If you have a business based in the U.S. and you pride yourself on having the lowest prices in town (or in your industry), are you ready to be severely challenged?
One of the most evident changes that the U.S. economy has undergone in the past 15 years or so is the flight of industrial and manufacturing companies away from the U.S. Why?
Well there are a lot of reasons, but the basis of this exodus is the fact that labor in the U.S. is increasingly expensive and hard to find.
Large companies can move all or a portion of their operation overseas and have their finished products shipped back to the U.S. (or anywhere else in the world) for a significantly lower cost than they can produce them here on U.S. soil.
In addition, this trend is expanding to include not only low-tech and highly automated manufactured products but increasingly it includes high-tech and knowledge based products that were once pretty much the domain of U.S. companies.
If you've ever shopped for programming help, needed a web site created, or tried to hire a freelancer to get your shopping cart integrated into your web business, you'll probably know what I'm talking about.
Firms from India, Hong Kong and Asia are everywhere and they are able to underbid U.S. companies in nearly every sector they enter.
If you have a business involved in these industries, or if you create and sell products that compete with the products these firms offer, chances are excellent that you won't be able to compete against them much longer, head to head - at least on low prices.
You may soon have to change your marketing tag line from "Nobody undersells the programming king!" Unless you are willing to work for almost nothing, there will surely be a less expensive alternative to creating your products.
The key might be this - don't try to compete on price alone! Find some other way to dominate your niche and exploit that characteristic.
The businesses that thrive here in the U.S. in the near future will be those that excel at something other than offering the lowest price around.
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Post#240 |
I currently reading a book now called "The World is Flat" by Thomas L. Friedman. Its a very well written book about recent history in the world (2000 to now) and a great portion of it talks about outsourcing and how much money can be saved from it.
A very important fact I learned from this book is that in the coming years, virtually every job that does not involve direct contact with the consumer is going to be outsourced or get a substantial cut in salary. There are just too many advantages to outsourcing for individual companies to pass up. These include being able to work while we sleep (due to time zone differences) and being able to work at an unbelievably small fraction of what you would expect in America.
The author stresses that these changes are not entirely bad and will be beneficial to innovation in the long run (if you believe in Keynesian economics). But we do not have the same advantages we once had, so the entreprenuer of today has to figure out what it is he can offer that no one else can. Only then will you have a successful business that is irreplaceable.
Posted by: Chris Elliott | April 23, 2006 10:30 PM | Permalink to Comment