Cost-to-Serve - Measuring the Profitability of Trading Relationships : Part 2
Hyper-competition Competition is also increasing for both manufacturers andretailers. For manufacturers, this is seen in the advent of global competition. In thepast, when markets were localised, a company only had to be as competitive as those in thelocality. If a potential competitor with a better way of doing things existed elsewhere,it did not present a challenge. This has now changed. Obviously if a company is choosingto export into a foreign market it must be competitive compared to its domestic rivals. Itis equally true for a domestic concern; while it may not have international aspirations,its customers will receive the attentions of foreign companies who do. In thesecircumstances only world-class performance will suffice. However retailers are also facingincreased competition. There is a blurring of distribution channels (perhaps bestsymbolised by petrol stations turning into supermarkets and supermarkets selling petrol)leading to enhanced competition. Furthermore in developed countries they face a stablepopulation and the entry of alternative retailing methods (e.g. electronic home-basedmethods) which could subtract market
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