3 big businesses that grew due to fierce competition
Updated: Nov 28, 2022
When we think about large companies today, we can think that they emerged naturally. That there was a clear problem and that the best way to solve it is the product or service offered today.
The reality for many companies is totally different. There are organizations that emerged or grew from very different situations, like the ones we mentioned in this post, where we write about 3 big businesses that were motivated due to the crises.
Another motivator of big growth in organizations is fierce competition. Competition, as well as crises, force us to look for alternatives to be better, to somehow stand out from others. In this post we will talk about 3 great businesses that grew because of their competitors.
Believe it or not, Switzerland has already gone through very difficult times in its economy. In 1970 the country had factories closing and thousands of people were becoming unemployed. At the same time Asian companies were penetrating the market with their extremely cheap products.
The Swiss watch industry is very famous all over the world, and at that time it suffered from competition from Japanese, Chinese and Korean watches. To give you an idea, between 1977 and 1983 Switzerland's market share dropped from 43% to 15%. Asians' watches were digital and mass-produced, making them much cheaper, while the Swiss sometimes took months to produce due to handcrafted workmanship, which made them more expensive.
The Swiss had a very strong tradition of producing the most accurate and perfect watches, so it was difficult to make more drastic decisions regarding production. But two rival brands decided to team up to find the best solution and get through that moment, the General Company of Swiss Watchmaking and Societé Suisse pour l’Industrie Horlogère. The first steps after the union were:
Automate production lines;
Reduce from 91 to 51 the number of watch components;
Replace steel bracelets with plastic
With these changes, the group suffered several criticisms, but they remained firm in their decision. The Swiss, however, didn't just cut costs, they knew they needed to get people to buy their watches so they could compete with the Asians.
So, when they realized that watches were seen as a product to be bought and used for life, they decided to turn the watch into a fashion item. Launching different models throughout the year, such as the classic line, casual sports and leisure, and also watches in different colors. This format even helped to carry out specific campaigns such as when the Halley comet passed close to the earth in 1986. The first launch of the Swatch brand was carried out in 1983.
This movement allowed Swiss watches to recover and become the best sellers in the world.
Just like the Swiss, American companies like Intel faced great competition from the Japanese in the manufacture of memory chips in the 1980s. The Asians produced products very cheaply and of great quality.
Not seeing alternatives to fight the Japanese, Andy Groove and Gordon Moore, president of the organization at the time, made a very difficult decision, they decided to stop producing chips, the product that had taken them to the level they were at the time.
After they stopped producing memory chips, Intel focused on semiconductors, a material that allows computers to process information. It was this drastic change that allowed Intel to survive and reach today's level, with more than 110,000 employees and annual revenue of approximately $79 billion.
The Prada company, founded in 1913 in Milan by Mario Prada, is a family business that has gone through good and bad times in its history. The leather goods store, before making the great success of today, had already exported to other countries in Europe and the United States before going through difficulties in the 70s. At that time, Gucci and Hermès companies grew very fast.
However, in 1978, Mario Prada's granddaughter, Miuccia Prada, took over the company. She had no training in fashion, design or administration, had only studied politics and theatre. Not working in the industry, Miuccia had no pre-set thoughts and thought of somewhat unexpected alternatives to save the family business.
As it was very difficult to compete in the leather goods business, she suggested switching to other materials. The family didn't like the idea at all at first, but they approved after Miuccia's insistence. In search of other materials, she discovered the fabric used in Italian military parachutes, a material that was light and resistant. With this material, luxury backpacks and bags were produced.
Despite the difficult decision, which was motivated by strong competition, the family company survived and became one of the biggest fashion brands in the world, with annual revenue of 2.4 billion euros and more than 13 thousand employees in 2020.
These three stories were taken from the book Oportunidades Disfarçadas, by the brazilian Carlos Domingos. The book presents numerous other companies that emerged or grew from unusual situations or reasons, such as: crises, customer complaints, failures and errors. If you want to get inspired or try to relate these stories to the situation you're going through today to create a business, it's definitely an excellent book.