Who is thinking differently

Topic: BusinessOrganization
Sample donated:
Last updated: April 17, 2019

The traditional European craftsmanship has existed for centuries. It runs on a wide variety of artisan organisations, such as Swiss watchmakers, Irish and Swedish crystal cutters, Scottish whiskey distillers, Belgian jewellers, and so on. But since the Industrial Revolution, thousands of small or medium sized European craftsmen stores had closed down because their products were not able to compete with cheaper standardized machine-made products from the Multi National Enterprises (MNEs).

Fortunately, their skills still got passed through generations. After decades of mass production, with the idea of “thinking differently”, Europe’s craftsmen get more advantages than their giant multinational competitors in the ever-globalising world today. The characteristics of them are outlined in figure 1 below.The forces of globalisation, standardisation, and mass production are widely described as threats to European craftsmanship products. As Time claimed, “manufactures of clothing, motor cars, and other consumer products are merging into giant, cross border enterprises to take advantages of economies of scale, and to bear the ever-growing expenses of marketing and technology”.

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The “best practice” strategy the MNEs used has worked incredibly well in the last 20 years. Best practice formalizes the seemingly intelligent idea that the company find out that does the best in the industry and then seeks to replicate it. The MNEs applied the most efficient manufacturing, marketing and even managing methods into every niche of the organisation.

They saved the cost, and came out with the cheapest products that possible.Customers are always happy to purchase the best products with lowest price. Therefore, “best practice” strategy had been accepted and widely used by most of the companies.

The MNEs quickly clutched the global market. But after a decade-long of benchmarking, their products and services become increasingly similar. For example, the gap between the best and worse U.

S. autos performers, which has 212 defects per 100 vehicles in 1998, has now narrowed to 53 defects (Hill, 2003). Further on, price becomes the only thing left to play in the competition. The DVD players’ prices dropped from US$1000 to US$50 within five years (Hill, 2003). The non-stopped price wars decrease the MNEs margins. Dr. Stephen Cummings (2002: 177) examines two options for the established manufactures: they can either carry on with the price wars, which would be more difficult, or turn into “identity”, which the competitors cannot rapidly copied.Also the definition of “quality” has changed.

It does not only include reliability anymore, but also identity. Reliability is one of the “hygiene factors”. The presence of the hygiene factors does not act as a motivator but their lack is a demotivator(Cummings, 2002:176). For example, it is hardly to tell the difference on the accuracy between Rolex watches and Regolo watches (which is a famous Hong Kong brand). The winner of the battle needs to have more “identity motivators” that separate itself from its competitors. It has to be unique to stand out in the crowd. It has to have something special that customers select it over others substitutes.

 Figure2. the diagram of “Hygiene factors” and “Identity Motivators”It brings us another subject: what do customers want? How to meet their expectations? Rational customers consider the accessibility, affordability, and product characteristics together and compare them with other products before they make purchase decision. Over times, people become more knowledgeable with products, they have more “disposal money” on hands, and they have more to choose from as the deep industrialising.We knows from Maslow’s needs of hierarchy theory, people’ needs level moves upward. People care more about psychological needs after their physiolocal needs have been satisfied. At the stage of people with “disposal money” today, it’s very clear that they are no longer satisfied with products that only Figure4. Maslow’s needs of hierarchy fulfilled their physiological needs.

Customers are sick of the blandness in the mass market. They are looking for something different, something unique. When they are making purchase decisions, they consider more in the “identity motivators”. The individuality, which the European craftsmanship represents, as one of the “identity motivator”, becomes more and more important.

The traditional European craftsmanship requires very high skills to perform the jobs in the “old and careful way”. The centuries-old skills are very labour selective and also labour intensive. It causes the relatively higher cost and much longer processing time compared with the technology-driven mass production. This can be viewed as a disadvantage in a modernism ways of thinking. But on the other hand, it can be view as advantages in the post modernism ways of thinking. The time-consuming factor causes that it is almost impossible for the competitors to rapidly copy the products.

There are several reasons determined the “individuality” of their products. Firstly, it is not possible to make the exactly same product by the same person, so it is impossible to copy the exact product. Secondly, it required very high skilled professionals to perform the job, it is difficult to find and gather the people with these unique skills to benchmark the products.Thirdly, one of the successful secrets of the MNEs is that they use the economies of scale to bring the cost down. But they cannot apply the same theory here because the jobs are very labour intensive. Consequently, the rivals need big financial budgets to run mass production. Therefore, high production cost becomes one of the barriers for the rivals to mass-produce the similar products.

Finally, the product’s retail price is made of production cost and other kinds of mark-ups. The product will not be sold cheaply with high production cost if the company remains profitable. The number of customers will be limited, because not everyone is affordable to purchase expensive products. The products become more unique for the owners.

As discussed above, these artisan organisations have several advantages. But they need to work on their weaknesses, such as time consuming, high cost, small production, and so on. Benchmarking, economy of scale, and other efficient methods may not be good strategy, but these weaknesses may slow the growth of the organisation in the short future. Time claimed, “Good work and modern technology are not mutually exclusive”. The organisations need to find the right strategy between the “in-with-new” and “out-with old”.

ConclusionArtisan organisation has a numbers of identity/difference factors that give them advantages in the competition. But they must continue to revalue the ways of thinking, adopt new ideas, develop more identity factors, and strengthen their hygiene factors to increase their profitability.

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