Competitive Strategy

Techniques for Analyzing Industries and

Competitors

Industry
Opportunities
And Threats
(Economic
and
Technical)

Company
Strengths
And
Weaknesses

Factors
Internal
to the
Company

Personal
Values
Of the Key
Implementers

Competitive
Strategy

Factors
External
to the
Company

Broader
Societal
Expectations

Context in Which Competitive Strategy Is

POTENTIAL
ENTRANTS

Threat Of
New entrants

Bargaining power
Of suppliers

INDUSTRY
COMPETITORS

SUPPLIERS

Bargaining power
Of buyers
BUYERS

Rivalry Among
Existing Firms

Threat of
Substitute products
Or services

SUBSTITUTES

Forces Driving Industry Competition

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

BARRIERS TO ENTRY
Six Major Sources

Economies of Scale

Switching Costs

Product Differentiation

Access to Distribution

Channels

Capital Requirements
Government Policy

INTENSITY OF RIVALRY AMONG EXISTING

COMPETITORS

Numerous or Equally

Balanced Competitors
Capacity Augmented in
Slow Industry Growth
High Fixed or Storage

large Increments
Diverse Competitors

Costs
High Strategic Stakes
Lack of Differentiation or

Switching Costs

High Exit Barriers

Barriers and Profitability

Exit Barriers
Low

High

Low

Low, stable
Returns

Low, risky
Returns

High

High, stable
Returns

High, risky
Returns

Entry
Barriers

PRESSURE FROM
SUBSTITUTE PRODUCTS

Bargaining Power of
Buyers
It is concentrated or purchase large volumes

relative to seller sales

It faces few switching costs
It earns low profits
Buyers pose a credible threat of backwards
integration
The buyer has full information

Structural Analysis And Competitive

Strategy
POSITIONING
INFLUENCING THE BALANCE
EXPLOITING CHANGE
DIVERSIFICATION STRATEGY

Structural Analysis And Competitive

Strategy
POSITIONING
INFLUENCING THE BALANCE
EXPLOITING CHANGE
DIVERSIFICATION STRATEGY

Structural Analysis And Competitive

Strategy
POSITIONING
INFLUENCING THE BALANCE
EXPLOITING CHANGE
DIVERSIFICATION STRATEGY

STRATEGIC ADVANTA
GE
Uniqueness
Perceived
By the Customer

Industry wide

Particular
Segment Only

Low Cost Position

DIFFERENTIATION

OVERALL
COST LEADERSHIP

F O C U S

Other Requirements of The Generic

Strategies
Generic
Strategy

1. Over Cost
Leadership

Commonly Required
Skills And Resources

Common
Organizational
Requirements

Sub
stained
capital
investment and access
to capital
Process
engineering
skills
Intense supervision of
labor
Products designed for
ease in manufacture
Low-cost
distribution
system

Tight cost control

Frequent,
detailed
control reports
Structured organization
and responsibilities
Incentives
based
on
meeting
strict
quantitative targets

Generic
Strategy

Commonly Required
Skills And Resources

Common
Organizational
Requirements

2. Differentiation

Strong marketing abilities

Product engineering
Creative flair
Strong capability
in basic
research
Corporate
reputation
for
quality
or
technological
leadership
Long tradition in the industry
or unique combination of
skills drawn from other
businesses

Strong
coordination
among functions in
R&D,
product
development,
and
marketing
Subjective
measurement
and
incentives instead of
quantitative measures
Amenities to attract
highly skilled labor ,
scientists or creative
people

3. Focus

Combination of the above Combination of the

policies
directed
at
the above policies directed
particular strategic target
at
the
particular
strategic target

Risks of Overall Cost Leadership

Technological change that nullifies past investments or

learning;
Low-cost learning by industry newcomers or followers,

through imitation or through their ability to invest in

state of the art facilities;
Inability to see required product or marketing change

because of the attention places on cost;

Inflation in costs that narrow the firms ability to

maintain enough of a price differential to offset

competitors brand images or other approaches to
differentiation.

Risks of Differentiation
The cost differential between low-cost competitors and

the differentiated firm becomes too great for

differentiation to hold brand loyalty. Buyers thus sacrifice
some of the features, services or image possessed by the
differentiated firm for large cost saving;
Buyers need for the differentiating factor falls. This can

occur as buyers become more sophisticated;

Imitation narrows perceived differentiation, a common

occurrence as industries mature.

Risks of Focus
The cost differential between broad-range

competitors and the focused firm widens to

eliminate the cost advantages of serving a
narrow target or to offset the differentiation
achieved by focus;
The difference in desired products or services
between the strategic target and the market
as a whole narrows;
Competitors find submarkets within the
strategic target and out focus the focuser.

A Framework for Competitor Analysis

What dives the Competitor

Future Goals
At the levels of management
and in multiple dimension

What the Competitor

Is Doing and Can Do

Current Strategy
How the business is
currently competing

Competitors Response
Profile
Is the Competitor satisfied with its
current position?
What likely moves or strategy shifts
will the competitor make ?
Where is the competitor vulnerable?
What will provoke the greatest and
most effective retaliation by the
competitor?

Assumptions

Capabilities

Held about itself and

the industry

Both strengths and

weaknesses

The Competitor Response profile

Offensive Moves
Satisfaction with current

position
Probable moves
Strength and seriousness

of moves

The Competitor Response profile

Defensive
Capability
Vulnerability
Provocation
Effectiveness of retaliation

PRIZE COMPETITION

Hichhiker (Ros)
15-20 %

High Road Brand

(Ros)
20 %

Dead End Brand

< 5%

Low Road Brand

5-10 %

Premium
Degree
Categories

H
RMS

1.

Hichhiker : Lowering price is dangerous focus on

innovation Nische marketing attract and keep narrow
base of loyal consumer lead the market in sub segment
of larger categories.
( eg. Kellogg v/s Gen Milk Sub segment /
Automobiles -chrysler)
Risk : If market leader lower the prices

2.

High Road Brand : Innovation Continuous

improvement eg. Gillette , Judicious pricing, Rising
entry Barriers, Move skills

3. Low Road Brand : Cost cutting, low pricing eg. cello,

Addgel
Brand building , then lead to premium,
dealer push , reduce skill - low end brand dont require
variety

THANK
YOU