Learn more about business with this collection
Essential product management skills
How to work effectively with cross-functional teams
How to identify and prioritize customer needs
Smaller companies can capitalise on their strengths
Larger companies can be difficult to compete against because they seem to have all the advantages.
Knowing the advantages and disadvantages of the larger competitor can help you to use them strategically to build your business profitably.
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Common advantages of larger competitors
- They have more resources: multiple locations, more people, more cash.
- Bigger network: They have more suppliers, more customers, more shareholders, and a better-developed network.
- Purchasing economy: They can benefit from the best discounts on big volumes.
- Location advantages: Larger companies can have multiple locations and distribution centres.
- Depth of skill: They can support specific skills smaller companies can't afford.
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Advantages of a smaller company
- More agile: A smaller company can change direction faster.
- Less need for volume to absorb overhead.
- Closer to the customer. A larger size often separates the customer from the business. Larger competitors may have layers of management between the decision-makers and the customer.
- More focused. Larger companies need a higher gross revenue and more customers to sustain the business.
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How to compete with a larger company
- Speciality strategy. A smaller company can be the best in quality, service, innovation etc.
- Segment focus. Building a business around a subset of the market may limit your size but is more likely to lead to a strong market share. Larger companies have to serve multiple segments to reach their volume targets.
- Moving faster. Smaller companies can chase changes in the market.
- Customer intimacy. Smaller companies are often closer to their customers and can understand their customers better than larger competitors.
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