Tuesday, September 10, 2013

Productivity, efficiency improvement?

There might be nothing to be cheer about when a company say want to do something to improve its efficiency. It is just part of competition in business world. If all your competitors has the same access to new technology and technology supplier; as long as your competitor has the financial resources, they can improve their efficiency as your company do too. The margin improvement you hope to enjoy will be eliminated when your competitors can afford to sell cheaper to gain market share because of higher margin. You will then sell cheaper to protect your market share and thus your margin improvement gone.

Unless you develop your own technology in house, kept it secret or apply patent to protect it, you are likely not able to enjoy the improve margin.