Competition is a key driver of global market performance. For many decades’ businesses have been excelling based on the strategy adopted by the management. Notably, the wrong choice of strategy is likely to derail the firm from achieving its potential.
This paper discusses one of the main business strategies that has been warmly embraced in the last decade. Time-based competition has for the past few decades been a key driver of competition in the global market. The paper discusses four main bases of time competition which includes; Product Development and Introduction Time, Material Lead Time, Delivery Time and Throughput Time. Notably, all these time bases for competition affects the global market performance of an organization in different ways. Additionally, the measures needed to determine the effect of time as a basis for competition in global competition has been discussed in details. In determining the effectiveness of the time-based competition as a strategy, the management has to asses several measures. Such measures include profitability, growth in market share, customer’s satisfaction, increased productivity and sales.
Throughout the paper, it is evident that time-based competition is a crucial driver of global market performance as opposed to quality and cost-based competition which are considered to be more of enablers in the business environment than drivers. In summary, time-based competition should be fully embraced by light-minded managers that seek to remain relevant in the competitive global market.
Table of Contents
I. Introduction
II. Background Information
III. Time Based Competition
IV. Global Market Performance
V. The Contribution of Time Based Competition to Global Market Performance
a) Product Development and Introduction Time
b) Material Lead Time
c) Delivery Time
d) Throughput Time
e) Responsiveness
VI. Conclusion
References
ABSTRACT
Competition is a key driver of global market performance. For many decades’ businesses have been excelling based on the strategy adopted by the management. Notably, a wrong choice of strategy is likely to derail the firm from achieving its potential. This paper discusses one of the main business strategies that has been warmly embraced in the last decade. Time-based competition has been a key driver of competition in the global market since 1990. It has discussed the main basis of time competition which includes; Product Development and Introduction Time, Material Lead Time, Delivery Time and Throughput Time. Notably, all these time bases for competition affects the global market performance of an organization in different ways. Equally, the several measures needed to effect these measures fully have discussed in details. However, in determining the effectiveness of the time-based competition as a strategy, the management has to asses several measures. Such measures include profitability, growth in market share, customer’s satisfaction, increased productivity and sales. Throughout the paper, it is evident that time-based competition is a crucial driver of global market performance as opposed to quality and cost-based competition which are currently considered as enablers in the business environment. Therefore, time-based competition should be fully embraced by light-minded managers that seek to remain relevant in the competitive global market.
Key words: Time Based Competition, Global Market Performance, Throughput Time and Material Lead Time
I. Introduction
The dynamics in the global market and the level of competition has made it necessary for organizations to seek new sources of competitive edge. Traditionally, the competition was only based on cost and quality, however, in 1990, George stalk through his book “Competition against Time” introduced a new concept of Time Based Competition. Adoption of time based competition was inculcated following the failure of previous basis for competition, change in customers need as well as technological changes. Stalk (2014) defined the concept as a strategic move that sought to significantly reduce the time taken in all operations so as to avail the products to the final consumers within the shortest time. Notably, every second wasted in making a decision, reduces the available time to respond to the situation by a minute.
Therefore, the main idea behind the concept was to ensure companies are quick to make decisions and are even more responsive to market changes. This includes ensuring reduced production time, fast new product development and introduction to market as well as shorter delivery times (Whipp, Adam, & Sabelis, 2010). The success of the strategy is assessed based on its contribution to the global market performance. As the driver of market performance, the time-based strategy had a positive effect and it and therefore enhanced the firms market performance by increasing the sales, productivity as well as the market size. This paper seeks to give insights on how time-based competition has become a key driver of global market performance.
II. Background Information
Competition has been a key driver to the global market performance with every company seeking to outsmart its rivals. The nature of the competition itself has changed over time, price and quality were once the driving force in the market. However, they are no longer considered competitive driving factors but rather enablers. Stalk (2014) notes that, just like military secrets, competitive strategies have a shorter life cycle of about ten to fifteen years before it is rendered insignificant. Once a strategy has been discovered and understood by the competitors, it becomes useless hence the need to adopt new ones.
This phenomenon has for the past decade lead to the shift of competitive basis from cost (price) based to quality based and finally to the current regime of time-based competition. In the early 1970s organizations were organized into profit centers, hence the main competitive strategy was price-based strategies. However, the strategy was substituted by quality-based strategy in the 1980s (Stalk, 2014). The two strategies were positioned to pursue shareholder’s value maximization rather than customer’s needs. The inefficiencies in these strategies, as well as advancement in technology, facilitated the introduction of time-based competition. Time-based competition aided many companies to transform to customer-centered firms, thus aiming at ensuring customer service is enhanced through a reduction in lead time, fast production as well as reduced delivery time. This approach ensured that customers were able to get anything they wanted at the right time and in any location thus improving their market performance. An example of the companies that adopted this strategy are the Walmart, a retail firm in the US and Amazon. As a result, these firms were able to grow in size, sales and profitability, three times more than the retail industry in the US (Stalk, 2014). On the other hand, Japanese manufacturers were able to make their product introduction process three times faster than their average American Competitors. Contrary to other competitive strategies, time based competitive strategy remains to be vibrant since its conception.
III. Time Based Competition
Whipp, Adam, & Sabelis (2010) defined time-based competition as a strategy that seeks to make an organization more attractive to its customers through elimination of non-value adding activities and reduction of lead time, throughput time as well as delivery time. The concept was introduced at the time where competition was key is positioning organizations. Also, the use of price and quality as competitive basis had become the norm as it no longer offered a strong basis for competition. There was the need to device new tricks of competing and standing out in the market against competitors. Therefore, the existing organization needed to adopt the strategy in order to compete effectively and also match new customers’ needs of prompt delivery. Failure to adopt the strategy is a miscalculation by the management that could lead to a disaster.
The main basis or elements for time based competition includes; material lead time, delivery time, throughput time as well as product development and introduction time. The strategy proved relevant in meeting one of the consumers’ needs that had been long forgotten. Customers needed prompt survives and timely delivery, hence competing on time basis helped enhance customer’s satisfaction. Equally, it helped the customers by addressing the challenges of late delivery as well as improve the company’s global market performance. The strategy played a key role in the growth of many firms that were swift to differentiate themselves by adopting the strategy. Also, with the introduction of the e-commerce, delivery time was equally important. Most shoppers ordering online desired prompt delivery since most e-commerce offered delivery services. Therefore, in order to meet their customers’ needs they had to compete on “Time basis”. In summary, time based competition was relevant in accommodating the market changes as well as cater for the changing customers’ needs.
IV. Global Market Performance
Global market performance of a company can be assessed based on some key performance measures such as profitability, productivity, customer’s satisfaction, market share growth rate, as well as sales registered (Rancati, 2005). Adoption of an effective competitive strategy is likely to drive the firm towards the attainment of higher efficiency, higher productivity and faster inventory turnover. These will, therefore, translate to desirable market performance. The strategy takes into account the various market diversity in the global platform. The global market is characterized by certain differences such as cultural, political, economic and most importantly the time zone differences (Rancati, 2005). Notably at the global market level, the time based competitive approach is considered a driver of global market performance because it positively contributes to increased profitability, productivity, sales, customer’s satisfaction and market growth.
V. The Contribution of Time Based Competition to Global Market Performance.
Time is a key organizational resource, just like finance and human resources. Therefore, it needs to be managed properly in order to attain organizational goals (Rancati, 2005). Minimization of inefficiencies in time usage has proven to be useful in enhancing organizational performance compared to its competitor. As a result, reduction of operational time (through time-based approach) has driven most organizations towards the desired global market performance (Rancati, 2005). The strategy contributes immensely to enhancing customer’s satisfaction through timely response to all customer’s needs and market changes. Additionally, time-based competition has contributed to the increased market size, productivity, and profitability as witnessed by the global market giants such as Amazon and Walmart.
There are a number of the basis for a time-based competition aimed at enhancing global market performance; they include; reducing product development and Introduction time, Material Lead time, Delivery Time, Throughput time and lastly response time.
a) Product Development and Introduction Time
One major characteristic of a firm that has effectively adopted time-based competition as strategy is its ability to develop and get a new product to the market before their competitors. The time based competitive strategy involve reduction of the time taken by the organization in developing new products and ultimately availing them to the market (Andries, & Gelders, nd). Notably, the concept was discovered after most Japanese companies witnessed considerable success compared to their western counterparts. The western companies believed that a firm could take as much time as possible in product development while Japanese, on the other hand, sought ways of minimizing product development cycle (Andries, & Gelders, nd).
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- Timothy Mwangi Nduru (Autor:in), 2019, Time Based Competition. The Key Driver of Global Market Performance, München, GRIN Verlag, https://www.grin.com/document/457454
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