Rajeev Karki

One of the challenges that businesses face today is a fierce price competition. Even though a business may provide better service and quality than its low price competitor, there comes a point when the price to value ratio is too great to ignore. Business may try different strategies to cut cost. Cost control may come from reduction in the workforce, a more efficient and streamlined manufacturing process, or even outsourcing of the manufacturing to foreign countries with cheaper labor costs. The current trend for a lot of companies has been to move the manufacturing process to China because of their good industrial infrastructure and also the availability of cheap labor

Everyone knows that the manufacturing costs in China are cheap. This piece of fact, though useful, is just a piece of information and cannot be considered Competitive Intelligence. I agree with Sue Myburgh’s definition of Competitive Intelligence when she says that “CI is about mining information sources and using appropriate analytical techniques to put this information together-information becomes intelligence only after it has been analyzed” (Myburgh, 2004 p. 48).

I recently took a trip to Guangzhou China to attend the Canton fair which is held twice a year, once in the spring and again in the fall. The fair attracts almost a quarter million buyers and over 13,000 exhibitors in the five day period (Canton Fair, 2008). My goal for visit was to study the vendors and products represented in the fair, check the prices on certain items, and most importantly understand how the Chinese business operate.

Upon my arrival, I was stunned by the sheer size of the Pazhou complex. There was no doubt that this was one of the largest buildings I had ever been in. With 5.7 million square feet of exibit space, it puts even some of the biggest US airports to shame. This particular fair was dedicated mostly for IT and Electronic products, something that I have real interest in. There were exhibits for everything from wires, fuses, switches, TVs, mobile phones, to huge industrial power generators, buses, bulldozers and backhoes. There were anywhere from ten to twenty vendors for any product that one might be looking for.

I had the advantage of staying at an apartment with some local businessmen who work as “sourcing agents” for buyers all over Asia and beyond. During my stay there, I also got to meet buyers from India and Nepal who had been visiting China for several years. I took this opportunity to casually interview both the buyers and the agents on how the export business works. I was shocked by some of the stories they told me about their own experiences. Here are some of the lessons that I learned that can definitely be used Competitive Intelligence in the future. It should however be noted that my research was only from the Guangdong province. Though the business practices may be similar in other provinces, further research much be done before generalizing these statements to other parts of China.

1. First of all, I was reminded not to do business with any party unless I visited the factory myself. It turns out that it is not uncommon for someone to falsify the existence of their own manufacturing facility, when in fact they are just middlemen. In fact there were several exhibits in the fair representing the same manufacturer, offering different prices for the same exact product made by the same company. I found out that by dealing with the factory directly, you could get much better prices.

2. Quality was another major issue. Having done business from other Asian countries, I knew that the quality control is not as strict there as it is here in the U.S. However, my jaw dropped when I heard that one of the businessmen received packages that were either empty or full of rocks. This does not happen with big reputable companies, but this is definitely something to watch out for. There are third party QC agents that will watch the goods while they are loaded in the shipping containers for a small fee. The average rate for having an agent to take care of quality and shipping of goods is about 1% of the value of goods. This seems like a very modest fee compared to the risk that it can mitigate.

3. It was interesting to find out that every product had a city that specialized in its manufacturing. For example, Senzhen has high tech factories that manufacture consumer electronic products and PC parts. Fuzhou is famous for its textile and wood products. For fashion jewelry products you need to visit Yiwu. Knowing the city where your products are made gets you closer to the manufacturer so that you can not only negotiate better prices, but also maintain quality by visiting the factory while your goods are being manufactured.

4. It turns out that bargaining is big in China. But, I also found out that you must be careful when bargaining. Because of the competition and the pressure from buyers demanding cheaper goods, some of the manufactures cut the costs by compromising with quality. For example, one of the manufacturers of Christmas lights offered to sell the goods at a lower cost, but the end product ended up being inferior in quality. The manufacturer was able to meet the lower price bid by using fewer strands of copper in the wire than what the standard quality was. It is important to make an agreement on both the price and quality when negotiating. When possible a sample must be signed and kept by both the manufacture and the buyer so that the final product can be compared against before the goods are accepted.

5. Use of interpreters is very common in Guangzhou. I found out that being an interpreter is a very lucrative job in the city not just because of the pay, but also because of the potential for commissions through the suppliers. These interpreters may have their own “preferred” vendors that they would like you to purchase the goods from. It is important that you do your own research on what places and vendors you would like to visit.

I have attempted to take the information that I found talking to people in China, analyzed it, and presented it in this paper hoping that it will be useful to anyone wanting start doing business in China.
 
Bibliography
Canton Fair. (2008, 24 April). Retrieved April 26, 2008, from Wikipedia: http://en.wikipedia.org/wiki/Canton_Fair

Myburgh, S. (Mar/Apr2004, Vol. 38 Issue 2). Competitive Intelligence. The Information Management , 46-55.

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This paper is my theory on leadership, its evolution though history, and its practice in our information and knowledge driven global corporate market. I will first define leadership and how it can exists in various forms. I will also talk about how a leader can use information in the form of Competitive Intelligence to come up with strategies that can move a company towards success.

Defining leadership and its forms:

Leadership is a set of qualities that people possess that allows them to influence others around them to the point that they want to follow his or her vision. Historically, leadership has been synonymous with power. People like Napoleon, George Washington, Ronald Reagan, and Winston Churchill were all great leaders with enormous power to change the world. But today in the knowledge and information driven world, “business is a war of ideas where the power to innovate and promote new products is the new basis of leadership” (Mitch McCrimmon).

Leadership qualities can come from birth, but they can also be learned through experience and practice. Sometimes we confuse a leader with someone who is extrovert. Being an extrovert can be a good asset for a leader, but it is not required. A person might be an excellent leader at work, but when they are in a social circle, they may step back and let others be the leader. So, a leader does not have to be leading 100% of the time. We can have an effective situational leader that steps up at the most opportune time and makes a difference. Oxford English Dictionary defines leadership as “the position of a group of people leading or influencing others within a given context” (Oxford English Dictionary, 1989), which I very much agree with.

There are various types of leadership styles. Throughout history we see heroic leaders that have fought and won important battles, or stopped nations from going to battle. They are usually the center of attention and power and people are drawn to them for vision and protection. Manz and Sims call this type of leaders “Strong Man” leaders. The other type of leader is someone who has the power to influence other people to follow their visions. They may not necessarily hold much power (Wray, 2008), but their charismatic qualities makes people emotionally connect to them, and want to follow. This type of leader can be categorized as the “Visionary Hero” (Manz & Sims, 1995, p. 215).

Strong man, Visionary, and Charismatic leadership all work to an extent. These leadership styles work great in an ideal situation where the market competition, the economy, and jobs are stable. Unfortunately, the real world is more chaotic. It is not uncommon for leaders, even at the C levels to change jobs every five years. If people are too dependent on one leader to provide vision, the absence of that leader might shake the foundations of that company. “A strong, visible and energetic leader may spur different psychological response. Some individuals may become overly dependent upon the leader, and in some cases whole organizations become dependent. Everyone else stops initiating actions and waits for the leader to provide direction …” (Nadler & Tushman, 1995, p. 111) A solution to this problem would be to raise up leaders within the company so that anyone can step up to the challenge when the opportunity arises. “A Leader should be like a boat with swimmers all around it. And the swimmers are the followers who balance the boat” (Shivkumar, 2008). In this analogy that Shivkumar uses, the followers are the ones that provide stability to the boat. The swimmers can still stay afloat until another boat arrives.

In his essay titled Tao Te Ching, Lao-tzu talks about leaders being like a Midwife where “the wise leader does not intervene unnecessarily. The leader’s presence is felt, but often the group runs itself” (Lao-tzu, 1995, p. 70). By allowing the followers to lead themselves, when a job is done, there is a sense of confidence instilled upon them that makes them strive for more.

In my opinion, a leader should not just passively let other people lead when the situation arrives. The leader should be proactive and intentional about trying to build other leaders. According to a survey done by John C. Maxwell during a leadership seminar, he found 85% of respondents attributed their leadership skills as coming from the influence of another leader. Only 10% of the participants said that their leadership skills were a natural gift for them, and 5% said that they came from working through a crisis. Even though this research was done on a small scale, it shows us that the most effective way to develop leaders is for other leaders to help them through the process. By raising multiple leaders, an organization breaks free from its dependence on a single leader figure. Empowering employees in this manner allows even people in the lower organizational structure to operate beyond the phenomena, facts, and data level in the scale of knowledge and work towards understanding the information and eventually gain wisdom (Gillette, 2002, p. 12).

Leadership tools:

Having a great leader is only a part of the puzzle. A leader also needs tools and resources that help him or her make the correct decisions and lead the group in territories that have never been charted before. One good way to gather this kind of information needed to make informed decisions is through Competitive Intelligence (CI). Competitive Intelligence (CI) is the ethical process of collecting, analyzing and applying information about the capabilities, vulnerabilities, and intentions of competitors in competitive arena (Miller, 2001, p. xi). Competition in any market is inevitable. Having already assembled the information about the market and your potential competitors gives you the advantage to succeed.

CI can be gathered through various means. The World Wide Web is a great resource for starting the initial research as long as the information comes from a reliable source. Even the competitor’s corporate website, press releases, prospectus and annual reports can be of great value. There are also paid services through companies like Lexis Nexis, S&P, Dow Jones Hoover’s that provide invaluable information for competitive analysis. When possible, the CI should be gathered and distributed proactively instead of on a per request basis. In order to do this, there needs to be a proper method for storage and retrieval of intelligence information. This is where the process of Knowledge Management comes into play.

Role of Knowledge management:

Knowledge management is the process that defines the proper methods for gathering, storing, and retrieval of information. In the field of Competitive Intelligence every piece of data about the competitor is valuable. This information must be stored in a database and easy access must be provided to it using a web portal so anyone that has the right privileges to view it may do so. The information must be kept current by updating it on a regular basis. Having a Knowledge Management (KM) system like this reduces the load of the CI analysts so that they can spend more time doing research.

The input for the KM systems should come from multiple sources. The leaders of the companies are great resource for gathering intelligence for the KM system because they are also the ones that are in contact with customers, competitors and other stake holders.

Strategic use of Information:

A good CI Knowledge Management system provides a great tool for the leaders of the company to make strategic decisions. This information can be used against the competitors to get ahead in the market. Other times it may be a more strategic move to form a partnership with the competing company, or even merge, for greater benefits for both parties.

It is much more common for businesses to find the weakness of a competitor and then attack it. Even though this is a valid strategic move, according to Roberts, this just makes the competitor realize their mistakes and come back stronger. A better strategy, according to Robert, is to find the strengths of the company and try to excel in those areas. “Attacking a competitor’s weakness only leads to marginal changes in the market position. Significant gains can only be made by attacking the heartbeat of that competitor’s strategy (Robert, 1997, p. 153).

According to Dr. Gillete, in the scale of Knowledge, information exists in 6 levels:

1. Wisdom
2. Understanding
3. Information
4. Data
5. Facts
6. Phenomena

Information starts out as phenomena, which is simply an idea. It then moves up the chain until it becomes wisdom, which is the ability to discern and make judgment calls (Gillette, 2002, p. Table 2).
One can separate a mediocre leader from someone that is outstanding by looking at what level of the scale of Knowledge they operate in. Knowledge workers tend to hover at the Data and Information level and sometimes at the Understanding level. Only a good leader can operate at the level of wisdom and guide the company’s future.

Conclusion:
Leadership comes in different styles and forms. There is not a single style of leadership that will work in every situation. Depending on the culture, ethics, and legal grounds, one should be able to practice various leadership styles. Even though there are differences, there are a few qualities that are common to all. An effective leader is able to build strength using the workers as the foundation. They are also able to use information strategically and make decisions that are based on wisdom and lead to ultimate success of a company.

References

(1989). Retrieved March 31, 2008, from Oxford English Dictionary: http://dictionary.oed.com/cgi/entry/50130907?single=1&query_type=word&queryword=leadership&first=1&max_to_show=10

Breeding, B. (2001). CI and KM Convergence: A Case Study at Shell Services International. In J. E. Prescott, & S. H.
Miller, Proven Strategies in Competitive Intelligence : Lessons from the Trenches (pp. 45-68). New York: John Wiley & Sons, INC.

Gillette, J. E. (2002). A practical framework for understanding KM. In Knowledge Management Strategy and Technology (pp. 1-22). Boston and London: Arctech House.

Lao-tzu. (1995). Tao Te Ching. In T. J. Wren, The Leader's Companion: Insights on leadership Through the Ages (pp. 69-71). New York: Free Press.

Lunsford, S. (2008, March 5). Organizational Leadership: Group Accomplishment through Outstanding Culture. Retrieved March 31, 2008, from CICS Weblogs: http://www.cicsworld.org/blogs/solunsford/2008/03/organizational_leadership_grou.html#more

Manz, C. C., & Sims, P. H. (1995). SuperLeadership: Beyond the Myth of Herioc Leadership. In T. J. Wren, Leader's Companion. Insight on Leadership Through the Ages (pp. 212-221). New York: The Free Press.

Miller, S. H. (2001). Corporations Get Smart. In J. E. Prescott, & S. H. Miller, Proven Strategies in Competitive Intelligence: Lessons from the Trenches (pp. xi-xv). New York: John Wiley & Sons, INC.

Mitch McCrimmon, P. (n.d.). What is Leadership? Retrieved April 1, 2008, from Leadersdirect: http://www.leadersdirect.com/leadership.html

Nadler, D. A., & Tushman, M. L. (1995). Beyond the Charismatic Leader: Leadership and Organizational Change. In T. J. Wren, The Leader's Companion. Insights on Leadership through the Ages (pp. 108-113). New York: The Free Press.

Robert, M. (1997). Strategy Pure and Simple II: How Winning Companies Dominate their Competitors . New York: McGraw-Hill.

Shivkumar, D. (2008, March 21). European Renaissance and the Information Renaissance: Derivatives of Leadership Part 2. Retrieved March 31, 2008, from CICS Weblogs: http://www.cicsworld.org/blogs/dsivakumar/2008/03/european_renaissance_and_the_i_1.html#more

Wray, A. (2008, January 29). How Princes Should Keep Faith. Retrieved March 31, 2008, from CICS Weblogs: http://www.cicsworld.org/blogs/amwray/2008/01/how_princes_should_keep_faith.html

Wren, J. T. (1995). Leader's Companion: Insights on leadership through the ages. New York: The Free Press.

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Geographical boundaries no longer isolate us from competition with other companies. Today, more than ever before, companies need to stay ahead of their competitors for survival. This paper is a discourse on the proper techniques for assembling, managing and strategically using Competitive Intelligence.

What is Competitive Intelligence?

Competitive Intelligence (CI) is the ethical process of collecting, analyzing and applying information about the capabilities, vulnerabilities, and intentions of competitors in competitive arena (Miller, 2001, p. xi). Competition in any market is inevitable. Having already assembled the information about the market and your potential competitors gives you the advantage to succeed.

Competition comes in various forms and it is not possible to fend off all competition at the same time. A company should use CI strategically, and decide which competitors to target. Sometimes, it may be wise for a company to take a step back, and not compete at all (Robert, 1997, p. 143).

Gathering Intelligence:

As long as the process is ethical, there is no single correct way of gathering CI. The competitor’s website, prospectus, or annual report is usually the best place to start. Web search engines can also be a good resource as long as the authenticity of the source can be verified. There are also pay for use services like Lexis Nexis, Dow Jones, Hoover’s, Standards & Poor’s, and NEWSEDGE that provide intelligence for various disciplines (Breeding, 2001, p. 53). Before a report is produced from this information, it is vital that the researcher know who his audience is. The CEO of the company may use CI differently than a salesman. Knowing who the user is and how the information is going to be used will provide the most accurate information.

In order to offer maximum benefits, the CI department needs to operate proactively instead of reacting only to individual requests. Having the information on hand saves time and resources.

Once a piece of intelligence is gathered, it must be stored for easy access by all authorized parties. This is where Knowledge Management comes into play. The key to successful implementation of Knowledge Management Systems are “information reusability and self-access features. Once the information is compiled, it is sent to a central place (where it is constantly updated) and is ready to be accessed a second, third, fourth….time. Each additional time it’s accessed, the cost to assemble the information is virtually nothing” (Breeding, 2001, p. 55). The Knowledge Management system can be setup as an intranet/internet portal that is protected and available only to authorized company personnel.

The CI information must be continually updated. Outdated and incorrect CI information is worse than having no intelligence at all. A significant amount of a CI analyst’s time should be spent on reading news articles and news alerts, and keeping the CI knowledge system up to date.

CI in global economy:

In today’s world, competition comes from domestic as well as international players. In order to gather intelligence on a foreign company, the CI analyst must overcome several challenges, cultural differences being one of the biggest factors. In order to accurately evaluate a piece of data, the CI analyst needs to understand the cultural norms and local rules and regulations. An action that is that is acceptable in United States may be against the law in other countries or vice versa. “For example, unless it is authorized by a court order, intercepting a competitor’s faxes or cell phone calls is viewed to be both illegal and un-ethical in the United States – a practice sometimes associated with CI that remains above the law in variety of other countries (Blenkhorn & Fleisher, 2005, p. 7).

The CI analyst must also be aware of the political situation and stability of the country when doing business globally. The United States has enjoyed a stable government for a long time. However, in countries like Nepal, Pakistan, Sri Lanka, Kenya, and Nigeria, the political situation has historically been unstable, causing violence and unexpected business closures. Having critical CI like this can help the company decide whether it should try to penetrate these markets or not.

Strategic use of Information:

Having a good CI of the marketplace does not necessarily make a company successful. The strategists of the company need to review the CI carefully and make decisions about how to play the game of competition. A natural business move might be to find all the flaws and weaknesses of the competitor and attack them in those areas. This may prove to be effective in the short run, but according to Michael Robert, this strategy only makes the competitor recognize those weaknesses and come back stronger (Robert, 1997, p. 153). A better strategy, according to Robert, is to find the strengths of the company and try to excel in those areas. “Attacking a competitor’s weakness only leads to marginal changes in the market position. Significant gains can only be made by attacking the heartbeat of that competitor’s strategy (Robert, 1997, p. 153).

Even in the same industry, for example, the automobile industry, the manufacturers are competing against each other on various grounds. Although they are all after the market share, not all companies are in direct competition. “To understand the competitor’s strategy for being there, one needs to identify each competitor’s driving force and business concept” (Robert, 1997, p. 152) Toyota is out there to beat GM in the market share and become the world’s largest car company. On the other hand, Honda’s driving force is its engine technology. Volvo’s target markets are families with children that are looking for safe cars whereas BMW caters to drivers that demand performance.

A new entrant in the car business might strategically choose to avoid direct competition by manufacturing small electric vehicles that give very good gas mileage. The Smart car has done just that. By differentiating themselves from the rest, Smart cars are gaining popularity in urban areas where commuting and parking are major issues. Subaru, on the other hand, has taken up the challenge to go head to head with Volvo in offering safer cars. Instead of building on the weaknesses of Volvo, Subaru decided to offer only all wheel drive technology in all their models. Subaru targeted Volvo in one of their advertising campaigns by showing a Volvo car crashed into the wall and the passengers walking away uninjured. On the bottom of the ad was a Subaru stopped one yard from the wall. The caption read “If you want to be in an accident, buy a Volvo. If you want to prevent an accident, buy a Subaru” (Robert, 1997, p. 156). By directly attacking the strength of its competitor, Subaru has gained a lot of trust with consumers as being one of the safest cars available.

Conclusion:

There are lots of different ways to gather CI and manage it using Knowledge Management Systems. But, the success of the company relies on how effectively they are able to use this CI. In certain cases, it makes sense to back out of the competition and choose a different market. In other cases, one needs to attack the strength of the competitor directly to make significant gains. In either case, one needs to target a single competitor at a time. Starting a war on two fronts is never a good strategy.

References

Blenkhorn, D. L., & Fleisher, C. S. (2005). The State of Our Understanding of Research and Practice in Competitive Intelligence and Global Business. In D. L. Blenkhorn, & C. S. Fleisher, Competitive Intelligence and Global Business (pp. 3-16). Westport, Connecticut: Praeger.

Breeding, B. (2001). CI and KM Convergence: A Case Study at Shell Services International. In J. E. Prescott, & S. H. Miller, Proven Strategies in Competitive Intelligence : Lessons from the Trenches (pp. 45-68). New York: John Wiley & Sons, INC.

Miller, S. H. (2001). Corporations Get Smart. In J. E. Prescott, & S. H. Miller, Proven Strategies in Competitive Intelligence: Lessons from the Trenches (pp. xi-xv). New York: John Wiley & Sons, INC.

Robert, M. (1997). Strategy Pure and Simple II: How Winning Companies Dominate their Competitors . New York: McGraw-Hill.

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