Competing on quality rather than price

The Financial Times carried an article today which I will use when discussing the different strategies British manufacturing firms can adopt when trying to compete in competitive global markets.

The essence of the piece is that many industrial firms have recognised the futility of trying to out compete their far-east asian rivals on grounds of cost and price. Instead, they are focusing their investment and energies in moving up the value chain and finding niche segments of markets where the price elasticity of demand is lower and where demand is less sensitive to fluctuations in the exchange rate.

“British manufacturers are combating threats from low-cost producer countries by moving into fields where price competition is less important….More companies are competing “on the basis of customer service and quality and less on price….Since 1990 manufacturing has slipped from 21 per cent to 14 per cent of UK economic output, partly as a result of competition from lower-cost nations…. Examples of companies that have shifted their strategies to compete in areas other than price include JCB, the earthmoving equipment supplier. In the past decade the company has launched a range of specialist products such as military trucks and telescopic handlers that can pick up loads in restricted spaces.”

The remainder of the piece can be found here

The value added frorm the FT comes in an excellent mini case study on Bedlam Puzzles

“Danny Bamping, managing director of Bedlam Puzzles, says the prices at which his company’s products are sold are a long way from being the deciding factor for ­consumers.”

The survey evidence comes from a new report from the EEF which is broadly optimistic about a sector which employs 2.9 million people n UK manufacturing and is responsible for 55% of UK exports and 75% of R&D expenditure in the UK.