Different sectors’ critical strengths

There are some strengths which all companies need in order to stay ahead of their rivals and be successful… They are virtually the same in every sector… But each sector also has its special conditions. These conditions mean that in every sector companies need specific ‘critical strengths’ in order to get ahead. In the future, companies will focus on these strengths and try to get ahead of their rivals in sectors as diverse as petroleum products, foodstuffs, electronics and automotives.

İsfendiyar Zülfükari is the young president of Turkuaz Petrol, one of the secret giants of the petroleum products distribution sector. He evaluated the latest developments in the sector and drew attention to a very important subject.

“There is a lot of movement in petroleum products. Tüpraş has been privatised, some companies have merged and there may be new acquisitions. All of these developments are very important. We are also looking favourably on expanding through acquiring a company. But it is not possible to get ahead of the competition and expand just by increasing the number of filling stations.”

İsfendiyar Zülfükari believes that the most important of the ‘critical strengths which bring companies to the fore in the petroleum products distribution sector and gives them a competitive edge is ‘storage strength’. Companies which have sufficient storage capacity will always be upbeat about petroleum products both today and in the future.

It is not just in the distribution of petroleum products. There are also similar developments in other sectors and movements towards ‘developing critical strength’.

But it is difficult to talk about a single critical strength for every sector. For example, in banking what is needed is the parallel development of eight factors which are continually interacting with each other. In logistics, where size is critically important, there are four additional factors which are prerequisites for being better than the competition.

Innovation is important in electronics
The increasing number of players in the electronics market has brought a parallel increase in competition. There are two critical strengths which enable companies to stay ahead of the intense competition in the sector. The first of these is technology and innovation. In order for a company to be competitive it must have technological infrastructure and sufficient accumulated knowledge. Profilo Telra CEO Göksen Körezlioğlu says: “In a market where technology is continually being used and updating itself, one stays ahead of the competition by producing distinctive, high added value products and by adopting a strategy of offering different products.”  Because, he says, by adopting a strategy of offering the consumer different, innovative products it is possible to remain aloof from declining price policies in a competitive market.

The second critical strength is developing a competitive pricing strategy. A company which has developed a technological infrastructure, has made investments in research and development which have enabled it to produce innovative products and offer them on the market with the right pricing strategy which is matched to the purchasing power of the consumer can be effective in competition. Göksen Körezlioğlu says: “When setting prices one should adopt a strategy which is based on an objective analysis of all the relevant factors including cost, competition, and the position of the product on the market.”

When one looks at the sector one can see that the players have adopted the similar strategies. The place which Turkish electronic producers have secured for themselves in Europe shows that they have applied the critical strengths well.

In automotives strength means a distributor network
Competition in the automotive sector is more intense than anywhere else. Hyundai Assistant General Manager Kurthan Tarakçıoğlu says: “To date the most important critical strength which has enabled a company to stay ahead of the competition in automotives has been the value of the brand and this will continue to be the case in the future.” But, as in many sectors, the value of the brand is not sufficient by itself.  The important factors in staying ahead of the competition in the area are the appropriate location of the plant, financial strength, prestigious brands and a mentality which is customer-focused and enables the company to be managed professionally. But more than all of these factors, the most important critical strength in the sector is the organisation of the company’s distributor network. Having an extensive distributorship organisation, a technological infrastructure, and a customer-focused service culture are what play the decisive role in competition. Kurthan Tarakçıoğlu explains this strength as follows:

“The factor which persuades customers to make a purchase is trust. This strength, which we describe as a critical strength, can be secured through a strong distributor organisation.  If companies are trusted then customers to whom they have sold a vehicle will recommend them to their friends and acquaintances and may even make a second purchase, providing the company with marketing flexibility at minimum cost.”

The sources of strength in two sectors
Cement is a sector in which there is no product variety and where the standards and quality are fixed. As a result, it is a market in which producers compete on price and payment terms. On the domestic market the prices are set regionally. As a result, the location of the production facilities also determines the company’s competitive strength. For this reason, geographical coverage is accepted as a critical strength.

Turkish Cement Producers’ Union Board Chairman Adnan İğnebekçili says that a company’s ability to apply sustainable development principles is also one of the factors determining competitive strength. İğnebekçili says: “For this reason, in the long term, competitive strength depends not so much from price-term policies but through a producer stressing its sensitivity on subjects such as sustainable growth and environmental friendliness.”

In ceramics the critical factors in securing a competitive advantage are an extensive distributor network, distribution strength, a certain size, design strength and branding. According to information provided by officials at Kaleseramik, as in every sector, it is a company’s strength in distribution and sales which determine the competitive position in the ceramics sector. Officials from Kaleseramik said that if a company applies effective logistics policies and can provide a good, rapid service then customers will choose it ahead of others. They said that, in a market in which the customer has the last word, this provides a company with a major advantage.

How does one get ahead in 12 sectors?

Sector Critical Strength The impact it has
Banking Branch network In retail banking, banks which have an extensive branch network can acquire more customers.

White meat Brand strength Particularly in times of crisis, companies which have a prestigious brand gain the trust of customers.

Cement Location Given that competition in the sector is regional, the geographical distribution of the production plants determines a company’s position.

Consumer durables Distribution and sales organisation An extensive distribution and sales organisation and the quality of this organisation are among the most important elements.

Foodstuffs Distribution and sales organisation A company which has a strong sales and distribution organisation is active in the creation of a new category. It increases its presence.

Chemicals Large-scale production and sales Having a large production volume under a single roof provides a company with a major advantage.

Logistics Large size As size rises the volume of business increases commensurately, costs fall and service quality rises.

Furniture Customer services Being able to solve after sale problems quickly and completely creates a significant competitive advantage

Automotives Distributor and sales organisation The coverage of the distributor organisation, infrastructure and service ensures that the brand is preferred.

Retailing Coverage of stores and HR The number of stores increases penetration. Quality human resources and services offered in the right manner.

Ceramics Distributor and sales organisation Ease of access is important in the sector, and distributorships and sales organisation determine competitiveness.

Insurance Agencies Agency networks play a decisive role in companies in the sector reaching a certain size.

EBRU FIRAT
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