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Competitors Analysis
It starts with identifying current andpotential competitors.
•Perspective of customers•Competitor in strategic group
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Identify competitor- Customer based
approach
• Primary competitors are quite visible andidentified. Eg Coke Vs Pepsi
• Later the basic business model is eroded becauseof customers changing priorities.
• Coke focused on Pepsi and ignored the emergingsubmarkets in water, iced tea and fruit-baseddrinks. The results was a missed opportunity andthe eventual need to pursue an expensive and
difficult catch up strategy.• Banks focused on Banks, which gave way to
insurance, mutual fund, brokers etc.
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What is Strategic Analysis and what
is Competitors Analysis?
Ans: Strategic Analysis is general and
competitors analysis specific.
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• Customer Choice approach
( What choices are customer making?)
Hp laptops or Dell laptops• Product – use Association approach
It is the association of products with specific use
contexts or application( what will u have for a snack?)
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Identify competitors- strategic group
approach
A strategic group is a group of firms that:
• Overtime pursue similar competitive
strategies ( use same distribution channel,
same communication strategies or same price)
• Have similar characteristics ( size or
aggressiveness)
• Have similar assets and competencies (brand
association, logistics & R&D)
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Mobility barrier concept is crucial because todevelop SCA is to pursue a strategy that isprotected from competition.
e.g Dell marketed computers directly first bycatalogue then by telephone & then byinternet.
IBM and HP used indirect channels –
retailersand system firms – found it difficult to shiftstrategies.
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Projected Strategic Group evolution
1. First phase- Medium and small firms attempt
to gain market share.
2. Second phase- strong firms make acquisition
to fill product line & distribution coverage.
3. Inter industry mergers occurs.
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Potential competitors are firms
engaged in
• Market expansion
• Product expansion
•
Backward integration• Forward integration
• Export of assets and competencies
• Defensive strategies.
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Understanding competitor
Competitors Actions
• Size & growth, profitability
• Image & Positioning
•Objectives and commitment
• Current & Past Strategies
• Organization & Culture
• Cost Structure
• Exit Barriers
• Strengths & Weaknesses
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Example of Companies with
Sustained Competitive Advantage
• Strong research and Innovation
• The technology industry is one of the leading
industries with respect to strong research and
innovation. And when it comes to setting the
pace using innovation as leverage; Apple and
Sony are the two companies that have held
their leadership position using innovation as acompetitive advantage.
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• Brand Popularity
• Being recognized all over the world as a
respected brand is a sustained competitive
advantage that companies such as Virgin,
Apple and Coca cola have used as leverage to
hold the market sway for years. Virgin is a
company that has used its brand name asleverage to break into new markets in
completely new territories.
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• Corporate reputation
• Corporate reputation is a form of sustained
competitive advantage that companies such
as Price Waterhouse have leveraged to
become world class entities.
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• Strategic assets
• Holding strategic assets such as patents is a
strong source of sustained competitive
advantage and General Electric has stood the
test of time because of the several patents
held. Mind you that possession of these
strategic assets has made General Electric oneof the most powerful companies in the world.
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• Access to working Capital
• Generally, public liability companies (quoted
companies) have a sustained competitive
advantage over private companies because of
their infinite capacity to raise capital from the
public. Take a look at how Oracle acquired 57
companies in a space of five years andReliance Industries investing a billion dollars in
a single swoop to open a chain of retail stores.
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• Superior Product or customer support
• IKEA has become a market leader in the
furniture industry because of its ability to
provide superior product at an affordable rate;
backed by a strong customer support system.
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• Flexibility
• The ability to change swiftly is a strength and
source of sustained competitive advantage
that Microsoft leveraged upon to become the
largest software company in the world.
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• Speed and Time
• Speed and time was once an overlooked
source of sustained competitive advantage
until FedEx and Domino Pizza used it as
leverage to become industrial pacesetters.
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• Low pricing
• Wal-Mart as at the time of this writing is the
most capitalized company in the world.
Thanks to its low pricing strategy that became
its strong source of competitive advantage.
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• Superior database management and data
processing capabilities
• GTBank, AT&T, Google, Facebook have
become market leaders in their various niches
because of the superior database
management and data processing capabilities
they possess.