Competitor scenarios

Liam Fahey

Liam Fahey is internationally recognized as a leading consultant on competitor analysis, competitive strategy, and scenario learning (liam.fahey@leadershipforuminc.com). Of the seven books he has published on these topics, his three most recent are: Learning from the Future (1998), Competitors: Outwitting, Outmaneuvering and Outperforming (1999), and The Portable MBA in Strategy, Second Edition (2001). Based in Needham, Massachusetts, he is an adjunct professor of strategic management at Babson College, a visiting professor of strategic management at Craneld School of Management in the UK, a founder and principal of Leadership Forum Inc, and a Contributing Editor of Strategy & Leadership.

Editor's note
This is the second Strategy & Leadership article in Professor Fahey's series on understanding competitors. The rst one, ``Invented competitors: a new competitor analysis methodology'' appeared in the November/December issue, Vol. 30 No. 6. cenario learning and competitor assessment are two tools for looking at the future that leading edge companies are learning to use efciently and effectively in combination. Given other demands on management attention, not many companies can expend the resources to annually investigate a wide range of future possibilities via scenario planning. Likewise, few companies can afford to continually track the details of their competitors' every strategic move. But almost all companies need to periodically weigh potential competitive threats, and now a proven methodology provides a look at rivals new and old in several scenario settings.

Managers need to be familiar with scenarios of future markets that are not merely extrapolations of current trends. This is because history teaches that the most potent competitors often emerge unexpectedly from surprising sources and under unanticipated circumstances. For example, a decade ago book-retailing chains were expanding at a record pace as they decimated their competition, small locally owned bookshops. However, the overnight success of Amazon.com's Internet store a potent combination of new marketing concepts, new technology, and new channel strategy forced the chains to reassess the future of book retailing and as a consequence make signicant changes to their historic strategy.

Liam Fahey

potent competitors `` History teaches that the mostfrom surprising often emerge unexpectedly sources and under unanticipated circumstances.

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Even long-time competitors sometimes do things completely out of character with their strategic and organizational modus operandi. For example, large diversied rms may suddenly decide to shed many businesses to concentrate on a few products and technologies. Another shift of marketplace power can occur unexpectedly when rivals make acquisitions that provide them with new competitive potential. Scenarios are a proven means to identify and examine pathways into alternate futures for which most managers, because of their focus on taking advantage of current conditions, are currently unprepared. Scenarios of futures where the business environment is distinctly different from current or anticipated conditions can help managers project and analyze competitors' futures: what competitors might do, how they might do it, and why. After a few years of experience, several leading companies that employ scenarios to better understand both current competitors' potential moves as well as the possible emergence of new rivals have learned several principles and some ways to avoid various pitfalls. Their basic technique, and their suggestions for avoiding missteps, can now be shared. In almost all cases, competitor scenarios produced actionable insights about these rms' own strategy alternatives. To demonstrate how this competitor scenario process works in practice, this article has a three-part structure: J First, to acquaint managers with the typical content of a competitor scenario. J Second, to explain the different types of competitor scenarios that can be created and the purposes associated with them. J Third, to show what managers can learn from different competitor scenarios and how they can use the understanding and information gained to improve strategy development and execution.

Competitor scenarios: purposes, key elements, and principles

A competitor scenario starts with a logical narrative that considers what a competitor might do over some specied time period, how its managers would do it, and why they would choose to do so. As with all scenarios, we must remember that any competitor scenario represents one projection of what a competitor might do. It is not a prediction of what it will do. The following competitor scenarios examine three broad aspects of marketplace strategy: in which product-customer segments the competitor chooses to compete (scope); how it competes (competitive posture); and what it seeks to achieve (goals). Competitor scenarios, of course, often focus on other issues or topics including: J How a competitor might guide and manage its R&D efforts. J How a competitor might build and manage an integrated supply chain. J How a competitor might develop and manage a networked enterprise around a series of alliances with many types of external entities. Competitor scenarios consist of the four key elements common to all scenarios: an end-state, plot, logics, and driving forces. For a brief description of each of the elements, see Exhibit 1. Note that there is no one right way to develop and interrelate these four elements. As will become evident in the following discussion, constructing competitor scenarios is an iterative process[1]. End-states are shaped by what is learned in the process of articulating and detailing the plot and the driving forces. In this article, we start the scenario process by asking different types of what-if questions

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Exhibit 1 Competitor scenarios: key elements

The components of every competitor scenario are: an end-state, plot, logics, and driving forces. End-state The end-state details the competitor's marketplace strategy scope, posture, and goals at the end of the scenario period. A radical new strategy would require the scenario developers to lay out what is radical about the strategy: how the products are revolutionary, what changes the products would imply for channels and customers, and other ways in which the strategy would be dramatically different from rivals' current approaches to competing and winning in the marketplace. The plot or story describes what the competitor must do to get to the end-state. What would the competitor have to do to develop, design, manufacture, market and sell the revolutionary products? Frequently, such plots must also address change within the competitor for example, the change in culture, systems, operating processes, assets, and leadership that would be required to facilitate and lead the drive toward a radical new marketplace strategy. Driving forces constitute the forces that shape or drive the plot. Some forces may be what is happening or likely to happen in and around the marketplace: what customers may do, trends related to sales of particular products, the emergence of new entrants, and governmental policies and regulations. Other forces are specic to the competitor such as changes in its goals or leaders, culture, competencies, etc. Finally, the scenario logic constitutes the explanation or rationales for the content, direction and intensity of changes postulated in the plot. The logic addresses the why questions: Why does the competitor want to pursue a revolutionary strategy? Why would customers respond to the proposed products in one particular way or another?

Plot

Driving forces

Logic

about competitors' likely future marketplace strategies. From the answers we craft the end-states that describe what the competitor strategy would look like. Competitors serve as one useful, and in some respects, ideal focal point for scenarios for a number of reasons. First, competitors are always at the heart of every signicant analysis of the competitive or industry context[2]. Thus, competitor scenarios provide one critical means of learning about the current and potential competitive environment. Second, strategy, however designed and executed, must win against current, emerging, and potential competitors in the marketplace. Customers and channels almost always possess the option to switch to rivals. Thus, competitor scenarios enable unique insights into the rivals that will shape the nature, direction, and intensity of marketplace rivalry. Third, once the notion of relevant competitors extends beyond large market share rivals, competitor scenarios generate learning about both competitors and the competitive context that would otherwise be unlikely to occur. Finally, because of the frequently intense emotions and feeling about rivals, managers and others often bring heightened energy and commitment to constructing and learning from competitor scenarios.
Principles

Some fundamental principles should always guide the construction and use of competitor scenarios (Exhibit 2). Sometimes these principles may seem counterintuitive. For example, why should learning about competitors not be the prime goal of competitor scenarios? The answer is that too often, competitor scenario developers become enamored of the possibility of crafting the most perfect scenario about the competitor one that is surprisingly comprehensive, self-evidently internally

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Exhibit 2 Competitor scenarios: guiding principles

Scenario purposes 1. The purpose of competitor scenarios is not to learn about competitors 2. Competitor scenarios should be used to learn about the competitive context beyond competitors (both the competitive or industry context and the macro environment) 3. Competitor scenarios should serve as one input to identifying, challenging and rening the organization's knowledge (including its beliefs, assumptions and projections about future) 4. Competitor scenarios should also serve as one input to outwitting, outmaneuvering and outperforming rivals 5. The ultimate purpose of competitor scenarios is to develop knowledge and insight that aids decision makers (in identifying strategy alternatives, making decisions faster, etc) Scenario analysis 6. Scenario construction and scenario assessment require distinct frames of reference, skills, and knowledge 7. A competitor scenario should be fully constructed before it is assessed for its competitive, strategy, and organization implications 8. However, strategy developers should not seek the perfect scenario before moving to assessment 9. Scenario developers need to disengage themselves from their own rm 10. Competitor scenarios should be constructed for a range of rivals (and not just large market share rivals)

consistent, elegantly articulated, and of course strikingly imaginative in everything it addresses and says about the competitor. Ultimately this commitment to constructing the perfect scenario limits the usefulness of the scenario project and consumes resources that are better employed elsewhere. Experienced managers instead use competitor scenarios as a source of learning about the broader competitive context and of the implications for their rm's strategy and operations. Competitor scenarios work best when they produce knowledge and insight that broadly informs and prepares decision makers to act rapidly as competitive conditions change. Which competitors should be the focus of competitor scenarios? The guiding principle should be, apply scenario thinking beyond your current large market share rivals. The reason is, competitor scenarios that address functional substitute rivals, small emerging rivals, and even invented rivals (that is, rivals that do not exist today but might exist at some point in the future) generate insights into the emerging and potential marketplace that often simply cannot be obtained no matter how acutely managers develop scenarios around the leading market share rivals. There are two distinct types of competitor scenarios that originate in two quite different forms of what-if questions: unconstrained what-if scenarios and constrained what-if competitor scenarios.

employed `` Several leading companies haveboth current scenarios to better understand

competitors' potential moves as well as the possible emergence of new rivals.

''

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Unconstrained what-if scenarios

Unconstrained or open-ended questions encourage scenario developers to pose any question that occurs to them pertaining to one or more rivals' marketplace strategies. Unconstrained what-if questions are limited only by the experience, imagination and creativity of those involved in thinking about the possible strategies of rivals. Four categories of what-if questions lead to competitor scenarios with different foci.
Standard questions

The standard questions that are frequently used to initiate unconstrained scenarios are noted in Exhibit 3. These questions have high relevance to most rms. Shaping these questions leads to determination of the relevant end-state a statement of what the competitor's marketplace strategy might be. Clearly, such statements can be detailed considerably beyond the examples cited in Exhibit 3. However, they should not exceed a half-page of carefully constructed narrative. A plot can then be detailed that leads to the end-state. This stage severely tests the knowledge and foresight of the scenario developers. Indeed, plot development all too often points up issues and questions that require access to external expertise. In this way, articulation of plots becomes a source of extensive knowledge for those involved. Sometimes plot elaboration forces managers and others to come face-to-face with issues and questions that are as challenging and insightful as they as unexpected. As one computer peripherals rm found, for example, in shaping the plot that explained how a rival's marketplace strategy resulted in product and technology dominance, it suddenly discovered how critical alliances in particular components would be to any rm's future success in this product space.

Base question scenarios

A different but related way to generate unconstrained competitor scenarios stems from asking a set of questions that are frequently raised in rms about rivals' strategies. These, unfortunately, rarely receive any kind of formal analysis (see Exhibit 4). This

Exhibit 3 Unconstrained what-if competitor scenarios: some typical questions

J What if the competitor commits to a diversication of its product line (new products for existing and new customers) through a combination of current and new technologies? J What if the competitor launches a series of new products (source internally and externally)? J What if the competitor launches a sequence of extensions to its current product lines (with the specic aim to attract new customers into the market) J What if the competitor suddenly divests a number of its product lines and/or pulls out of a number of geographic regions J What if the competitor moves rapidly to a customization-driven strategy? J What if the competitor fundamentally changes its core value propositionhow it competes to win customers in the marketplace? J What if the competitor commits to gaining signicant market share (and to do so as quickly as possible) without regard to the its long-term consequences (either for the rm itself or for the marketplace)?

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Exhibit 4 Competitor scenarios: baseline questions

Scenario title The ``dumb'' scenario Basic question What might the competitor do that would be least in its own strategic interest? What would be the ideal strategy for the competitor? What would be in the competitor's long-term best interest? Which strategy might the competitor pursue that would most ``help'' our rm? What strategy might the competitor pursue that would most ``hurt'' our rm? Why create the scenario Learn what could most negatively affect one or more rivals Learn what might be in the short-term interest of the competitor Learn what the competitor would have to do to win in the long-term Learn how and why a competitor's actions might benet our rm Learn how a competitor could make our rm most vulnerable Scenario benets May be possible to ``aid'' the competitor to commit to these actions May be possible to inhibit some of these benets accruing to the competitor Some of these decisions and actions may also be appropriate for us May indicate new ways to view actions of rivals; may indicate actions we should take May be possible to identify preemptive actions

The ``ideal'' scenario

The ``best long-term'' scenario

The ``most helpful'' scenario

The ``most hurtful'' scenario

method often produces unique insights into competitors' strategies and their implications. These base-question scenarios exemplify how rich insights can many times be gleaned without fully elaborating and detailing the relevant end-states, plots and logics. This is so in part because end-states and associated plots and logics based upon these what-if questions lead in turn to further questions (and insights) about rivals that in all likelihood would remain unasked (and not obtained).
A case

Consider the case of one electronics rm that asked the ``dumb'' what-if question: What strategic move might the competitor make that would be least in its own strategic interest? After an extensive analysis of the change in the marketplace, including emerging technologies and the recent emergence of new competitors promoting new product forms, the analysis team concluded that the least advantageous future strategy for this particular market share leading competitor would be to stick tenaciously to its current strategy that is, continue to incrementally improve its current products and to enhance its value added for customers in small but consistent steps. The team concluded that this strategy would be ``dumb'' because the competitor would likely nd itself losing the competitive, market and technology war that was about to breakout in this particular market space. A number of signicant strategy implications emerged that required the electronics rm's immediate attention: J First, it needs to quickly analyze whether it would suffer a similar fate if it too did not radically shift from its current product portfolio. J Second, the rm had to develop one or more projections, in scenario form, of the potential paths the technologies might take, and their potential interactions, over the next ve years.
New competitors

Unconstrained competitor scenarios are ideal for tackling one of the most fundamental issues that confronts the creators and advocates of any strategy:

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managers `` Experienced of learning use competitor scenarios as a source about the broader competitive context and of the implications for their rm's strategy and operations.

''

How might new types of competitors come into the market? New types of competitors include any organization that would provide a product or solution unlike the rm's current product or solution but which customers would purchase instead of its offering. Although issues and questions pertaining to the emergence of potential new types of competitors often arise in the course of strategy discussions inside most rms, few rms seem to devote any serious analytical thinking to them. Most do not consider the potential impact of such new entrants until either they actually have products in the market or they announce their imminent arrival. Indeed some management teams have remained aloof from any attention to such rivals even after the relevant staff teams such as a competitor analysis unit or a team with strategic planning responsibility had documented the (potential) emergence and threat of these rivals.

New competitors
Two avenues have proved especially useful in identifying new types of competitors the search for functional substitute rivals and interactions across technologies.
Functional substitute rivals

Here the dominant unconstrained what-if question is quite straightforward: How might functional substitute products or solutions come to be and what kind of rm might create and bring them to the market? Developing even tentative answers to these questions, however, is not nearly quite so straightforward. One reason why this is so quickly becomes evident when a team of managers and others begin to develop this type of competitor scenario. It requires considerable knowledge and expertise outside the rm's historic comfort zones. Yet even preliminary efforts to develop this scenario can generate substantial returns in terms of new knowledge about current and emerging technologies, changing customer needs, potential new marketplace dynamics, and new competencies in many functional areas including R&D, manufacturing, marketing, and sales. The basic what-if question is: What if a functional substitute emerged that had the following specic product features? Consider the case of a medical equipment manufacturer manager who asked: What if a pharmaceutical rm were to develop a drug that would relieve or eliminate the medical problem for which one of our product lines is used in surgery? The analysis team then had to call upon many external sources of knowledge and expertise to identify which pharmaceutical rms were conducting relevant research or already had potential products in the early stages of development or clinical trials. Then they had to determine what the development and product lifecycle of such products might be. They used this data to generate an endstate that specied what the product might be, the strategy required to take it to market, the plot that described how the rm could develop, test, and introduce the

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product, and a set of logics explaining why the rm would go through with the research, commit the resources required for an expensive product launch, and eventually win in the market against a number of existing products. In sum, a pharmaceutical product might be chosen by hospitals and doctors instead of a surgical procedure as a preferable form of treatment for the particular medical condition for which surgeons now use one of the rm's product lines. Consideration of this competitor scenario led to new understanding into: J How and why pharmaceutical products evolve. J How they could compete against the rm's traditional medical instruments. J The forces shaping treatment decisions within hospitals. J How and why the rm's long established and highly successful products could be vulnerable to products that many managers simply did not see as being part of ``the industry''.
Technology linkages

As evident in the discussion of functional substitutes, technology change leads to the emergence of new products and solutions. The critical question guiding the efforts of competitor scenario developers thus becomes: How might technology developments interact to give rise to new customer offerings? Ultimately, this question becomes: What if these technologies were to develop in particular ways? When technology is dened broadly to include all spheres of R&D, technology linkages as a source of competitor scenarios prove to be critical for rms in almost every industry. But even in product areas not thought to be technologically advanced, linkages across a variety of technologies, some of which may seem at rst glance not terribly related, can sometimes give rise to new competitors. Some nancial services companies now nd themselves competing directly for the same customers with far smaller providers who have used Internet and communications technologies along with database and related technologies to deliver superior value along a number of dimensions.
Invented competitors

A distinct class of competitor scenarios revolves around invented competitors[3], that is, competitors that do not exist today but which could exist at some point in the future[4]. Invented competitors possess the great merit of shifting the frame of reference in projecting and assessing rivals' strategies from current or emerging rivals to one or more rivals that, by denition, are strikingly dissimilar to any rival managers have had to contemplate to date. As a consequence, invented competitors enable managers and others to challenge their underlying assumptions indeed their whole world-view of competition in a unique way. Unconstrained what-if questions are personied by the notion of invented competitors: only the imagination and creativity of those involved limits the range and character of the competitors that might be invented. Let us take the case of a nancial services rm that used an invented competitor scenario to establish a radically distinct perspective on its future marketplace from which to assess its current strategy and its key underlying assumptions. The guiding what-if question was, What if a competitor emerged that possessed a marketplace strategy characterized by: J Interactions with external entities principally channels and customers that were exclusively electronic.

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J A full commitment to attracting new customers into the market. J A driving aim to ``dominate this particular market segment''. In detailing this end-state, the team carefully built a rich narrative around the following: J How the rm would reach customers and channels electronically. J How many types of customers could be reached. J The electronic methods employed to reach customers. J How the methods would be used to develop two-way ows of information. J How the rm could use data and information gathered from customers in almost real time to amend the ``offer'' to individual customers. J What the elements of the product offer or solution would be to customers (that is, what the nancial product would be that customer would actually be purchasing). For the next step, the team had to detail what plot or story would explain how the invented competitor reached this end-state over the next four years. Each year's plot affected what would or could take place in subsequent years. A signicant element of the plot described how the invented competitor would actually come to be, that is, what would have to happen for it to come into existence and then grow and develop as a company. The chronology of the plot revolved around the following items: J A small group of individuals with extensive experience in the relevant product domain exiting an existing nancial services rm. J Select individuals from other nancial services rms then join them. J This set of individuals then initially develops a loose alignment with a small boutique with considerable expertise in a variety of aspects of doing e-business. J The rm develops a technology platform to interact with customers. J At the same time, it begins to develop the rst outlines of what the ``offer'' would be to customers. J It then works with one large institutional customer as a ``test-bed'' for the offer as a location to develop a serious trial of the platform technology. Because of the radical nature of the proposed strategy and especially because of the degree of change involved for customers for example, all facets of how they would interact with a nancial services provider it was critical to set out and assess the logics underlying the plot. Central issues and questions were identied for each major step in the plot and for the plot as a whole. Key questions included: J Why would different segments of the invented competitor's customers move to an electronic mode of doing business? J What advantages would its customers gain from buying via e-business? J How would developments in e-technologies facilitate what the invented competitor wanted to achieve? J In what ways, might the invented competitor be able to leverage success with the proposed customer solutions into other customer offerings?

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when they `` Competitor scenarios work best that broadly produce knowledge and insight

informs and prepares decision makers to act rapidly as competitive conditions change.

''

Constrained what-if competitor scenarios

Constrained competitor scenarios start from a common point of departure: What would the competitor do if a specic set of marketplace or macro environmental endstates or conditions were to arise? These scenarios start with some specication of what the world would look like at some point in the future and then ask, ``What would the competitor do under these conditions?''. Thus, these scenarios explore the initiatives a competitor might take if it were to nd itself in a particular world endstate (such as emerging new technologies and new product regulations) or how it might react to the strategic moves of rivals. They are therefore constrained what-if questions. Constrained competitor scenarios are especially appropriate when your rm wants to identify and assess: J What would a particular competitor do under specied marketplace conditions?

Constrained what-if competitor scenarios

J Why a competitor would adopt one strategy rather than another? J Which marketplace changes might lead one or more competitors to adopt a particular strategy? The competitive context that serves as the ``constrained what-if'' can be established in at least two distinct ways. First, industry or competitive scenarios, if already developed for other purposes, provide one ideal context. Second, carefully articulated what-ifs that describe a brief set of future competitive conditions can also serve as the backdrop for constrained competitor scenarios. A number of such constrained what-ifs are briey described in Exhibit 4. Although at rst glance they may seem relatively simple and obvious, more often than not, development of such short what-if lists typically requires extensive reection on what could happen in the next few years and which what-if questions would give rise to the most productive competitor scenarios. It may require considerable dialogue around what could happen, before scenario developers converge on one or two what-ifs that raise interesting and perplexing questions about how one or more categories of rivals might respond to the stipulated competitive conditions. For example, a projected competitive context dominated by e-business may not lead to difcult strategy choices for a particular competitor but the potential emergence of a substitute product might lead to strategy choices ranging from divestment from the industry to acquiring or aligning with a provider of the substitute product. When existing industry or competitive scenarios constitute the rst critical step in shaping and using constrained competitor scenarios, the end-states serve as the principle focus of the competitive conditions. Although industry or competitive

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scenarios can be created in multiple ways, constrained industry or competitive endstates are typically crafted around a small set of key uncertainties. Exhibit 5 illustrates one such set of constrained competitive end-states constructed by a research and development intensive company that was confronting two key uncertainties: (1) A number of emerging ``technologies'' at varying stages of development that may or may not advance further, but if they did, they could dramatically affect research breakthroughs and thus new products; and (2) Considerable regulatory ux that could directly effect the ability of all current rivals to market and sell new and existing products or major product line extensions in various channels and to different end-customer segments. The four scenario cells shown in Exhibit 5 depict four quite different worlds. A strategy designed to win in one world, for example, extended status quo, could well fail miserably in the unbridled battle world. The steps in constructing competitor scenarios are then relatively straightforward: J Identify the strategy issues for the competitor. J Develop the scenario plot outline. J Detail the scenario plot. J Articulate the logics. J Determine the business issues to be addressed. When a rm identies key competitor strategy issues associated with each end state new marketplace opportunities, threats to traditional ways of competing or to the rm's planned strategies it establishes a more rened understanding of the competitive context within each end-state. As a result its managers can better understand the strategy challenges that would confront the competitor in each endstate. For example, a preview of the intensive nature of the vehement rivalry unleashed

Exhibit 5 Four competitive end-state worlds

Modest regulatory change Low level of technology change Status quo In this end-state, rivals continue to slowly adapt their customer solutions in the historic customer segments. Rivalry is moving toward an emphasis upon service elements. Rivals are still prohibited from entering signicant market segments Product fragmentation In this end-state, product modications unfold at a rapid rate. Some new products challenge the dominance of old solutions in some customer segments. Customers can choose from clearly differentiated solutions. Rivalry has shifted to product or solution superiority Extensive regulatory change Customer skirmish In this end-state, rivals compete with slowly changing products. But they now compete ercely in the pursuit of new customer segments. Rivalry is now intense as the number of rivals has increased in all customer segments Unbridled battle In this end-state, both product change and market change persist. Continuous product change keeps shifting the range of available customer solutions. And, rivals can aggressively pursue most customer segments

High level of technology change

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Exhibit 6 Examples of constrained what-if competitive conditions

J What if our competitive context in four years time is dominated by e-business connections between all players in the industry, resulting in solution segmentation, consolidation in traditional channels, and competitor fragmentation? J What if over the next three years, technology propels the emergence of new products, including functional substitutes that are signicantly more sophisticated than current products? J What if rivalry intensies but it is solely among the current dominant players in this specic product space and all rms commit extensive new resources to the battle? J What if the economy continues in stagnation and technology increases in importance as the platform for both new products and new ways of competing in the marketplace?

in the unbridled battle end-state claries the what-if set of conditions in which the competitor will have to identify and choose its preferred strategy: J A blizzard of new products. J The relentless search for new opportunities to enter into any channel. J Offering an entirely new range of enticements to customers and channels. In order to develop a scenario plot (and sometimes perhaps more than one) for each end-state represented in Exhibit 5, the core competitor scenario question must now come to the fore: What would the competitor do (that is, what strategy would it pursue) were it confronted with the competitive context in each end-state? It is important to note that the strategy options may vary dramatically from one end-state to another. For example, the competitor staring into the unbridled battle world might consider: J Divesting entirely out of this product range (due to the intensity of the rivalry and the absence of the necessary resources to stay the course). J Concentrate on one product segment (perhaps as a way to avoid the head-on clashes guaranteed with other rms if it develops a full product portfolio). J Develop a full line of products (perhaps by developing alliances with a number of other rms). J Move to become more of a research and development rm and less of a manufacturer and distributor (perhaps by leveraging its current and potentially accessible technology skills and capabilities).
Execution

Once a scenario plot has been outlined, managers can then detail what it would take to execute the projected strategy. In other words, choosing a strategy option does not identify or explain how it could be executed. Indeed, understanding how the competitor might execute a particular strategy often represents the core learning that emanates from these constrained competitor scenarios. Scenario developers gain insight not only into how the strategy might win in the marketplace but also into what the competitor would have to do both in the marketplace and within the rm in order to realize the opportunity at the heart of the strategy. The logics in these competitor scenarios address one fundamental question: Why would the competitor pursue this strategy? What forces within and external to the competitor would support or drive the competitor to adopt this strategy becomes the

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central question. The relevant external forces and how they affect a projected strategy may be specic to individual end-states (see Exhibit 5). In the unbridled competitive end-state, specic regulatory developments (not evident at all in the status quo world) might lead the competitor to seriously consider reducing its presence in, or even withdrawing entirely from the product-market sector. As a last step, it is essential to ask: What business issues emerge from each scenario that pose opportunities and threats that the organization must explore? Again, the issues can vary signicantly across the end-states.
The reward: insight and alternatives

Competitor scenarios provide a methodology to enable managers and others to construct and assess a variety of potential strategies that rivals might adopt. They require both imagination and creativity on one hand, and considerable knowledge and understanding of what strategies might be available to rivals, and how and why they might pursue them. In almost all cases, competitor scenarios lead to rich insight into the rm's own strategy alternatives and sometimes to alternatives that were previously not on the rm's radar screen.

Notes
1. For a more elaborate and detailed discussion of the generic analysis process involved in both constructing and assessing competitor scenarios, see Liam Fahey, ``Competitor scenarios: projecting a rival's marketplace strategy'', in Liam Fahey and Robert M. Randall (1998), Learning from the Future: Competitive Foresight Scenarios (John Wiley & Sons), pp. 223-45. 2. Readers interested in constructing industry or competitive scenarios, see Liam Fahey, ``Industry scenarios'', in Liam Fahey and Robert M. Randall (1998), Learning from the Future: Competitive Foresight Scenarios (John Wiley & Sons), pp. 189-222. 3. For a discussion of the invented competitors, see Liam Fahey, ``Invented competitors: a new competitor analysis methodology'', Strategy and Leadership, Vol. 30 No. 6, November/ December. 4. Invented competitors, of course, can be used to identify potential new forms of competitors.

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