Competitive strategy

Competitive Strategy

Gain Market Shares

வி�னை� விலியும் தன் விலியும் மா�ற்றா�ன் விலியும் துனை� விலியும் தூக்கி�ச்செ�யல் -  Thirukkural 471

Before undertaking any task, weigh judiciously (1) the nature of the task on hand, (2) your own strength, (3) Competitor's strength and (4) the strength of your support team, allies and partners.

Lets look at…

• Process of formulation

• Frame work for analysis

• Principles to GAIN…

Source: Competitive Strategy – Michael Porter Marketing War-Fare – Al Ries & Jack Trout

Formulation…

• Situation Analysis– The business we are doing

• Current Implicit and explicit strategy?

– Implied Assumptions• Relative position• Strengths• Weakness• Competitors• Industry Trends

Formulation…

– Environment Scan• KSFs of Competition• Opportunity & Threats• Capabilities of existing competition• Capabilities of potential entrants• Probable strategic moves of competition• Government, social and political factors• Relative strength compared to current and future

competition

Formulation…

– What Should we be doing?• Test assumptions and Strategy for

– Internal consistency» Goals achievable?» Do internal policies address and reinforce Goals?

– Environmental Fit» Goals and Policies exploit Opps ,Threats and timing?

– Resource Fit» Goals and Policies match resources available and

timing?

Formulation…

– Communication and Implementation» Goals & Policies are understood?» Is there congruence between Goals & Policies?» Managerial talent avaliability

Formulation…

– Strategic Alternatives• Arrive (As) Basis the analysis made• Compare existing against the backdrop of this

analysis

– Strategic Choice• Determine the best alternative that best fits • And has the ability to leverage Opps and Threats

Framework

Porter’s 5 Forces

New Market Entrants, eg:Geographical factorsEntry ease BarriersIncumbents resistanceNew entrant strategyRoutes to market

Competitive Rivalry, eg:Industry size and trendsNumber and size of fimsFixed v variable cost basesProduct/service rangesDifferentiation, strategy

Product and Technology Development, eg:Market distribution changesAlternatives price / qualityFashion and trendsLegislative effects

Supplier Power, eg:Geographical coverageBrand ReputationProduct/service level qualityRelationships with customersBidding processes/capabilities

Buyer Power, eg:Buyers size/numberBuyer ChoiceChange cost/frequencyProduct/service importanceVolumes, JIT scheduling

Threat Of

New Entrants

Bargaining Power

of Buyers

Threat of

Substitute products

Bargaining Power

of Suppliers

Rivalry among existing Firms

Three Generic Strategies…

Differentiation Overall Cost Leadership

FOCUSParticular Segment

only

Low Cost positioning

Uniqueness perceived

by customer

Industry Wide

Competitor’s Response ProfileIs the Competitor satisfied with the current position?What likely moves of strategy shifts will they make?Where is the Competitor vulnerable?What will provoke the greatest and most effective retaliation by them?

Current Strategy

How is the BusinessCurrently

Competing

Capabilities

Strengths &

Weakness

Assumptions

Held aboutitself

and the Industry

Future Goals

At all levels ofManagement

&Other

Dimensions

Principles to Gain

War-Fare

The Strategic Square…

• There is no one way to Gain

• There are 4 ways to Compete…

Competition

Flanking Guerrilla

OffensiveDefensive

Defensive…

• Only the market leader should consider playing defense

• The best defensive strategy is the courage to attack yourself

• Strong competitive moves should always be blocked

Offensive

• The main consideration is the strength of the Leader’s position

• Find a weakness in the Leader’s strength and attack at that point

• Launch the attack on as narrow a front as possible

Flanking…

• A good flanking move must be made into an uncontested area

• Tactical surprise ought to be an important element of the plan

• The pursuit is just critical as the attack itself

Guerrilla…

• Find the segment of the market small enough to defend

• No matter how successful you become, never act like the leader

• Be prepared to bug out at a moments notice

Out of every

100 companies

as a glittering generality,

1 should play Defense,

2 should play Offense,

3 should play Flank

&

94 should be Guerrillas!

த�ர்த�ங்கி�ச் செ�ல்விது த�னை� தனை�விந்தபோ��ர்த�ங்கும் தன்னைமா அறா"ந்து. – Thirukkural 767

"Well trained armed forces will withstand every offense then outflank and storm the foe"