An EXL – IMD Initiative
  July 19, 2007, Waterman’s Company, 16, St. Mary-at-Hill, London

EXL Service in association with IMD, one of the world’s leading business schools, organized a business forum titled: Low Cost Competition – Why the Challenge is Intensifying. It was addressed by Adrian Ryans, Professor of Marketing and Strategy at IMD. The forum is a part of thought-leadership workshop series organized by EXL for its key clients and prospects. The discussion focus was on critical factors that are facilitating growth and competitiveness of the low-cost players and how they are able to provide “good enough” quality at unbeatable prices. Directors, COOs, General Managers, and Business Unit Heads from leading companies of UK and Europe participated in the event. The feedback from the participants was that it was an enriching session and that it successfully addressed the growing concern of strategists facing a new breed of market competitors. Event Highlights The forum highlighted the successes that the low-cost players have achieved in a wide range of industry sectors, be it airlines, financial services, retail, automobiles, IT services, or pharmaceuticals. Participants discussed how the Asian markets, with their highly competitive and innovative approach, coupled with their unbeatable economies of scale, present a large opportunity for many Western companies looking to take advantage of them and improve their bottom lines. To prove that the challenge is real and that it encompassed almost every business sector, IMD conducted a survey of its customers. Almost 80% of the executives and managers from across several industry verticals expressed concern at the increasing success rate of low-cost service providers and manufacturers. A McKinsey survey of business executives also indicated that the low-cost competition was increasing competitive intensity in many industries. Achieving cost efficiency and higher competitiveness is a critical goal for business strategists, because by offering lower prices to the customer, the company can enter a virtuous cycle of higher revenues and excellent margins. The forum analyzed the Traditional Business Model vis a vis the Focused Business Model. In the former, the company takes care of infrastructure, customer relationships, and innovation all by itself. The latter model is utilized by highly focused companies that specialize in one of the three. It has been seen that networks of these highly focused players can sometimes outperform traditional horizontally integrated companies, because each of the players has the potential to be best-in-the-class in its core process. Also, in some industries, integrators have emerged that help a company put together a highly competitive network of specialized players. The forum concluded with an insight into how traditional companies are reducing their product costs by taking advantage of the competitive and innovative Asian markets. Participants were of the opinion that companies should look for creative ways to offset the rising development costs and shorter product lifecycles. They would have to experiment with creative ways to open their business models by using outside ideas and technologies in new product development as well as actively commercialize inside intellectual property externally. Therefore, the success of low-cost competitors indicates that there is an opportunity for traditional companies that move quickly and aggressively.