As companies worldwide emerge from the Great Recession, new trends and hyper-global competition are forcing American companies to redesign business models and seek a greater edge in order to retain or increase their market positions. In turn, more and more companies are implementing important strategies to enhance both domestic and international competitiveness. Here are five essential strategies you’ll want to consider.

1. Focus on Core Competencies

Today, companies in every industry are racing to add greater value than their competitors. To achieve this, many are delving deeper into their core competencies and outsourcing more and more non-core functions to other U.S. producers.

This strategy is enabling American firms to focus on what they do best. Thus, if a firm produces engines, the key is to concentrate all efforts of producing the best engines in the industry and subcontract all non-essential functions to other firms.

2. Attract and Retain Necessary Talent

As companies focus on their core competencies in hopes of becoming the world’s best at what they manufacture, they increasingly require higher skilled employees with the ability to think critically, solve complex analytical problems, and manipulate sophisticated technologies. And herein lies the problem.

A skills deficit is emerging at all levels that will become more severe as U.S. and global unemployment rates fall.

A skills deficit is emerging at all levels that will become more severe as U.S. and global unemployment rates fall. This point is best illustrated by the fact that although the U.S. unemployment rate was nearly 9 percent during 2011, 600,000 U.S. manufacturing jobs went unfilled, says the University of Michigan. If companies cannot find workers with the necessary skills, corporate growth potential will be limited.

Moving forward, companies must develop creative strategies to find and retain highly skilled employees. To do so, employers will need to establish more attractive working conditions, invest more in employee training programs, continually refresh and upgrade employee skills, and work with local universities and community colleges to ensure courses offered satisfy market demands.

3. Become More Customer Centric

There is no doubt that today, the customer is king. Consumers in every country typically have access to a greater variety of products and services at increasingly attractive prices. As a result, producers of both goods and services need to become more customer centric and cater to changing buyer needs and desires to a greater extent than ever.

This may include offering faster delivery times and shorter customized production runs, as well as emphasizing customer loyalty through improved customer support, branding strategies and social media. And very importantly, many companies need to offer different value propositions and new products specifically designed for developing country budgets and tastes, as opposed to adjusting products originally designed for the U.S. market.

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For example, General Electric designed a portable PC-based ultrasound machine for rural China, and a handheld electrocardiogram device for rural India—both small and relatively inexpensive, said Jeffrey Immelt, CEO of General Electric. International sales of these products, which were not offered in the United States, reportedly were very favorable.

4. Drive Down Costs

Since the beginning of the Great Recession, many companies in all corners of the globe focused on strategies to drive down costs. Although the U.S. and global economic growth has increased, the need to continually improve efficiencies has not decreased.

As a result, companies must continue to improve processes and streamline operations. And often not considered, firms must encourage greater communications and coordination across all corporate departments.

Plus, with advances in horizontal drilling and hydraulic fracturing, American energy companies are exploiting previously untouched domestic unconventional energy resources, such as shale gas, shale oil and tight oil, once considered too difficult to extract. Stated by Boston Consulting, a business management firm, U.S. production of shale gas alone “has helped knock down the U.S. wholesale price of natural gas by 51 percent since 2005.” Greater savings passed to consumers likely will give U.S. firms a competitive advantage.

5. Expand Internationally

Although economic growth rates of many developing countries recently have been downgraded, they are still projected to increase considerably faster than in the United States. In turn, U.S. firms should consider expanding beyond the domestic market of 313 million consumers and target the world’s 6.7 billion consumers.

Importantly, according to the U.S. Chamber of Commerce, markets outside the United States represent 73 percent of global purchasing power and 87 percent of economic growth. And the Organisation for Co-operation and Development, an inter-governmental organization headquartered in Paris, says today’s 1.8 billion middle class consumers will rise to 5 billion by 2030, with the vast majority living in Asia.

As a result, it’s important to reach these markets through exports and/or investments. And in many cases, establishing strategic alliances and partnerships is a sound strategy to understanding specific market demands and demographic trends, which often reveal consumer tastes and spending habits.

This article appeared in International Insights, a Fifth Third Bank publication, April 2014.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author of several books, and a nationally syndicated columnist on global business, trade policy, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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