Highly Competitive Business Environment

Introduction

In the wake of globalisation and technological advancement, business ecosystem has growth into one of the most competitive environments globally. As pointed by Chatain (2011) and Bennett et al. (2013), contemporary business environment, irrespective of industry and organization size, is characterised intensified fight for similar market, resources, and opportunities by business entities. Currently, success in business demands strategic thinking to leverage capabilities and resources Although stiff competition can drive an organisation out of business or affecting its profitability, healthy competitive environment ultimately enhances respective performance measuring by market share and effectiveness in services offered and quality of products (Dunning, 2013; Pillania, 2009). Ideally, degree of competition varies with an industry but, in a larger scale, subject to potential opportunities, ease of entry, nature of the business products, exit barriers, government policies, homogeneity, economies of scale, and technology. For any business entity to growth and be sustainable, it must be competitive including innovating and adopting various ways of gaining advantage and beating competitors to the market and retaining the customers. In addition to having direct competitors, which is the most common form of competition, competitive environment can manifest in the form of changes in social and technological variables, regulatory sources, and alternative products or services (indirect competition) (Teece, 2010; Johnson et al., 2008; Osterwalder, & Pigneur, 2010). One notable example is the development of mobile phones and subsequently introduction of smartphones, which ultimately rendered such products as landline phones, postal services, and cellular phones near obsolete and unsustainable in some areas.

Source and effect of change in business environment

In addition to heighten competition and increased consumer demands, complexity in the market rooted on enhancement technology, globalisation, and consumer-business relation have forced business entities to shift views, approaches, and culture to adopted the changing environment. Fundamentally, this intensified competition have forced businesses to identified and analysis in depth its competitive advantages viewed as strengths over the other players in the field while viewing its and competitors’ weaknesses with same degree. According to Johnson et al. (2008), building a sustainable advantage calls for a business model modelled by the understanding of the market including consumers’ demographics and demands and other players and anticipation of changes in market. Consumers strive for better and cheaper products resulting in constant change drive and perspective towards the products and to some extent, the company. Furthermore, technology may encourage establishment of new firms that provide same or high quality products cheaply resulting in direct competition or providing alternative products (Pillania, 2009; Teece, 2010). Changes in business environment may also encompass such elements unreliability of traditional suppliers and distributors, demand for efficiency workforce, employee’s skills set, and enactment of new laws such environment conservation regulations, labour laws, and international sanctions.

Analysing competitors is a crucial aspect of gaining competitive edge. According to Upson et al. (2012), competitor analysis encompasses thorough assessment not just core elements but direct and indirect factors affecting the environment that a business tries to profits from or ability to counter competition. In addition to the elements such as such strengths, weaknesses, threats, and opportunities capturing both current and prospective of other players, factors with economic, social, political, and importantly technological changes must be taken into consideration (Czepiel, & Kerin, 2012; Gibson, 2011; Porter, 2008). According to Galbreth & Ghosh (2013) and Bansal & DesJardine (2014), in fight for market share and sustainability, business entities must take into account the factors controlling the market, consumers’ perspective, suppliers, and distributors. As pointed by Porter (2008), change in business is a factor of underlying economics of an industry with forces controlling it going beyond other players in the particular market and industry with similar or related products. Porters (1978) noted that potential entrants, suppliers, and substitute products are competitors in addition to consumers.

Theoretically, business change and its sources vary depending on the field and location. However, this assertion is contentious as changes in one field can cause ripple effects to the other industries. As acknowledged by Crawford (2008) and Wang & Shaver (2014), emergence of new products replacing existing with qualities that are more desirable and same benefits with considerably lower pricing, drives consumers to these alternative products enhance heightening competition. In business, social, or economic spectrum, changes is an inevitable element that is fundamental

Regarded as effective method of assessing competition nature in a market, Porter’s Five forces theory outlines five factors termed as forces that forms business foundations in developing a strong view of competitors. In his articles titled ‘How competitive forces shape strategy’, Porter (1979) argued that the essence of any business entity formulation a strategy is to cope with external competition. Nevertheless, he contended that the biggest problem in dealing with competition is having a narrow perspective or being pessimistic towards its nature. In the wake of smartphones, Steve Ballmer then Microsoft CEO laughed at and lashed out against new iPhone terming ridiculously expensive in comparison to its Windows handsets in turn failing to realise the potential market of smart phones and competitive advantage Apple would gain as a result (Bort, 2016; Weinberger, 2017). Later on, Microsoft went ahead to acquire Nokia arguing that without the Nokia, the company’s struggling Windows Phone operating system and ecosystem would collapse and non-competitive against dominant players, Google Android and Apple’s iPhone. The company wrote off the investment calling it a huge mistake and ultimately shutting down it smartphone businesses. Professionals and scholars point to the Microsoft perspective and reaction to changing handset, phone, and operating system ecosystem as a case study to fail to identify and take advantage of changes in the market as well as evolving consumer needs.

Potential challenges of changes

In business, social, or economic spectrum, changes is an inevitable element that is fundamental. In essence, changes can transform organizational working or operating environments such economic growth, boom, or collapse, technological advancement, and new competitors. In order to keep up with continuous changes affecting internal or external environments of a firm, it necessitates adopting look term approach. As explained by Steiner (2010), this strategic planning encompasses factors that a business entity should priorities, areas to focus resources, expected outcome, roadmap to achieving the goals, and expected barriers. In embracing changes, organization encounters number of problems that include:

Conflicts

If not well understood, change can evoke fear and uncertainty among involved individuals as well as those anticipates to be affected. According to Nelissen & van Selm (2008) and Casadesus-Masanell & Ricart (2011), conflict emanates from the uncertainty to individual comfortable and benefitting the most from the status quo. In addition to causing resistance to change, such conflict among those implementing and individuals threaten by such change can severely derail the process by disrupting strategy and schedule. Mitigating the challenges requires organization to be intervene root cause by being proactive and incorporating all involved and mostly likely to be affected during the process (Casadesus-Masanell & Ricart, 2011; Paton, & McCalman, 2008). Additionally, Ford et al. (2008) posited setting an open and collaborative culture encouraging constructive conflicts while restricting those perceived destructive. Organizations can empower employees at every level through creation of working environment that allows sharing information, corporations, and involvement in core functions and decisions.

Lack of proper planning

Secondly, planning is another most prevalent cause of ineffective implementation of organizational change. Building from the change management model formulated by Lewin, Cummings, et al. (2016) asserted that implementation of change is subject to multiple factors and can be derailed by number of elements. For an organization to adopt change effectively whether into its internal or external environment, it must set in place strategies to combat challenges associated to its identification, prioritisation, implementation, and engaging involved persons. Armenakis & Harris (2009) contented that business must set in place elaborated and well-thought plans of combating changes in its internal and external environments.

Rutherford (2009) contended that without correct strategic planning underlining all underlying factors and nature of change as well as what need to happen for new approaches and structures to be successful. Planning encompasses checking compatibility of system, culture, product, or approaches to be adopted to replace those that exist require a well-thought through and data-based strategy for successful implementation and increasing efficiency (Vecchiato, 2015; Santhidran et al., 2013). Additionally, creation of timeline of changes as well as all the schedule of every step and process accounting for downtime and unintended consequences ensures coverage of all aspects of changes in a timely manners. With availability of reference point, this checklist makes the changes variables are implements sequentially while ensuring necessary and critical structures and decision are factored in at every step. Moreover, Ben-Menahem et al. (2013) explained that change planning involves also structuring and anticipating changes in internal and external environment that might negatively or positive influence organization operations and performance. Before embarking to changing operating structures and cultural system, businesses entities should ask change-management-oriented questions that would aid in providing a clear scope, roles, and expectation.

Implementation of changes without prior demonstration of reasons for change such as poor financial outcome, declining sales, fall in market share, and customer dissatisfaction supported by figures and data will ultimately encounter a resistance or low motivation because everyone involve understands or see the need. The major problem in change implementation is fail in planning stages (unfreezing stage) that include challenging existing beliefs, behaviour attitudes, norms, and values, which are core factors (Sarayreh, et al., 2013; Cummings et al., 2016). Building from Kotter’s 8-Step Change model , Pollack & Pollack (2015) and Appelbaum et al. (2012) pointed that the most challenging step towards change is initiation stage that include forcing organization to re-examine its core values for instance, if an firm strive to be a leading in the global and this goal is being threaten by upcoming players in the industry developing a strong connection and shared values. Currently, most organization fails to plan and set in place market structure in anticipation of changing market, consumers’ behaviour and perspectives, policies, and internal organization’s culture (employees’ motivation, team behaviour, diversity, and performance) but rather decision to embrace market trends without in depth research, planning, and clear entry and exit strategy.

Lack of effective communication and engagement

Kotter & Cohen (2012) argued that people do not mind change but they have to get used to the idea, have a deep understanding of the effects, and provided with opportunity of influencing the direction of change. According to Sonenshein & Dholakia (2012), engaging employee by asking for their opinions during either strategy formulation or implementation has a significant implication on the results and direction of change. Moreover, feeling of being part of the larger organization instils a positive attitude and behaviour towards change. Based on three-step change theory, argued that the change process must involve freezing existing situation as first step (Cummings, et al., 2016; Petrescu, 2010). In including such methods as increasing the driving forces directing the attitude, beliefs, and behaviour of involved individuals a way from existing established structures and culture. According to Sarayreh et al. (2013), ushering in new culture, structures, and operating approaches require pausing or freezing the status quo and restraining forces perceived causing negative influence to the change. During this freezing stage, organizations seeking to adopt change can identify and familiarise with the problem, recognise and sell the need for change, build trust and motivate the key players, and brainstorm the solutions. Brisson-Banks (2010) pointed out that development of successful changes process is rooted on identifying and pointing out through compelling message the need to adopt new approaches and ways of doing things.

Effective communication in informing employees and other key shareholders on impeding changes, gaining buy in to need for change, addressing any concerns that may arise, and seeking support throughout the entire process. The theory of employee engagement outlines importance of employee involvement in core organizations decisions resulting in full interest and commitment to objectives and ultimate goals (Avey et al., 2008; Mone, & London, 2018). According to Gilley et al. (2009), for employees to feel part and important elements in the larger organizational goals and success, leaders have to share information, ideas, and expectations extensively and clearly. Avey et al. (2008) reasoned that employee psychological capital is related to one’s positive emotions that in turn are associable to behaviour, attitude, and mindfulness key to organizational change. According to Van den Heuvel et al. (2010) noted that without this motivation, implementation of change would suffer a major setback because not just key players but all involved individuals would fail to buy in and participate in effecting meaningful changes.

Another important element is working with others players and stakeholders in the field such as employees, investors, and partners in order to attain expected results. Founding from Kotter’s theory, Bimber et al. (2012) lamented that in implementation of change, an organization should not expect support from all involved parties with individuals were not involved or affected directly by underlying factors. Thomas & Hardy (2011) further stated because of the uncertainty brought by the changes, engaging with involved individuals effectively aids to solve and address the resistance and fear on the effects over new ways of operations and culture.

Conclusion

Following identification and formulation of strategic plan to be followed in change implementation, the next stage in ensuring people believe and behaviour a manner that support new ideology or culture. Importantly, embracing this new ways and direction is a long-term factor with involved persons understanding the ways in which it benefits them. Most of failed changes are attributable to assumption by management that everyone will buy in to the changes just because it seems necessary and beneficial to organization growth and performance. According to scholars, in a given industry, some people will ultimately be affected negatively by change either directly or indirectly but especially those benefiting from current and established structures and approaches. In same degree, others might take long to recognise and conceptualise the problem to organizational survival and sustainability hence essence of change.

As such, managing change need to take into account factors as resistance from harmed individuals and timely recognition the need for change. It is identified that most organization fail to successful implement change because on its slow recognition of underlying factors such as cause, best approach, and combatant elements coupled with ineffective communication of these problems, needs, and approach to involved individuals. Ideally, people need time to understand the problem and need without being rushed into it and communicated effectively but management should not wait too long because competitors might adopted to changing environment faster gaining competitive advantage by reaching the market first. After involved members embraced the implemented change and starting to take shape, organizations need to identify supporting factors and barriers, formulate ways of sustaining said changes, stabilize its charts, ensuring support from both leaders and employees, and make sure everyone is adequately informed on the process collectively aimed at anchoring the changes.

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