DEVELOPMENT CRITERIA FOR COMPANIES IN OPEN MARKETS

The biggest risk for companies that are located in open market niches is that of having a rebound effect in the short term. We understand that an Open Market is one that already exists and offers a broad spectrum of products already developed by companies that have applied the technologies of development and research of new products. They are not markets where innovation is the key to growth. An example is automobiles and motorcycles in which the basic concepts of the design of both engines and bodies are maintained over time.

If we evaluate the above, we can assert that the engineering concept of the Otto cycle (The Otto cycle is the thermodynamic cycle that is applied in the engines of internal combustion of ignited provoked (gasoline engines) invented by Nicolaus Otto in 1876). Two and four stroke engines is the same since the beginning of the industry. Except for the concept of the Wankel engine and the new concepts of electric vehicles, the engines continue to operate under the same principle.

Returning to the concept of Open Market, we can say that a company can redesign or modify a vehicle or motorcycle based on what is available in the market. This does not mean literally “Copy” for what is perfectly valid and allows the optimization of the existing in function of the application of criteria of excellence and offering to the possible client elements that improve their perception of a product.

However, a company that ventures into this type of market even when its ideas and products are innovative must grow neatly in such a way that the "promise" you make to the Customer is maintained over time.

Much has been said in management texts to define the concept of Quality and Customer Satisfaction. Think for a moment as customers and define the previous terms; When we go to a store or select a good or service our criterion is based on evaluating how reliable or credible the "PROMISE" or "COMMITMENT" of the manufacturer or seller in terms of the characteristics and behavior of what is sold.

Terms such as "Satisfaction", "Delight" and any of those used to define the quality of a product, do not show more than the confidence that we can have in fulfilling what is offered. In a management course in which I participated, the facilitator asked the participants ... What does AVON sell? ... some of responded..” redolence, creams, beauty products etc ...” the facilitator's response was: AVON sells HOPE ....

This is nothing more than what we expect from a product .... The fulfillment of what it offers and the guarantee that it will last after it acquires it.

The business life cycle in business architecture is the process of change in a company over time by incorporating new business processes, new technologies, and new capabilities, as well as the maintenance, provision and availability of existing elements in the company. (Wikipedia: Illustration of the business life cycle)

In particular, the case of family companies requires special attention because it is affected by own

factors that, if not corrected, can accelerate the decline of its development after accelerated growth.

WHAT WE UNDERSTAND BY FAMILY COMPANY (FC)

In general, FCs are often associated with small and unprofessional companies; But in reality what

defines them is not their size or the quality of their management, but the fact that ownership and

management are in the hands of one or more members of the same family group and that there is an

intention that the company continue to be owned by the family (Gallo, 1989; Lansberg, 1983).

In the case of FCs, they face the additional challenge of balancing family strategies and issues. In

this scenario, corporate governance plays a crucial role in ensuring a strategy of alignment between

the interests of the business and the interests of the owner families.

SUCCESS AND CRISIS RELATED TO THE LIFE CYCLE OF THE FAMILY

BUSINESS

The FCs fail if they do not see that the key to their future success lies in how the family engages in the company, that is, in how they prepare themselves to overcome their own crisis that they will have to overcome by the mere fact of being EF.

KEY ELEMENTS IN THE DEVELOPMENT OF NEW PRODUCTS AND

MARKETS

The process of developing a market and brand depends fundamentally on the organizational structure of the company.

One of the most common and dangerous mistakes in a company's life cycle is the development of accelerated growth based on open niche markets without the prior development of a solid organizational structure.

The growth sequence must be supported by exponential growth in terms of service strategy and market dominance based on their real needs.

In family enterprises in their early stages, performance measurement is the behavior of sales with priority given to the present and with an emphasis on the achievement of the task with fuzzy and unstructured objectives. The analysis of the market virtually does not exist and the autocratic style is the predominant one.

Administrative control is based on the flow of funds and revenue management as a measure of the success of the company.

Another element of family organization is the lack of rigid structures and the management of projects without information or analysis. Success is measured only with attention to the present.

The client is a medium rather than a goal and the biggest mistake of any organization is made, which is not to take into account the fundamental objective of the company which should be the increase of the customer base with emphasis on the quality of the After-sales service.

It is well known that the feedback given by an unsatisfied customer reaches an average of 8 potential clients.

In FCs, the CRM cycle is based on its early stages in terms of promotion and sales effort, rather than achieving customer loyalty through the feedback of a structured system to listen to the Voice of the Customer.

Customer Relationship Management (CRM) is interpreted as the use of appropriate software rather than as a structured means of completing the Sales and Service cycle.

DEVELOPMENT CYCLE OF A NEW PRODUCT

WEIGHTING OF A BUSSINES CASE

STEPS FOR THE DEVELOPMENT OF A NEW PRODUCT

BUSINESS CASE

A "business case" is a document that summarizes the main aspects of a commercial actions and

allows us to gain clarity to justify an investment and subscribe the service level agreements

necessary for the correct development of the plan, based on pre-established efficiency and

effectiveness indicators.

The Business Case is a means to review the considerations, assumptions and methods taken into

account, as well as to document the repercussions if the alternative or proposal is implemented or

not; and even more so, to identify the benefits that its implementation will generate, is generally

structured as follows:

• General Scheme

• Executive Summary

• Introduction

• Methods and Data Analysis

• Scope and Limits

• Assumptions

• Cost / Benefit model

• Source of Data and Methods Employed

• Financial Model

• Risks, sensitivity and contingencies

• Conclusions and recommendations

I do not intend in this analysis to enter into the development of a business case step by step as it is the subject of an essay different from the one proposed in this article; It is enough to emphasize the previous function of a marketing and / or sales area for the beginning of a development process or project.

Before committing the company in the process of developing a new product, whether it is new design or the improvement or makeup of an existing one, the area of market intelligence, marketing or sales (depending on the size or structure ) must justify the need and / or benefits of the same through the elaboration of a Business Case.

In this previous analysis, all the aspects involved in development are evaluated and justified step by step. Although it may be a sales opportunity, it may not be justified in terms of volume, manufacturing costs, investment, profitability, post sales, etc.

After this Business Case has been fully justified and approved, the formal definition of the project begins so that all the areas and services of the company are aligned with the objective of the Business Case.

Before continuing with the methodological detail for the development of new products, I allow myself to make some considerations.

In general terms all manufacturing and marketing companies have a similar organizational structure which is independent of the positions and their occupants.

In the following example I describe the basic functions within a company which must be combined in their entirety in the process of developing new products or markets.

FUNCTIONAL ORGANIZATIONAL CHART OF A MANUFACTURING COMPANY

SUGGESTED FUNCTIONAL ORGANIZATION FOR COMMERCIALIZING COMPANIES

SUGGESTED FUNCTIONAL ORGANIZATION FOR COMMERCIALIZING COMPANIES

WITH OFF-SHORE OPERATIONS

PROJECT DEVELOPMENT

Basically a project consists of four phases or stages:

FINAL COMMENTS

I want to finish this working paper with some considerations that I hope will be considered as a

summary of my experience in the industry.

Much is said that the Customer is the most important thing and yet it has become a cliché that is

ignored by most of the growing companies. A customer is not the most important thing ... it is the

essence of any business, ignoring this precept leads to the failure of any organization, however well

organized it may be.

An important precept for preserving a client is that of transparency in business relations. A

customer can understand a mistake but will never forgive the misleading or misrepresentation of

the information.

The fundamental basic principle of CRM is to preserve and loyal customers .... Nothing we do with

selling a lot to many if we do not keep buyers.

The after sales area is the vital organizational element to keep the customer base growing and thus

ensure the growth of sales and therefore of revenues and profits.

The growth of a company is not measured by the number of customers, is measured by the number

of customers who after the first purchase maintain their business relationship.

A common mistake made by companies is to increase the supply of products without adequate

after-sales support. The development of a Business Case and the formal follow-up of the

development of a new product is fundamental to achieve its permanence in the market.

The customer is always the customer but ... he is not always right. Therefore a common mistake of

the sales area is to develop countless variants and models of a product without a market analysis,

profitability and investments. Due to the fact of generating a new sale should not be generated new

products that complicate the scheme of the company.

Any new project should consider the interchangeability of the parts for the replacement market

and warranty service.

World-class companies are extremely careful in this regard as the generation of spare parts in

disorderly form will subsequently become a serious financial problem because of having to increase

cash flows to maintain a non-interchangeable parts inventory.

The After Sales area is the fundamental axis of a commercial process. The Research and

Development (R&D) and Product Industrialization (PI) must be thoroughly careful when developing

component listings (BOM) without considering the interchangeability of these.

The excessive number of models and variants instead of representing an advantage for the

company constitutes a headache, requiring a very complex organizational structure to be able to

maintain the After Sales and Spare Parts service in both Dealers and final customers.

Any questions or queries about this and other topics can be made through my personal email

juanpadronlopez@hotmail.com or the phone +593 95 893 1736.