The most popular leverage to achieve big with smal

  • Detail

Leveraging leverage, small enterprises can compete with big ones. In the increasingly competitive market environment, small and medium-sized enterprises with relatively weak operation ability are fortunate to survive. It seems that small enterprises can only be a dream. The scarcity of resources of small and medium-sized enterprises has seriously restricted their ability to carry out market development and penetration. Facing the challenges of small and medium-sized enterprises, large enterprises can easily kill small and medium-sized enterprises by launching price wars, conducting intensive promotional activities, developing new products, repositioning existing products, etc. Does this mean that SMEs can only passively defend themselves? Does it mean that small and medium-sized enterprises can survive only by sticking to "small"? Does it mean that small and medium-sized enterprises will never grow up? Niche market strategy, follow-up strategy, positioning strategy and other strategies related to the development of small and medium-sized enterprises also seem to prove this point, telling small and medium-sized enterprises how to find a market gap ignored by large enterprises and how to avoid the attack of large enterprises. In the face of large enterprises with abundant resources and strong strength, is there no effective strategy for small and medium-sized enterprises to win the strong with the weak and fight for the big with the small

a classic case of striving for greatness with small size - success does not come from market segments

since its maiden flight in 1971, Southwest Airlines has grown from a small company with only three jet aircraft to the most competitive transportation company in the United States. However, when the company started its business, it was faced with an extremely severe situation. The aviation industry is one of the capital intensive industries. This environment makes it difficult for challengers to make achievements

American Airlines and Continental Airlines, the competitors of Southwest Airlines, have a huge fleet of aircraft, with hundreds of aircraft, ranging from various types of small aircraft to large Boeing 747. In addition, major airlines have seized a set of key assets of aviation operations: many take-off and landing positions and corresponding landing rights of airports in large cities from the Atlantic coast to the Pacific coast. They use these landing rights as the basis of the air traffic control system. This system requires extensive coordination and large air terminals to transfer passengers and different types of aircraft groups, so it is expensive to operate. But these systems maximize their reach. The hub system uses every major transportation company to control the number of flights and the cost of flights in a certain area, so its return is worth it. This system also protects the position of market occupiers through relatively high barriers to entry

at the early stage of the development of Southwest Airlines, the company's strategy focused on providing point-to-point flight services with high frequency, short haul and the lowest price from external suppliers. Everything the company has done to expand from a relatively small market to other areas of processing and production focuses on improving efficiency and reducing costs. In order to reduce airport expenses, Southwest Airlines only operates in the secondary airport, and all 737 aircraft are used to save training and parts costs. During the flight, only peanuts are provided instead of the usual meals. In this way, Southwest Airlines shortened the preparation time for departure to 20 minutes - half of the industry average time - and maximized the number of flights, thus generating more profits. This enables the company to reduce the cost to an extremely low level, which is 50%-60% lower than that of competitors on average. Even so, Southwest Airlines is still the most profitable airline in the United States

almost all experts believe that the success of Southwest Airlines benefits from the use of niche competition strategy. Indeed, on the surface, Southwest Airlines has found a segment market - short distance point-to-point intercity flight service. The target consumers in this segment do not need too many proliferation services, but convenient, economical and punctual services. Therefore, southwest airlines can rely on the strategy of low cost and low price to gain a leading position in this market segment. It is true that these analyses are correct, but none of them can answer such a question: Why did the main competitors with strong developed static tension and compression, static change, high-frequency tension and compression fatigue and low large resources not copy the strategy of Southwest Airlines to nip Southwest Airlines in the bud, and why did not use the intensive promotion and price war they are good at on the same route to seize this target market. What is the reason that competitors do not imitate a better business model? What is the reason that competitors face a better marketing method and cannot learn from the successful experience of challengers. In fact, this classic case is actually a classic application of leveraged competition strategy - to transform the assets of competitors into their own competitive customers: it is the assets owned by major competitors that hinder their competition and determine the success or failure of the competition

leverage competition strategy, the best weapon to fight big with small size

Southwest Airlines has successfully applied leverage strategy, becoming a classic case of fighting big with small size. As the case shows, the so-called leverage strategy is to convert the specific assets owned by competitors into obstacles to their competition, and turn the resources that competitors originally maintain their competitive advantages into the competitive advantages of small and medium-sized enterprises. Every competitor has its weaknesses, which are often caused by excessive investment in its core resources

the strong performance of competitors is that they have far more resources than small and medium-sized enterprises. The tangible current assets, fixed assets, intangible brand assets and distribution networks accumulated by strong enterprises in the process of development enable them to win the trust of target consumers and dominate the market. That is to say, the competitive advantage of a strong competitor comes from its own resources. The reason why such resources can play a full role is based on the existing competition rules, which are advocated and vigorously maintained by large enterprises. If small and medium-sized enterprises try to compete in the way advocated by large enterprises, of course, there is little chance of success

assets become another form of focusing risk around the enterprise. Like anything with two sides, an advantage may turn into a disadvantage from another point of view. When the competition rules are changed, and small and medium-sized enterprises have formulated new competition rules that restrict the effectiveness of large enterprise resources, any asset representing a large amount of investment can become an obstacle to the reform of large enterprises. Therefore, the core of leverage strategy is to formulate new competition rules for the assets owned by large enterprises. Under the new rules, the assets owned by large enterprises are no longer a competitive advantage. On the contrary, due to the existence of existing assets, it is difficult for them to carry out effective competition with the small and medium-sized enterprises that have formulated the new rules

Copyright © 2011 JIN SHI