Going on the Offensive Commit to building your competitive advantage until it is decisive Build from your most significant strengths and capabilities Attack the competitor’s weak points – not their strengths

Examples of Offensive Strategies Match or beat rival’s product quality at a lower price Leapfrog competitors be a first adopter of next-generation technologies, or be first to market with next-generation products Pursue continuous product innovation when rivals are not innovative Pursue disruptive product innovation to create new markets Adopt and improve on good ideas of other firms (rivals or otherwise) Attack market segments where a key rival makes big profits Blue Ocean – create new segmment

Choosing Which Rivals to Attack Best Targets for Offensive Attacks Vulnerable market leaders Struggling firms on the verge of going under Small local or regional firms with limited capabilities Runner-up firms with weaknesses in areas where the challenger is strong

Examples of Defensive Strategies Participate in technologies that are alternatives to those pursued by rivals Introduce new features, add new models, or broaden the product line to close gaps / niches rivals may pursue Maintain economy-priced models and options Lengthen warranties Offer free support services Preempt rivals by making early announcements about new products or price changes Challenge quality or safety of rivals’ products Offer volume discounts, financing terms, and exclusive agreements with distributors that are better than rivals’

What Role Should the Website Play To only disseminate product information As secondary or minor distribution channel to sell directly to customers As one of several distribution channels to access customers As the primary distribution channel for selling to customers As the company’s exclusive channel for selling to customers

Outsourcing Strategies Outsourcing strategies involve a decision to farm certain value chain activities out to outside specialists and strategic allies. When is outsourcing appropriate? Contract manufacturers Distributors or retailers Outsourcing Internally Performed Activities Vendors with specialized expertise

Outsourcing Strategies Potential advantages Reduce costs using source that does activity well Enhance innovation with collaborative expertise Allows flexibility to shift resources for change Firm can focus on developing core competencies Potential risks Relying on source expertise rather than developing own

Vertical Integration Backward integration Forward integration Pro: Control over more product components Opportunities for cost reduction and differentiation Con: Need to invest to develop that expertise Forward integration Pro: Control over channel-to-customer processes Cons: Increased costs for personnel and facilities Resulting complex organization structure = less flexibility

Strategic Alliances, Partnerships, Mergers, Acquisitions A strategic alliance (in all forms) is a formal agreement between two or more separate firms in which there is: Strategically relevant collaboration of some sort Joint contribution of resources Shared risk Shared control Mutual dependence Can be via formal contract (alliances, partnerships) or ownership ties (mergers, acquisitions)

Strategic Alliances, Partnerships, Mergers, Acquisitions Provide access to: Markets, resources, expertise, knowledge, experience Technical, cultural, political, etc. Non-ownership alliances typically short-lived Risks of alliances High failure rate – differing objectives, clashing cultures

Timing of Strategic Initiative First mover advantages Leadership image, patents/copyrights, seize customers, build customer switching costs Late mover advantages Imitation less costly, avoid first-mover mistakes