Competing with the best (continued)

In a Telkom presentation at Rhodes University on August 22, the Telkom media spokespeople spoke about “investing in change”. This presentation continues the idea of competition leading to innovation. There are two lessons to be learned from this Telkom illustration.

Firstly, Telkom, which funded the Rhodes University and Journalism Careers Indaba, elaborates on my previous post, “Competing with the Best”, that competition gives rise to innovation, in the many ways.

In the 1960s, South Africa was connected to 72 nations through Telkom. In the 1990s, South Africa launched its mobile operations, underwritten by Telkom in partnership with Vodafone. This subsidary grew to be Vodacom, which Telkom sold in late 2008 in preference for its own 3G network.

Telkom, which was previously a parastatal company,  had the monopoly in telecommunications in South Africa. Neotel has since come into the mix and has become a major competitor for Telkom.

Naas Fourie, the chief of strategy at Telkom, says “Defending one’s market share in today’s competitive market environment is no longer enough.”

This is one of the aspects that drives Telkom to do better, and develop ICTs (Information Communication Technology). Telkom is therefore promising to adopt new strategies in an attempt to keep their customers. They want to connect Africa to the rest of the world and are in the process of providing more options for their customers in an attempt to keep them from switching to Neotel.

Telkom is also trying to improve their brand and there name and are sponsoring connections to the 2010 World Cup.

Here are some of the promises Telkom has made:

According to Telkom, they have 29 points of presence, 46 mobile broadband transceiver, 31 fixed broadband  wireless access transceiver stations, 17 network centres as well as improving call centres.

  • Telkom is also offering training and bursaries to computer and other electronic engineers to further enhance the skills in South Africa. ICT skills like infrastructure are scarce in South Africa.

The second important aspect of this illustration is going viral and is the ICT adaptation and transformation and what this means for businesses.

Even though there is a digital divide, mobile or wireless access and cheaper ICTs mean that more people can access this facility in an attempt to connect more people.

These changes can only mean great things for digital businesses and the information sector.

If these sectors create a creative strategy and solid business model, this better digitalised economy will be very beneficial and create many other opportunities.

Would Telkom have done changed and innovated if Neotel, MTN, Vodacom and Cell C, had not existed in South Africa? Would they have lost their customers in the rural areas because there is no infrastructure in the rural areas and mobile phones would be a more viable option?

For more information about Telkom and their challenges, ups and downs look at “A moment of silence” and “Odds and Ends” from Cath’s The Next Generation TV show.

TIP: Innovate don’t stagnate.

Like Naas Fourie says, It is not enough just to compete with the competition, but to far exceed them. So look at where your competition is ahead and innovate in order to exceed them.

Advertisements
Published in: on August 25, 2009 at 6:47 pm  Comments (1)  
Tags: , , , , , , , , ,

Competing with the best

Microsoft’s sales plummeted, so in an aim to recovers its revenue they made a deal with Yahoo to try and compete with the Google search engine.

Microsoft and Yahoo created their own “decision” search engine called Bing unveiled in May 2009.

Yahoo and Microsoft make a deal.

Yahoo and Microsoft make a deal.

According to the Financial Times, Microsoft would take on the costs whilst Yahoo would work on attracting consumers.

Another big partnership came when Nokia’s market had declined by 47 percent in 2009, so Nokia decided to partner with Microsoft. This amalgamation would create the Nokia E series which will incorporate Microsoft’s Office Mobile into its phones in order to compete with Google Chrome.

Although this does not tie directly into businesses, this alliance has been talked about and cannot be ignored. It also brings up the topic of competition and how a company, digital companies as well as other types of companies, should deal with competitive markets.

Although competition for Google is good, especially as a consumer it produces many questions.

Competition is important

Direct competition exists where organisations produce similar products that appeal to the same group of consumers. For example two corporations sell the same type of software.

Meanwhile indirect competition refers to when different companies make or sell items which although not in head to head competition still compete for the same customers and their money.

Both these types of competition are vital for businesses and consumers as it ensures that prices are not fixed. It ensures that companies are continually innovating and progressing in order to attract a wider market.

If one company reamins dominant, there would be no substitutes for any products and this would not enable the digital financial markets to flourish as a whole.

And while it is good that Google has the potential competition from two large corporations that do have the potential to compete with Google, how beneficial to consumers is this?

Larger risks
And as we have spoken about the benefits of Google or other monopoly corporations, there is a danger for big companies in trying to become bigger. Larger companies that employ more staff and have an extended reach across borders were affected more adversely by the recession.

For example, the Independent Media Corporation, although not only affected by the recession but other factors, they were left in debt. The Independent News Media owns 430 titles across the world, but lost most of it value and was immersed in 1.4 billion euro debt. They have more titles, more staff and other assets which they need to maintain.

In brief Big Company equals More Assets, resources and larger Markets equals more at Risk.

Risks such as that of stagnating instead of innovating, risks that another market or trade can be decline and directly effect the company.

International bank Barclays was also bad affected by the recession.
I came across an article by Larry Dignan, Sam Diaz, Andrew Nusca concerned with Microsoft search deal risks becoming AOL.

The article says
“Does Yahoo need to own the underlying search technology? Possibly. The biggest risk to Yahoo is that it becomes AOL, a company that’s a gateway to the Web yet a step behind. A company that owns vertical categories such as finance, news and sports, but little else. A company that doesn’t own any content. And a company too dependent on third party technology for a big chunk of revenue. AOL’s search fortunes are hitched to Google. Yahoo’s search bounty will be tied to Bing.”

Conglomerates risk losing their independence and previous structures that held them together. Convergences are important, but it does jeopardise other aspects of the company.

TIP: Think before you Ink.
Consider the negatives and positives aspects of making a deal or amalgamating with another company before making a fixed deal.

 

Look out for how to compete with other businesses that are similar to your own without overstepping the copyrights and other legal boundaries in business.