompetitive' that it is extremely
vulnerable to offshore competition.
Not even the SABC is exempt.
If deregulation of the airwaves allows foreign broadcasters
to penetrate the South African market via either land-based or
satellite transmissions, the State-owned broadcaster could
face plummeting viewership and concomitant loss of advertising
But deregulation is no longer a matter of 'if'.
In 1993, Parliament passed legislation designed to 'free'
broadcasting from the SABC stranglehold. It transferred the
authority to allocate radio and TV airwave frequencies to the
Independent Broadcasting Authority (IBA).
And the International Telecommunications Union made 702
frequencies available for TV in South Africa.
What does this mean?
The combination of deregulation and channel availability
makes foreign competition for viewers almost a certainty.
FOREIGN COMPETITION IS MORE THAN LIKELY
'To address the threat we need to be as good a player as
anyone else in the world in terms of quality, service, pricing
and all the other aspects that are important.'
These words by Alan Beadle, of Consol Glass, are brave.
But we've heard them before. Ad nauseam.
However, not all sectors of the market will face the same
intensity of foreign marketing activity. Some overseas
companies will engage in only sporadic long-range sniping.
Although they may make occasional 'kills', you can usually
shrug off their feeble attempts to poach on your territory.
The dangerous offshore companies are those with long-term
intent. And there are many of them.
THE THREAT YOU FACE IS REAL
Read what Engineering News had to say in its leader on
September 30, 1994:
'South Africa's manufacturing endeavour has for so long
been directed at supplying holistic needs in a protected,
siege-type economy that we have tended constantly to produce
complete products or systems without any fear that competitive
world forces will keep us out of our home markets.
'But as protective tariff walls begin being lowered, there
will no longer be such a thing as a home market. The world
will be able to enter what was your "home" market without
restriction: that is the probable scenario in the years
Remember what President Nelson Mandela told members of
America's National Trade Council in New York on October 3,
'The policy of subsidising business and industry is
counterproductive. We want our goods to be internationally
competitive without subsidies.
'Protective tariffs, exchange controls and the financial
rand all have to go to break down the barriers between us and
the rest of the world.'
No barriers means more competition.
IDENTIFY THE THREAT
Gather and analyse as much information about potential
offshore competitors as possible. I suggest that you take
four simple steps to collect intelligence.
Scour local newspapers, financial publications and the trade press for any significant announcements about overseas interest in your sector of the market.
Ask a specialist press clipping bureau to monitor
foreign publications for similar information.
Attend all locally organised foreign trade shows that
are relevant to your areas of operation.
Keep a wary eye on visits by foreign trade
delegations -most come here to sell rather than buy. What they have to
sell may usurp your position in a formerly protected market.
Now that you realise foreign businesses may be targeting your domestic
market, what next?
You establish the source of the threat. Unlike the British in Singapore,
ensure that your guns face the right direction.