In corporate management, the pursuit of profit and price competition (selling cheap) are often discussed as conflicting strategies. Management that is overly focused on short-term profits risks losing sight of the long-term perspective and neglecting the essential value provision that is a company's core purpose. So how should companies face this dilemma and continue to provide essential value? I would like to summarize this as a reminder to myself.
How Do Profit Pursuit and Price Competition Differ?
Profit pursuit is an indispensable activity for a company to sustain itself, while price competition (selling cheap) is a different short-term customer acquisition method. Profit is indispensable to a company like "oxygen," but profit itself is not the purpose of a company's existence.
If you chase short-term profits and resort to easy discounting or excessive price-reduction strategies, even if sales temporarily increase, you risk damaging brand value and customer trust. In the real estate industry, for example, choosing a broker based on "the lower the commission the better" can lead to decreased service quality and unsatisfactory results. In other words, being swayed only by low prices ultimately harms both the company and the customer.
On the other hand, maintaining appropriate pricing can be seen as proof that a company has confidence in the value of its products and the quality of its services. By consistently providing at the appropriate price, customers feel they are receiving "value beyond the price," and trust and loyalty in the company grows. Rather than dominating the market temporarily through discounting, competing on essential value is the long-term growth strategy.
Why Is Essential Value Provision Important?
Essential value provision refers to the true reason for existence that a company provides to society and customers. If you can provide essential value in the form of excellent products, services, and customer experience, customers will continue to choose you, and sustainable sales and profits will follow. The value referred to here includes not just product functionality and price, but multifaceted elements such as company reliability, brand, and after-sales service.
At INA, we believe that talent is the source that creates corporate value. It is our belief that only when each employee grows does the entire company's value provision capability improve. By excellent talent creating high-value-added services, both customer satisfaction and corporate profit can be achieved simultaneously.
In this way, if a company focuses on essential value provision, it becomes chosen without having to compete on price alone. Because customers will happily pay when they feel value beyond low prices, the result is securing appropriate profits. What is important is to always return to the origin: "Who are we providing what kind of value to?"
What Is Optimal Management Decision-Making Based on Mission?
Mission-based management decision-making means making decisions with the company's reason for existence and long-term vision as the axis. INA's mission is to aim for "the world's No.1 human capital investment company" and to create corporate value through the growth of people.
Looking at this mission, the axis of INA's management decisions naturally becomes clear. Namely, the standard for judgment becomes whether it contributes to long-term vision achievement and stakeholder happiness rather than short-term sales and profits.
For example, a discount campaign just to boost near-term performance may temporarily attract customers. However, if it damages the company's provided value and brand, and undermines employees' pride and motivation, it is not a good strategy in the long run. Initiatives that run counter to the "growth of talent" and "sustainable growth" that INA's mission values will ultimately also deprive the company itself of growth opportunities.
Without being swayed by short-term numerical targets, asking "why does our company exist, and what value do we want to keep providing in the future?" is essential. As INA's philosophy also states, the management decision that makes everyone involved — employees, customers, and all stakeholders — happy is ultimately optimal for the company and also leads to sustainable profits.
How to Realize Sustainable Growth Through Value Creation?
The contrast between "profit pursuit" and "price competition" symbolizes the conflict between short-term and long-term values in corporate management. Rather than leaping at the temporary results obtained through easy price competition, returning to the essential value provision that is the company's reason for existence is, I firmly believe, the path to long-term success.
Short-term profits are merely results, and what should truly be aimed for is sustainable growth through value creation. As long as a company continues to be faithful to its mission, profits will inevitably follow — that is the way visionary management should be.
That is what I believe.
Frequently Asked Questions (FAQ)
Q. What are the disadvantages of price competition (selling cheap)?
Even if sales temporarily increase, there is a risk of damaging brand value and customer trust. Service quality decreases, and in the long term both companies and customers may end up losing.
Q. How can appropriate pricing be maintained?
It is important to clearly define the value your company provides and set prices commensurate with that value. By investing in talent development and service quality improvement, and letting customers experience value beyond the price, maintaining appropriate pricing becomes possible.
Q. What specifically does mission-based management decision-making mean?
It means making decisions with the company's reason for existence and long-term vision as the axis. The standard for judgment is whether it contributes to long-term vision achievement and stakeholder happiness rather than short-term sales.
Q. Can essential value provision and profit securing coexist?
They can coexist. Because customers pay when they feel value beyond low prices, focusing on essential value provision results in securing appropriate profits. The key is talent creating high-value-added services.
