Hello. This is Tenfu from Seito Shijuku. Companies need to quickly understand customer needs. You can say that you need to be aware of what customers find inconvenient, what they would like to see improved, and what they think is important even though they are not consciously aware of it. Oh, good job! !
In business administration, the story of Ford and GM is famous. Ford came up with a way to mass produce a car called the Model T Ford. In the manufacturing industry, there is a theory called ``economies of scale,'' which states that the more a product is produced, the more fixed costs are spread out and the cost of making the product becomes cheaper .
This is also a matter of economics, but many products consist of variable costs and fixed costs. I think the realistic product price is that a reasonably large profit is added to that. Fixed costs here refer to equipment such as factories and wages of workers.
In the short term, it is difficult to enlarge the factory or raise or lower the wages of workers, so these costs are considered fixed costs. Intuitively, fixed costs are costs that would take more than a year to change. Naturally, if this fixed cost is constant, that is, if the number of human resources is constant, the fixed costs such as labor costs per unit will be lower if you produce in large quantities, i.e., if you produce 100 units rather than 50 units.
Also, variable costs are the material costs of products , etc. Basically, the material cost per unit does not change whether you produce a small quantity or a large quantity, so if you produce a large quantity, the ``total'' material cost will increase.
Total material cost = material cost per piece (variable cost) x production volume.
Just to be sure, I'll say it again: Material costs per item are variable costs, regardless of production volume. Since the production volume can be changed over a short period of time, variable costs can be considered a short-term concept.
In other words, what I'm trying to say is that by mass producing the Model T Ford, the cost per vehicle was reduced, that is, the fixed cost was reduced , so it was possible to produce a very cheap car. . However, the success of Ford's Model T car did not last long, and it was overtaken by GM.
The reason is that although the Model T car was first class in terms of cost, there was only one type of Model T car available. As a result, customer needs change. GM began selling cars with a better design than the Model T, and design became more sought after than price.
It is common for companies that have achieved great social success to stick to the same way of winning, only to be overtaken by companies that come later and offer better products. Another example is the story of Swiss watches. In the past, mechanical Swiss watches held the majority of the market share. However, it was overtaken by Epson, which released the world's first quartz wristwatch in December 1969.
Thus, it is common for a successful company to be overwritten by another. In other words, GM determined that customers needed design over low price , and Epson introduced a new technology called quartz watches to the market. Whether GM and Epson planned and executed these decisions (planned) or happened by chance (emergent), these business decisions can be thought of as business strategies.
The overriding business strategy that I think of is retail. In the past, there were greengrocers, fishmongers, and a shopping street. With the opening of large shopping malls and the emergence of convenience store franchise businesses, traditional shopping streets are no longer seen. However, shopping malls, convenience stores, and more often mentioned department stores, are about to be overtaken by online shopping.
What is inconvenient for me is the disappearance of bookstores in the city. Buying books online allows you to see a variety of books. Once a social trend moves forward, it is difficult to stop it. I still believe in the possibility of real stores that are not online . I hope many people can share in the benefits. Next time, I would like to analyze strategy and tactics. See you soon.
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