22.10.2013 1 Assist. Prof. Dr. Ozge Ozgen Department of International Business and Trade Competitive Strategy Positioning a business to maximize the value of the capabilities that distinguish the company from its competitors. Competitor analysis is needed to answer: Who should we pick a fight with in the industry and with what sequence of moves? What is the meaning of that competitor’s strategic moves? Variables in Identifying Competitors How do other firms define the scope of their market? • The more similar the definitions of firms, the more likely the firms will view each other as competitors How similar are the benefits the customers derive from the products and services other firms offer? • The more similar the benefits, the higher the level of substitutability between them How committed are other firms to the industry? • To size up commitment of potential competitors to industry, reliable intelligence data are needed concerning potential resource commitments Common Mistakes in Identifying Competitors Overemphasizing current and known competitors while ignoring potential entrants Firms not in industry but who could overcome entry barriers Customers and suppliers who may integrate backward or forward Overemphasizing large competitors while ignoring small ones Overlooking potential international competitors Assuming competitors will continue to behave in same way Common Mistakes in Identifying Competitors (contd.) Misreading signals indicating a shift in focus of competitors Overemphasizing competitors’ financial resources, market position, and strategies while ignoring their intangible assets Assuming all firms in industry are subject to same constraints or are open to same opportunities Believing purpose of strategy is to outsmart competition, rather than satisfy customer needs The Components of a Competitor Analysis Source: Porter, Michael E. (1980), Competitive Strategy, The Free Press, p.49
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22.10.2013
1
Assist. Prof. Dr. Ozge Ozgen
Department of International Business and Trade
Competitive Strategy Positioning a business to maximize the value of the
capabilities that distinguish the company from its competitors.
Competitor analysis is needed to answer:
Who should we pick a fight with in the industry and with what sequence of moves?
What is the meaning of that competitor’s strategic moves?
Variables in Identifying Competitors How do other firms define the scope of their market?
• The more similar the definitions of firms, the more likely the firms will view each other as competitors
How similar are the benefits the customers derive from the products and services other firms offer?
• The more similar the benefits, the higher the level of substitutability between them
How committed are other firms to the industry? • To size up commitment of potential competitors to industry,
reliable intelligence data are needed concerning potential resource commitments
Common Mistakes in Identifying Competitors
Overemphasizing current and known competitors while ignoring potential entrants Firms not in industry but who could overcome entry barriers
Customers and suppliers who may integrate backward or forward
Overemphasizing large competitors while ignoring small ones
Overlooking potential international competitors
Assuming competitors will continue to behave in same way
Common Mistakes in Identifying Competitors (contd.)
Misreading signals indicating a shift in focus of competitors
Overemphasizing competitors’ financial resources, market position, and strategies while ignoring their intangible assets
Assuming all firms in industry are subject to same constraints or are open to same opportunities
Believing purpose of strategy is to outsmart competition, rather than satisfy customer needs