Strategies for Dealing with
Competition
Dr rushdy wady
Objectives
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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)
Substitutes
(Threats of
substitutes)
Buyers
(Buyer power)
Barriers and Profitability
Exit barriers
Entry Barriers
Low
High
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
Group A
Quality
High •Narrow line
•Lower mfg. cost
•Very high service
•High price
Group B
•Full line
•Low mfg. cost
•Good service
•Medium price
Low
Group C
•Moderate line
•Medium mfg. cost
•Medium service
•Medium price
Group D
•Broad line
•Medium mfg. cost
•Low service
•Low price
High
Low
Vertical Integration
Analyzing Competitors
Objectives
Strategies
Competitor
Actions
Reaction
Patterns
Strengths &
Weaknesses
Competitor’s Expansion Plans
Markets
Products
Individual
Users
Personal
Computers
Hardware
Accessories
Software
Dell
Commercial
& Industrial Educational
Hypothetical Market Structure &
Strategies
Market
leader
40%
Expand Market
Defend Market Share
Expand Market Share
Market
challenger
30%
Attack leader
Status quo
Market
nicher
Market
follower
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
(5)
Mobile
defense
(6) Contraction
defense
Optimal Market Share
Profitability
Optimal market share
0%
25%
50%
75%
Market share
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
Defender
(3) Encirclement attack
(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”
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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