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ObjectivesObjectivesObjectivesObjectives

Identifying CompetitorsIdentifying Competitors Evaluating CompetitorsEvaluating Competitors Competitive Intelligence SystemsCompetitive Intelligence Systems Competitive StrategiesCompetitive Strategies Customer vs. Competitor OrientationCustomer vs. Competitor Orientation

©2000 Prentice Hall

Induce your competitors not to invest in Induce your competitors not to invest in those products, markets and services those products, markets and services where you expect to invest the most … where you expect to invest the most … that is the fundamental rule of strategy.that is the fundamental rule of strategy. Bruce Henderson, Founder of BCGBruce Henderson, Founder of BCG

There is nothing more exhilarating than There is nothing more exhilarating than to be shot at without result.to be shot at without result. Winston ChurchillWinston Churchill

©2000 Prentice Hall

Five Forces Determining Segment Five Forces Determining Segment Structural AttractivenessStructural Attractiveness

Five Forces Determining Segment Five Forces Determining Segment Structural AttractivenessStructural Attractiveness

Potential Entrants(Threat ofMobility)

Potential Entrants(Threat ofMobility)

Buyers(Buyer power)

Substitutes(Threats ofsubstitutes)

Suppliers(Supplier power)

Suppliers(Supplier power)

IndustryCompetitors

(Segment rivalry)

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Barriers and ProfitabilityBarriers and ProfitabilityBarriers and ProfitabilityBarriers and Profitability

Low, stablereturnsLowLow

High, stablereturnsHighHigh

LowLow

Low, riskyreturns

High, riskyreturns

HighHigh

En

try

Bar

rier

sE

ntr

y B

arri

ers

Exit barriersExit barriers

©2000 Prentice Hall

Industry CompetitionIndustry CompetitionIndustry CompetitionIndustry Competition

Number of Sellers - Degree of Number of Sellers - Degree of DifferentiationDifferentiation

Entry, Mobility, Exit barriersEntry, Mobility, Exit barriers Cost StructureCost Structure Degree of Vertical IntegrationDegree of Vertical Integration Degree of GlobalizationDegree of Globalization

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HighHigh

LowHigh

LowLow

Qu

alit

yQ

ual

ity

Vertical IntegrationVertical Integration

Strategic Groups in the Major Strategic Groups in the Major Appliance IndustryAppliance Industry

Strategic Groups in the Major Strategic Groups in the Major Appliance IndustryAppliance 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

©2000 Prentice Hall

Analyzing CompetitorsAnalyzing CompetitorsAnalyzing CompetitorsAnalyzing Competitors

CompetitorCompetitorActionsActions

ObjectivesObjectives

Strengths &Strengths &WeaknessesWeaknesses

ReactionReactionPatternsPatterns

StrategiesStrategies

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Competitor’s Expansion Competitor’s Expansion PlansPlans

Competitor’s Expansion Competitor’s Expansion PlansPlans

Markets

Pro

duct

s

IndividualUsers

Commercial & Industrial Educational

PersonalComputers

HardwareAccessories

Software

Dell

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Hypothetical Market Hypothetical Market Structure & StrategiesStructure & StrategiesHypothetical Market Hypothetical Market

Structure & StrategiesStructure & Strategies

40%

Marketleader

30%

Marketchallenger

20%

Marketfollower

Expand MarketDefend Market Share

Expand Market Share

Attack leaderStatus quo

Imitate

10%

Marketnicher

Special-ize

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Defense StrategiesDefense StrategiesDefense StrategiesDefense Strategies

AttackerAttacker

(3)(3) PreemptivePreemptivedefensedefense

(4)(4) Counter-Counter-offensiveoffensivedefensedefense Defender

(1)(1)PositionPositiondefensedefense

(5)Mobile

defense

(2) Flank defense(2) Flank defense

(6) Contraction(6) Contractiondefensedefense

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Optimal Market ShareOptimal Market ShareOptimal Market ShareOptimal Market SharePro

fita

bili

ty

Market share0% 25% 50% 75% 100%

Optimal market share

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Attack StrategiesAttack StrategiesAttack StrategiesAttack Strategies

AttackerDefender

(3) Encirclement attack

(4) Bypass attack

(2) Flank attack

(5) Guerilla attack

(1) Frontal attack

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Specific Attack StrategiesSpecific Attack StrategiesSpecific Attack StrategiesSpecific Attack Strategies

Price-discountPrice-discount Cheaper goodsCheaper goods Prestige goodsPrestige goods Product proliferationProduct proliferation Product innovationProduct innovation Improved servicesImproved services Distribution innovationDistribution innovation Manufacturing cost reductionManufacturing cost reduction Intensive advertising promotionIntensive advertising promotion

©2000 Prentice Hall

““Nichemanship”Nichemanship”““Nichemanship”Nichemanship”

End-user specialistEnd-user specialist Vertical-level specialistVertical-level specialist Customer-size specialistCustomer-size specialist Specific-customer specialistSpecific-customer specialist Geographic specialistGeographic specialist Product or product-line specialistProduct or product-line specialist Product-feature specialistProduct-feature specialist Job-shop specialistJob-shop specialist Quality-price specialistQuality-price specialist Service specialistService specialist Channel specialistChannel specialist

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BalanceBalanceBalanceBalance

CompetitionCustomer

+ Fighter orientation+ Alert+ Exploit weaknesses- Reactive

+ ID opportunities+ Long-run profit+ Emerging needs & groups

©2000 Prentice Hall

ReviewReviewReviewReview

Identifying CompetitorsIdentifying Competitors Evaluating CompetitorsEvaluating Competitors Competitive Intelligence SystemsCompetitive Intelligence Systems Competitive StrategiesCompetitive Strategies Customer vs. Competitor OrientationCustomer vs. Competitor Orientation