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					Objectives
Identifying Competitors  Evaluating Competitors  Competitive Intelligence Systems  Competitive Strategies  Customer vs. Competitor Orientation


©2000 Prentice Hall

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

There is nothing more exhilarating than to be shot at without result.
Winston Churchill
©2000 Prentice Hall

Five Forces Determining Segment Structural Attractiveness
Potential Entrants (Threat of Mobility)

Suppliers (Supplier power)

Industry Competitors (Segment rivalry)

Buyers (Buyer power)

©2000 Prentice Hall

Substitutes (Threats of substitutes)

Barriers and Profitability
Exit barriers
Low High Low, risky returns

Entry Barriers

Low

Low, stable returns

High

High, stable returns

High, risky returns

©2000 Prentice Hall

Industry Competition
Number of Sellers - Degree of Differentiation  Entry, Mobility, Exit barriers  Cost Structure  Degree of Vertical Integration  Degree of Globalization


©2000 Prentice Hall

Strategic Groups in the Major Appliance Industry
High •Narrow line
Group A

Quality

•Lower mfg. cost •Very high service •High price

Group B •Full line •Low mfg. cost •Good service •Medium price

Group C •Moderate line •Medium mfg. cost •Medium service •Medium price Group D •Broad line •Medium mfg. cost •Low service •Low price

Low

High
©2000 Prentice Hall

Low

Vertical Integration

Analyzing Competitors
Objectives Strategies

Competitor Actions

Reaction Patterns

Strengths & Weaknesses

©2000 Prentice Hall

Competitor’s Expansion Plans
Markets
Individual Users

Commercial & Industrial Educational

Products

Personal Computers Hardware Accessories Software

Dell

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Hypothetical Market Structure & Strategies
Market leader Market challenger Market nicher Market follower

40%
Expand Market Defend Market Share Expand Market Share
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30%
Attack leader Status quo

20%
Imitate

10%
Specialize

Defense Strategies
(2) Flank defense

Attacker

(3) Preemptive defense

(4) Counteroffensive defense

(1) Position defense Defender (5) Mobile defense

(6) Contraction defense

©2000 Prentice Hall

Optimal Market Share
Profitability
Optimal market share

0%

25%

Market share

50%

75%

100%

©2000 Prentice Hall

Attack Strategies
(4) Bypass attack (2) Flank attack (1) Frontal attack Attacker (3) Encirclement attack Defender

(5) Guerilla attack
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Specific Attack Strategies
Price-discount  Cheaper goods  Prestige goods  Product proliferation  Product innovation  Improved services  Distribution innovation  Manufacturing cost reduction  Intensive advertising promotion

©2000 Prentice Hall

“Nichemanship”
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End-user specialist Vertical-level specialist Customer-size specialist Specific-customer specialist Geographic specialist Product or product-line specialist Product-feature specialist Job-shop specialist Quality-price specialist Service specialist Channel specialist

©2000 Prentice Hall

Balance

Customer
+ ID opportunities + Long-run profit + Emerging needs & groups
©2000 Prentice Hall

Competition
+ Fighter orientation + Alert + Exploit weaknesses - Reactive

Review
Identifying Competitors  Evaluating Competitors  Competitive Intelligence Systems  Competitive Strategies  Customer vs. Competitor Orientation


©2000 Prentice Hall


				
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