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Small players have advantages.

Small Players Have Advantages

The ferocity of global competition is escalating fast. Winning in international markets requires alert response to the needs of highly disparate customers and being a low-cost producer. There is no one global market. The international winners will realize that success must be built on the satisfaction of quite specific, ever-changing preferences of customers in thousands of distinct market segments.

The impact of this reality will be devastating on the less nimble corporate giants, laboring under pompous bureaucracies. They tend to be parochial and seriously allergic to change. They tend to be high-cost and to spawn in-house politics, disinformation, and much focus on quite the wrong priorities. They may be eaten alive by their flexible competitors who respond quickly to the needs of their customers with high-quality, differentiated products. Many relatively small players thrive on this international playing field. They don't need it to be level.

The advantages enjoyed by such smaller businesses include: * Speed of action and reaction - a sense of urgency. * Excellent communications that inspire customers and employees alike. * Motivated employees whom trade unions cannot slow down, even if they are organized. * Avoidance of overhead incurred to support executive hubris. * Flat, project-oriented organizations which facilitate management contact with both customers and factory employees. * Management's concentration on true priorities, such as quality and productivity.

None of this suggests that "critical mass" is unimportant. However, adequate scale is not just a function of size; it varies with the capital intensity of the business, the rate of technology change, and length of product life cycle. Scale does give staying power against large capital demands and recurring investments in technology change.

But ability to compete internationally is not necessarily a question of size. It is often a question of product differentiation, technology transfer, or choice between home- or foreign-based manufacturing sites to serve distant markets.

Global competition will eventually force the pedestrian giants to shed their wasteful habits and concentrate on the imperatives. When this happens, the small guys had better watch out!

Small-company advantages can be put to work even for the giants with deep pockets, if they adopt the necessarily different mind-set. (Mind you, this does represent a dramatic triumph of pragmatism over corporate vanity.) Competition will eventually force big-company leadership to address quality before head count, to emphasize effective two-way communication ahead of image-building, to practice hands-on management ahead of high-profile "community leadership" and other posing for holy pictures.

When this happens, big companies will be reorganized into small, responsive units with maximum autonomy, total accountability, and commensurate freedom to take responsibility. As the metamorphosis happens, smaller players could lose competitive advantage in a hurry.

Some giant corporations have thrived along these lines - winners like Johnson & Johnson or 3M. However, many large American corporations with costly structures, newsmaking renumeration practices, and an inability to deal with the unfamiliar are perhaps among those that need to change most in order to be globally effective.

C. FLEMMING HEILMANN / Brockway Standard Inc. In competing globally, small can be beautiful, writes C. Flemming Heilmann. Born of Danish parents in Malaysia, Heilmann's career in the container business has spanned four continents over a 32-year career with such firms as Metal Box PLC of England, Continental Can Co. of the U.S., and Onex Packaging Inc. of Canada. In 1989, he became Chairman and CEO of Atlanta-based Brockway Standard Inc., a company whose history dates back to 1875 and which today is a leading producer of metal containers for food, industrial, and household products.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Special Section: Being a Global Leader; views of C. Flemming Heilmann, Chairman and CEO of Brockway Standard Inc.
Publication:Directors & Boards
Date:Sep 22, 1991
Words:582
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