Why Businesses that Take Risks Tend to Win in the Long Run
Updated: Nov 19, 2018
If you falter, you fail. If you snooze, you lose. If you think you can, you will.
Welcome to another edition of Weekly Business Learnings!
A shipping and logistics provider
In this week's case study, we find out why forward-thinking businesses that take risks - big or small, tend to win in the long run.
We compare two shipping and logistics provider - Company A and Company B and share our observations.
Both businesses are in the postal, shipping and logistics industry and provide global freight forwarding services.
Company A is a huge conglomerate and has a sizeable market share in the US freight forwarding industry not just for businesses but for consumers too.
Company B is a small to mid-sized US freight forwarder for overseas shoppers that is increasingly gaining market share and loyal customers due to its high quality services and flexibility.
Recently, Company A has reduced the number of services they offer and put out several restrictions due to a few negative incidences with some customers.
For instance, Company A restricts all food shipments regardless of whether it is dry goods such as tea or processed foods such as chocolates and candies because of a few bad customers that have made things difficult for the company.
Company B does not have food restrictions unless it concerns perishables or fresh foods - meats, dairy, vegetables etc.
Company B charges a bit more or what the industry deems a premium price, but shipment is traceable via renowned and reliable shipping heavyweight DHL. Customers can easily trace their goods, contact the logistics provider and reschedule deliveries at ease.
Company A, although a large local monopoly, does not have an efficient track and trace system. It is also impossible to contact the shipping provider about delivery schedules.
To make matters worse, after overhauling their website earlier this year, the parcel track and trace system has stopped working. Since then, customers are unable to find their parcels despite having tracking numbers provided by the merchant.
This would probably lead to an increase in the number of calls at Company A's call centre.
Parcel updating time has also lengthened from 1 working day to 3 working days. This would lead to fewer purchases near and during festive seasons and promotional periods such as Black Friday sales, as customers looking to consolidate their parcels would refrain from buying more items in order to avoid late holding charges.
Missed opportunities and Loss of Market share
Company B provides a service for hazardous material packaging whereas Company A turns customers down when they try to ship goods containing alcohol such as common beauty products, toiletries and perfumes to Singapore.
This situation is particularly unsavoury for the consumer as they will have no choice but to find another shipping provider who can do the job.
For the parcel forwarding company, countless missed opportunities.
Reap the benefits of Risk-taking
Taking calculated risks is a smart choice for businesses in order to succeed in a highly competitive environment and to meet up with the needs of an ever-changing economy and consumer purchase behaviour.
Taking risks is scary for risk-adverse business owners and leaders if they do not have the practical experience in specific areas of the business or are more interested in cost-cutting than ambitious or more unconventional ways of strategic business expansion.
Through trial and error coupled with the ability to carefully measure whether risks taken can gain more benefit than harm for the company, will allow a business to grow its revenue, and dominance in the business.
Oftentimes, we may allow small setbacks to affect our view of the business world. However, one must bear in mind that small setbacks and exceptions may not mean that retreat and abandonment are the only options. Working on a solution around the problem could be a much better one.
At Tweema, our philosophy revolves around problem-fixing not just by nipping it in the bud, but making things better through innovation and well-thought out decision-making and planning.
For marketing consultancy to improve your new or existing business potential, write us today.