Business Competitiveness in the 21st Century Business Environment.

Why Local Manufacturers should rethink their Strategy

By Andrew Ekwang

“Industrialists want the government to ban locally available imports” headline from Daily Monitor 24^th October 2011 and the launch of the Uganda Competitive Investment Climate Strategy (CICS) at the Sheraton Hotel, Kampala recently are the two events that got me asking, “what is competitiveness? – the ability of a country (or firm) to provide goods and services which provide better value than their overseas rivals. And who is ultimately responsible for the competitiveness of Ugandan products on the Global Market?  - The Industrialist or Government?” in my own view our local industrialist should not blame imports a lot because in a global market goods and services move to the locations were there effective demand  is provided that demand can yield profits . 

The Ugandan consumer is obsessed with perception and quality –what will people think of the product am consuming? And is it the best quality my money can afford at this point? these two questions and many more run in the minds of consumers as they do their shopping, but do they really think about were this product they pick was made and if they do does that place screams quality and style? Take for example a young lady shopping for beauty products, if in her selection three products from Uganda, USA and China satisfies their selection criteria of quality and price, the made in USA most likely will be purchased based on the fact that USA beauty products always denotes highest standard.  This reputation US companies built over the years, and companies like St Ives put in their best to gain that recognition.

Industrialist requesting government to ban importation of locally available products and at the same time asking the same government to strike some trade agreements to help open export market for them is so contradictive and  at the same time its depriving the customers from choice. At all times in a free market or even semi- free market the ultimate decision maker is the customer and thus producers have to study the market, their needs, their perceptions on quality, style and price, their buying patterns and what makes them loyal, then making a product that is both of quality and appealing to attract buyers, that’s when branding comes in. Branding is so important that businesses spend millions ever month to keep themselves relevant in the market and  is considered  as one of the biggest driver of revenue, the highest number of i-phone users or even Mercedes Benz cars owners become customers because of what the brand stands for, and over the years these produces ensure they meet these expectations and if possible exceed it to keep and grow their market but not ask governments to ban competitors from outside markets when they know  that if they generate good customer appeal locally they will also need these markets to expand.

The dilemma our local industrialist must be facing is how to survive in a highly competitive and very open market. Raising questions like, how do you invest the little revenues in branding and production sustainability at the same time?  Where do they access the resources to open and facilitate R&D departments? Can the local human resources available deliver us the best competitive ideas? And if all these are possible then how do we achieve the best combinations of all these to produce the best result locally and internationally.  The biggest challenge is convincing the entrepreneurs and top management of these firms to realize that the local consumers are now as enlighten and demands quality and good appeal just like the US consumer and to believe that this consumer will buy from any producer willing to deliver both the quality and a competitive price. Then these businesses should decide if they want to just survive or satisfy these consumers and grow their businesses. If they chose the latter, then discussions on financing, technological investments, research and the right human capital investment can be achieved either through organic growth with well set objectives or partnerships with either other local or internationally recognized players in their industries to facilitate funding, transfer of both technology and knowledge to compete favorably.

It is in the hands of the businesses to manage factors such as Price relative to competitors, Productivity - output per worker, Unit costs, State of technology, Investment in capital equipment, Technology, Quality, Reliability, Lead time and Entrepreneurship levels that boost their competitiveness, governments will then come in to mange factors such as Exchange rate, Relative inflation, Tax rates, and Interest rates.  Much as I do believe competitiveness of local produces need to be boosted, I also do believe the produces themselves need to realize global competition is real and customers will always look for the best their money can afford, investing the little in areas of Process innovation and Improving relationships with suppliers to lower unit costs, Product innovation to boost quality, Sourcing from abroad where appropriate and studying the market needs and buying trends will provide a much more reasonable result than just banning imports.