Strategies for Dealing with Competition

Priyanka Kaul & Harshil Pacheria

Objectives
Identifying Competitors Evaluating Competitors Competitive Intelligence Systems Competitive Strategies Customer vs. Competitor Orientation

Induce your competitors not to invest in those products, markets and services where you expect to invest the most that is the fundamental rule of strategy.
Bruce Henderson, Founder of BCG

There is nothing more exhilarating than to be shot at without result.

Winston Churchill

Five Forces Determining Segment Structural Attractiveness

Potential Entrants (Threat of Mobility)

Suppliers (Supplier power)

Industry Competitors (Segment rivalry)

Buyers (Buyer power)

Substitutes (Threats of substitutes)

Barriers and Profitability

Exit barriers
Low High

Entry Barriers

Low

Low, stable returns

Low, risky returns

High

High, stable returns

High, risky returns

Industry Competition
Number of Sellers - Degree of Differentiation Entry, Mobility, Exit barriers Cost Structure Degree of Vertical Integration Degree of Globalization

Strategic Groups in the Major Appliance Industry

A High Group Narrow line Lower mfg. cost Very high service High price Group B Full line Low mfg. cost Good service Medium price Group C Moderate line Medium mfg. cost Medium service Medium price Group D Broad line Medium mfg. cost Low service Low price

Low

Quality

High

Low

Vertical Integration

Analyzing Competitors
Objectives
Strategies

Competitor Actions

Reaction Patterns

Strengths & Weaknesses

Competitors Expansion Plans

Markets
Individual Users Commercial & Industrial Educational Personal Computers Hardware Accessories Software Dell

Products

Hypothetical Market Structure & Strategies

Market leader Market challenger Market nicher Market follower

40%
Expand Market Defend Market Share Expand Market Share

30%
Attack leader Status quo

20%
Imitate

10%
Specialize

Market Leader Strategies

Expanding the Total Market

New Users New Uses More Usage

Protecting Market Share

Innovation Fortification Confrontation Harrassment

Expanding Market Share

Product Innovation Market Segment Innovation Distribution Innovation Promotion Innovation

Defensive Strategies
Flanking Preemptive Counteroffensive Mobile Contraction

Defense Strategies
(2) Flank defense

Attacker

(3) Preemptive defense

(4) Counteroffensive defense

(1) Position defense Defender

(6) Contraction defense

(5) Mobile defense

Optimal Market Share

Profitability
Optimal market share

0%

25%

Market share

50%

75%

100%

Market Challenger Strategies

Market Challenger Strategies

Direct Attack Backdoor Attack Guppy Attack

Attack Strategies
Frontal Attack Flank Attack Encirclement Attack Guerilla Attack Bypass Strategy

Attack Strategies
(4) Bypass attack (2) Flank attack (1) Frontal attack Attacker (3) Encirclement attack Defender

(5) Guerilla attack

Specific Attack Strategies

Price-discount Cheaper goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing cost reduction Intensive advertising promotion

Market Follower Strategies

Market Follower Strategies

Strategy of Conscious Parallelism
Found Where
Homogeneous Product High Capital Intensity Low Differentiation Options High Price Sensitivity Highly Competitive Industry

Market Follower Strategies

Strategic Considerations
Segment, Segment, Segment Use R & D Efficiently Think Small Have an Energetic CEO Who is Everywhere at Once

Market Nicher Strategies

Nichemanship
End-user specialist Vertical-level specialist Customer-size specialist Specific-customer specialist Geographic specialist Product or product-line specialist Product-feature specialist Job-shop specialist Quality-price specialist Service specialist Channel specialist

Balance

Customer
+ ID opportunities + Long-run profit + Emerging needs & groups

Competition
+ Fighter orientation + Alert + Exploit weaknesses - Reactive