Adapted from AdPrin.com

Assessing the effects of a competitor orientation:

Prediction caseView as slide show

Competitor orientation

Adapted from AdPrin.com

What if we ran the following study?1. Select 20 firms in different industries2. 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 FirmsPrincipal Goal Collateral Goal

1 High Profit 3

2 Profit 1

3 Stability 1

4 High Profit Maintain MS 2

5 High Profit Increase MS 0

6 Profit Maintain MS 4

7 Profit Increase MS 0

8 Maintain MS Profit 2

9 Increase MS Profit 1

10 Maintain MS 4

11 Increase MS 2

* 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)

1947-55 1956-64 1965-73 1974-82

DuPont 1 25.9 15.5 8.0 6.9General Electric 1 21.4 9.4 6.7 7.9Union Carbide 1 19.2 9.1 6,3 6.6Alcoa 2 13.8 4.2 4.2 5.5Kennecott 3 16.0 8.9 8.2 3.2General Motors 4 26.0 13.2 12.0 6.3Johns Manville 4 14.9 4.6 7.6 4.9Standard Oil of N.J. (Exxon) 6 16.0 7.8 7.6 8.0General Foods 6 12.2 11.4 8.9 7.4US Steel (USX) 6 10.3 6.0 3.5 3.4International Harvester 6 8.9 4.6 4.0 -3.4Kroger 8 12.1 6.1 4.9 4.6Standard Oil of Indiana 8 10.4 5.4 6.4 8.3Sears 9 5.4 8.5 6.4 4.2Goodyear 10 13.3 7.0 5.7 4.0Gulf 10 12.6 8.9 7.12 6.3American Can 10 11.6 5.2 4.8 3.8Swift 10 6.9 2.4 3.3 n.a.A & P 11 13.0 7.8 4.2 -2.9National Steel 11 12.1 6.0 5.1 1.1

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 44.5 137

Yes 58.8 97

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.