Reading the Road

Since the turn of the century, diverse businesses have faced a wealth of chal­lenges including governmental spend­ing cuts, supplier consolidation efforts as well as the intense demand shifts directly related to increased global competition on almost all fronts. Obvi­ously some of these trends have had a more lasting effect on businesses than others, and many of these shifts remain in tact, and in fact some have intensi­fied.

Fortunately, many industry experts still see a wealth of opportunities for diverse firms in years to come. The key, of course, rests with a firm’s ability to properly position itself to take advan­tage of even the most miniscule oppor­tunities. “The first step diverse firms need to take if they want to capitalize on challenges and turn them into realis­tic opportunities is to change their mindset,” said James Lowry, Chicago-based vice president and director of The Boston Consulting Group. “We have to understand that perspective plays a key role in where we find suc­cess in the future.”

Facing globalization

There is no question about it, deal­ing with globalization is not going to get any easier, especially considering how the advances in technology and software continue to erase the walls for and the intensity is only going to increase. Rather than trying to find ways around it, we need to accept that globalization is unavoidable and pre­pare ourself for the long term,” said Lowry. “The problem is that we talk about these issues regularly, but there are very minor efforts to actually make things happen. If we look at our strengths and partner with each other we could come up with some outstand­ing answers to this issue.”

Leonard Greenhalgh, Ph.D., pro­fessor of management and director of programs for minority- and women-owned business enterprises at Hanover, N.H.-based Dartmouth Tuck School of Business, stresses the reality of global­ization is that international firms are experiencing increases. “Globalization in today’s market is resulting in busi­ness going overseas more than it comes here,” he said. Understandably this may not be something that diverse firms can stop individually, but it does necessitate being creative in finding solutions so that firms can remain competitive.

According to Lowry, the key to success rests with the ability to show that diverse firms have something spe­cial to offer — something that con­sumers cannot realize elsewhere. “Know your differentiating factor and search out where you can sell your products and services overseas. This is a huge shift in the marketplace and going forward no business can afford to ignore this aspect. It is not simply about cost, instead it is about satisfying needs,” he said. “We also need to real­ize it is not just smaller diverse firms dealing with this pressure, so we need to be prepared for what this means in our domestic dealings. For instance, while the Big Three [Chrysler, Ford and General Motors] created a vision for minority business, they are under tremendous pressure and have been forced to change their models. We need to adjust as well.”

Combating consolidation

By simply following the news day-to-day, it is easy to see that huge levels of consolidation continue to unroll in almost every industry, and unless diverse businesses are more effective on a large scale, they have a huge battle ahead because size does matter, explains Lowry.
Unfortunately, as Greenhalgh sug­gests, this trend has created some syn­ergies, which are in turn leading to sup­pliers being cut out of opportunities due to supplier consolidation efforts and increased competition for the same portion of business.

Lowry said, “This may mean giv­ing up ownership or a percentage of ownership, which is often very difficult for entrepreneurs, but it is a must for future success. Major banks, airlines, telecom have all done it, and there is no reason why we should be trying to avoid consolidation.” He continued, “The key here is to understand and embrace how a strategic consolidation can actually provide benefit through enhanced offerings. Consolidation in your customer base may initially mean less opportunities, but it can also mean an opportunity to tap into new avenues for growth. Again, the key is to keep the perspective focused on potential opportunities rather than always look­ing at how you are being cut out of the supply structure.”

Recognizing lasting trends

Lowry stresses that diverse firms need to stop letting trends slip by. “For example, going green is something that is only gaining speed, and we need to capitalize on the opportunities it pres­ents,” he said.
Lowry noted that going green is only one of several growth areas that offer opportunities.
“After all,” he said, “most of the fastest growth areas are sectors where we truly lack presence. Security, IT and healthcare industries are all growth industries, and we have yet to penetrate these markets effectively. These mar­kets are not going away, especially con­sidering the demographic shifts.”

Part of capitalizing on what the corporate marketplace wants will come with establishing and properly market­ing partnerships and alliances. “We cannot rest with the past operational models,” said Lowry. “As minority entrepreneurs we need to look for inter­esting and effective ways to diversify and recognize feasible opportunities where we are not represented.”

Susan Au Allen, national president and CEO of the Washington, D.C.-based U.S. Pan Asian American Cham­ber of Commerce, adds that diverse firms need to focus on ways to sell American-made products overseas while also sourcing and connecting suppliers who are qualified and capable to provide what is needed within the states. According to Allen, participating in trade missions may be one way to move beyond simply talking about pos­sible solutions.

“Continued success is all about relationships. After all, relationships are the key to increasing growth,” she said. “There will be more suppliers vying for the same contracts. One of the biggest keys to success for diverse firms in the years to come is to avoid being too myopic as you make your plans.”