Today’s business landscape has changed a lot. When you look at 10, or even just 5 years ago, you would have noticed that there are more companies today with products/solutions to problems that didn’t exist years ago.
What are the challenges Kiwi businesses need to overcome?
There are a lot of challenges facing a lot of New Zealand businesses, but they all fall under these three categories: (1) more competition than ever, (2) changing buying behavior, and (3) looming online security threats.
How can one overcome these challenges?
While there is no single proven way to succeed in business, a common theme among the successful ones is that they have a modern workforce.
When you use Porter’s Five Forces — a framework for analyzing a company, market, or industry — you’ll realize that the market is more saturated than ever with tons of alternatives/ substitutes, and changing buyer’s behaviors.
It is, therefore, imperative that businesses today strive to develop an unfair advantage in their industry or market in order to become successful.
3 Challenges Every New Zealand Business Must Overcome
Challenge 1: More Competition
A quick-and-dirty analysis using Porter’s 5 Forces reveals that almost every industry are in the same situation. But before that, here’s a quick recap on the five forces:
- Competitive rivalry — looks at the number and strength of your competitors. When rivalry is intense, companies often attract customers using price cuts. But when there’s minimal (or no) competition, the stronger your position is with healthy profits.
Threatof new entrants — refers to the ability of other people to enter your market. If it takes little money and effort to enter your market, or if others can replicate the technology you’re using, then rivals can quickly enter your market and weaken your position.
Threatof substitutes — the likelihood of your customers finding a different way of doing what you offer. If what you do can be replaced by something else available in the market, what’s stopping your customers from doing so?
- Bargaining power of buyers — how many buyers do you have and how big are their orders? How much would it cost them to switch to your competitors? When you deal with a few buyers, they have more power to dictate terms to you.
- Bargaining power of sellers — how easy is it for your suppliers to increase their prices; how many suppliers do you have? The fewer suppliers there are, the more you need their help and the stronger their position and their ability to charge you more.
This framework is often used to determine an industry’s attractiveness or assess the company in terms of its environment.
Take, for example, a fictional web development company called Best Web Agency. If you look at the competitors within the segment, there are a lot of them. There are
The barriers to entry in this industry are also individual. Anyone with design and programming experience can start offering these kinds of services.
In addition, there are a lot of drag-and-drop website builders that can act as an alternative to the services Best Web Agency can offer. There are countless pre-built templates regard- less of which platform the user chooses. All these factors make it difficult to stand out in this market.
Challenge 2: People’s Buying Behavior Has Changed
The internet has also changed the way people buy — both online and offline. It decentralized the buying process in that businesses can no longer withhold information that may prove useful in the buying cycle without it affecting them negatively later on.
For example, before the internet, buying a laptop means going to a store, talking to sales people, and deciding on which model to purchase.
Salespeople can opt not to share some important pieces of information like battery life or power consumption, which may make some buyers hesitate. But with the internet, con- sumers no longer need to ask and get these information from salespeople. They just search for reviews online and make their decisions long before talking to someone from your com- pany.
Challenge 3: Looming Online Threat
In addition, there is a continued rise of a new kind of threat — cyber attacks. With more and more people relying on using the internet for their daily needs, it’s imperative that you equip not only yourself with the knowledge and tools but also your staff.
More than 84% of cyber security breaches were caused by human error. This means that even if you are careful yourself, your staff might not have the same level of awareness.
In addition, about 70% of all SMBs have been targeted by a cyber attack in 2018. Unfortunately, most of them didn’t realize and weren’t prepared for these attacks.
These three challenges have to be faced by New Zealand business owners like you if you want to remain competitive, relevant, and successful. You must strive to develop an unfair advantage in your own industry.
Read more in our newest white paper on what an unfair advantage looks like — what qualities do modern and successful New Zealand businesses have and do that others don’t.