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 point.

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 weapons efficient.'

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 another.

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 market.

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 international companies.'

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.

So ...


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 the threat.

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 Africa.

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.

Remember ...


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 ...


BECOME COMPETITIVE

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 revenue.

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 ahead.'

Still unconvinced?

Remember what President Nelson Mandela told members of America's National Trade Council in New York on October 3, 1994?

'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.

So ...


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.

  1. Scour local newspapers, financial publications and the trade press for any significant announcements  about overseas interest in your sector of the market.

  2. Ask a specialist press clipping bureau to monitor foreign publications for similar information.

  3. Attend all locally organised foreign trade shows that are relevant to your areas of operation.

  4. 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.

Prev   Next

  Authors Note
    Introduction
     
1. Protection Gets the Bullet
     
2. Perceive the Threat
     
3. Define the 'Get In' Strategy
     
4. A Quick Backward Glance-1
     
5. The Importance of Pricing
     
6. Vital Ingredients: Products and Productivity
     
7. Customer Service: On the Backburner
     
8. A Quick Backward Glance-2
     
9. Preventative Strategies: Price and Service Quality
     
10. Preventative Strategies: The Ramparts of Distribution
     
11. Preventative Strategies: Management - to restructure?
     
12. Preventative Strategies: Market Aggressively to Win
     
13. A Quick Backward Glance-3
     
14. In Conclusion
     
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