The Threat of FedEx Kinkos / Adobe
Numerous people in the industry are up in arms about the recent capability added to Adobe Acrobat to send jobs directly to FedEx Kinkos. I can understand how that could be disappointing, but it shouldn't be a surprise. Every day the world gets more connected. Two large companies decided to make it easier for their customers to perform a task they were already doing. Does this give FedEx Kinko's an unfair advantage over traditional reprographers? Maybe for some cases. It may be easier for me to send my PowerPoint presentation, but does it make it easier send a large bid distribution for a hospital construction project? I don't think so.
You can break the work that both FedEx Kinko's does and reprographers do into individual market segments. For example construction bid set distribution, sign making, casual black and white copying, casual engineering copying, construction document management, and many more. These categories could even be broken into more granular sub-segments (i.e. sign making for construction versus retail sign making). FedEx Kinko's is strong in some of these segments and weak in others. Reprographers, in general, are also strong in some segments and weak in others. I believe as you build your business plan and look into your planning horizon you decide which of these segments you can compete in and which you could loose to a competitor with different strengths. As Sun Tzu says in "The Art of War", his book on ancient Chinese military strategies and tactics, "fight the battles you can win."
Jack Welch's strategy at GE was to be #1 or #2 in a market or exit the market. Many within GE made arguments that business where they were not market leaders were profitable business and shouldn't be exited. Jack's counter argument was the resources spent on these non-leading businesses could be diverted to those markets where they can have a leadership position. They could use those precious resources to improve their service or offer new products. New products and services by a market leader carry a premium over a non-leader thus generating more profits.
There are several market segments that PLP sells into that we believe will eventually be taken by competition or more likely become made obsolete by changes in the market. Per our business plan we put very little resources into those segments and plan on no profit from them. Every year we get more profit than we expected, but it does decline. We are pleasantly surprise by the profits, but if we got nothing we would be on plan. All of our precious resources are put into those market segments we believe we can be #1 or #2 (with a goal to be #1). Instead of spending time pining over the business we lost we are pleasantly surprised by what we maintained, but seeing the favorable results of putting our resources put behind segments we can compete more favorably in.