Issue link: https://www.e-digitaleditions.com/i/276079
18 FEDA News & Views continued on page 40 S everal weeks ago I wrote a blog, "How to Win a Price War." A number of readers sent me notes, including my former Harvard/ MIT executive student, Tenglum Low. Tenglum was a top executive of both a major Malaysian steel company and a major brewery, and he related his experience doubling his market share in the face of a price war by focusing on turbocharging his company's value proposition. Here is his story (slightly edited): Dear Jonathan, Your article on "How to Win a Price War" is great reading, and a reminder to corporate leaders on how to enhance profitability and market share through value creation and value capturing. Sun Tzu often reminded generals and sovereigns that the objective of war is not simply killing the enemy but, instead, it is ultimately a means to gain power and kingdoms. The best generals know that the real victory is to win a war without the need to fight any battles. The most effective generals seek to win a kingdom without destroying its resources, so as to fund their next battle. Hence, in the world of competition, we should destroy the enemies without destroying the industry's profitability. When we become the market leader, we can command a substantial portion of the industry profit pool. I remember fighting the Malaysian steel war in the 1990s as a young Head of Commercial at Southern Steel. Within three years, we grew from 30 percent market share to 60 percent market share in domestic wire rod. Many strategic moves were played in the near duopoly market. Today, I would like to narrate our moves in response to steep price discounts by the market leader at that time. T h e s t e e l p r o d u c t s a r e a l m o s t homogeneous in quality. But despite this, the slight differences of the products of the steel mills—if synchronized well with the production equipment of the customers—can make great differences in customer productivity. Hence, if any steel mill became the dominant supplier to the users, it could "re-synchronize" its products with the customers' equipment and, thereby, significantly enhance the customer's productivity. Then, if the customer used the same drawing process with another supplier's wire rod, the customer's productivity would drop significantly—and these losses would be much greater than any price discount offered. This essentially locked in a relationship with very high switching costs. With this knowledge in mind, we evaluated customers through a new paradigm. We looked at the concept of "supply chain versus supply chain," and how we could focus on growing carefully targeted customers in order to grow our sales. The customers, at that time, could be segregated into six areas of downstream products. We could not How to Double Your Market Share While Countering a Price War A Blog Post by Jonathan Byrnes