Assessing the effects of a competitor orientation: Prediction case View as slide show Competitor orientation Adapted from AdPrin.com

What if we ran the following study? 1. Select 20 firms in different industries 2.Assess the extent to which their goals are competitor-oriented (market share) 3.Examine their profits over the next three decades Assuming that the 20 firms differ greatly with respect to the competitor-orientation, what would you predict? Profits in firms with market share as a primary goal are: _____much less _____less _____the same _____more _____much more than in firms with profit-oriented goals. See the next slides for the actual outcomes. Adapted from AdPrin.com

Competitiveness Scale Competitiveness 1=low 11=high Pricing Goals* Number of Firms Principal GoalCollateral Goal 1High Profit 3 2Profit 1 3Stability1 4High ProfitMaintain MS2 5High ProfitIncrease MS0 6ProfitMaintain MS4 7ProfitIncrease MS0 8Maintain MSProfit2 9Increase MSProfit1 10Maintain MS4 11Increase MS2 * High profit means a return of investment of at least 15% after taxes and MS is Market Share Adapted from AdPrin.com

Competitiveness and ROI by Firm Firm Competitiveness 1=low 11=high Return on Investment (After Taxes) DuPont General Electric Union Carbide ,36.6 Alcoa Kennecott General Motors Johns Manville Standard Oil of N.J. (Exxon) General Foods US Steel (USX) International Harvester Kroger Standard Oil of Indiana Sears Goodyear Gulf American Can Swift n.a. A & P National Steel Adapted from AdPrin.com

Competitor-Oriented Firms Less Likely to Survive (1955 to 1992) Profit Oriented Competitor Oriented Survived DuPont General Electric Union Carbide Alcoa Goodyear A&P Did Not Survive Gulf American Can Swift National Steel Adapted from AdPrin.com

Effects of the Experience Curve Descriptions Exposure to Experience Curve Percent Selecting Less Profitable Decision Sample Size No Yes Adapted from AdPrin.com

Based on this exercise, write a small application step for yourself, and set a deadline, preferably within one week. If you are working with someone else, share your application plan and the results of your application. For example, examine the competitor-oriented strategies of your firm and evaluate whether the focus on the competitor is appropriate. A political campaign would justify being competitor-oriented. Adapted from AdPrin.com