Strategies for Dealing with Competition Dr rushdy wady

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 Bruce Henderson, Founder of BCG There is nothing more exhilarating than to be shot at without result. Winston Churchill Winston Churchill

Five Forces Determining Segment Structural Attractiveness Potential Entrants (Threat of Mobility) Potential Entrants (Threat of Mobility) Buyers (Buyer power) Substitutes (Threats of substitutes) Suppliers (Supplier power) Suppliers (Supplier power) Industry Competitors (Segment rivalry)

Barriers and Profitability Low, stable returns Low High, stable returns HighLow Low, risky returns High, risky returnsHigh Entry Barriers Exit barriers

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

High LowHigh Low Quality Vertical Integration Strategic Groups in the Major Appliance Industry Group A Narrow line Lower mfg. cost Very high service High price Group D Broad line Medium mfg. cost Low service Low price Group C Moderate line Medium mfg. cost Medium service Medium price Group B Full line Low mfg. cost Good service Medium price

Analyzing Competitors CompetitorActions Objectives Strengths & Weaknesses ReactionPatterns Strategies

Competitor’s Expansion Plans Markets Products Individual Users Commercial & Industrial Educational Personal Computers Hardware Accessories Software Dell

Hypothetical Market Structure & Strategies 40% Market leader 30% Market challenger 20% Market follower Expand Market Defend Market Share Expand Market Share Attack leader Status quo Imitate 10% Market nicher Special- ize

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 Attacker (3)Preemptive defense (4)Counter- offensive defense Defender (1) Position defense (5) Mobile defense (2) Flank defense (6) Contraction defense

Optimal Market Share Profitability Market share 0%25%50%75%100% Optimal market share

Market Challenger Strategies

Direct Attack Backdoor Attack Guppy Attack

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

Attack Strategies Attacker Defender (3) Encirclement attack (4) Bypass attack (2) Flank attack (5) Guerilla attack (1) Frontal 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

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

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 Competition Customer + Fighter orientation + Alert + Exploit weaknesses - Reactive + ID opportunities + Long-run profit + Emerging needs & groups