Chapter -2

Dimension of Competitive Analysis:

Competitive strategy refers to how a company positions itself in the market to gain an advantage
over competitors. There are three main dimensions of competitive strategy, as introduced by
Michael Porter in his "Generic Strategies" framework:

1. Cost Leadership

 Objective: Become the lowest-cost producer in the industry.

 Approach: Focus on minimizing production and operational costs to offer products or
services at a lower price than competitors.
 Example in Bangladesh: Grameenphone, by leveraging its scale and infrastructure, can
reduce costs, making its services more affordable than some competitors.

2. Differentiation

 Objective: Offer unique products or services that are valued by customers and different
from competitors.
 Approach: Focus on product innovation, quality, brand, and customer service to create
something distinct.
 Example in Bangladesh: Aarong offers uniquely designed handicrafts and clothing that
appeal to customers looking for premium and culturally significant products.

3. Focus (Niche)

 Objective: Target a specific market segment or niche.

 Approach: Focus on serving a particular group of customers better than competitors who
target a broader market.
 Example in Bangladesh: Pathao focuses on providing ride-sharing services in urban
areas, targeting a specific need in densely populated cities like Dhaka.

These three dimensions help businesses define their competitive positioning and decide how to
allocate resources to build and sustain their advantage in the market.

Strategic Groups and Firms Profitability:

Strategic groups are clusters of firms within an industry that follow similar strategies or
business models. These groups are often formed based on common characteristics like pricing
strategies, product offerings, or target markets. By understanding which strategic group a firm
belongs to, businesses can better assess their competitive position within the industry.
How Strategic Groups Affect a Firm’s Profitability:

1. Competition Intensity: Firms within the same strategic group tend to be direct
competitors, which can increase competition. The more intense the competition within a
group, the harder it is to maintain high profitability. For example, if multiple telecom
companies in Bangladesh are targeting the same customer segment with similar pricing,
competition will drive down prices and profits.
2. Barriers to Mobility: Some strategic groups may enjoy higher profitability because of
strong barriers to entry. These barriers might include brand loyalty, technology, or
economies of scale that are difficult for firms in other strategic groups to overcome. For
instance, a luxury car manufacturer in Bangladesh might enjoy high profitability because
new entrants find it difficult to match their brand reputation and customer base.
3. Market Power: Strategic groups with unique offerings or niche markets often have
greater pricing power, leading to higher profitability. A company in a strategic group that
focuses on premium, differentiated products (e.g., high-end electronics) might enjoy
higher margins compared to firms offering low-cost alternatives.
4. External Factors: Market conditions and government regulations affect strategic groups
differently. For example, in Bangladesh, firms focusing on environmentally sustainable
products might benefit from government incentives, enhancing their profitability
compared to firms in other groups.

By understanding these dynamics, a firm can make strategic decisions to improve its competitive
position and profitability within its respective group.

The Strategic Group Map as an analytical Tool

The Strategic Group Map is a visual tool used in business strategy to analyze the competitive
positions of different firms within an industry. It helps companies understand how they compare
to their competitors based on key factors like pricing, product quality, or distribution channels.

Key Components:

1. Strategic Groups: Companies in the same industry that have similar business models or
strategies. For example, in the airline industry, budget airlines like Ryanair and
Southwest would be one group, while premium airlines like Emirates and Singapore
Airlines would be in another.
2. Axes of the Map: The map typically uses two dimensions that differentiate the
companies, such as price (low to high) and product variety (narrow to broad). These axes
help visualize how companies compete.
3. Clusters: Firms that are close together on the map form clusters, indicating they follow
similar strategies. Companies in different clusters have distinct strategies and target
different market segments.

Why Use a Strategic Group Map?

  Identify direct competitors: It shows which companies are in direct competition and
which are not.
 Recognize gaps: It highlights potential gaps in the market, where no firm is currently
competing, offering opportunities for growth.
 Analyze competitive pressure: The closer two firms are on the map, the more direct
competition exists between them.

Example (in the Bangladesh market):

In Bangladesh's retail sector, you could create a Strategic Group Map comparing local retail
chains. On one axis, you might have price range (low to high) and on the other axis, store size
(small shops to large supermarkets). Chain stores like Shwapno and Agora might form one
group as higher-end supermarkets, while smaller local retailers form another group focused on
lower prices.

This tool helps companies adjust their strategies by better understanding where they fit in their
industry's competitive landscape.

Chapter -4

Components of Competitor Analysis

Competitor analysis involves identifying and evaluating your competitors to understand their
strengths, weaknesses, and strategies. It helps businesses position themselves effectively in the
market. The key components of competitor analysis include:

1. Identification of Competitors

 Direct competitors: Companies offering similar products or services.

 Indirect competitors: Companies offering alternative solutions.
 Example (Bangladesh): For a local clothing brand, direct competitors would be other
clothing brands, while indirect competitors could be fashion accessory sellers.

2. Competitor’s Market Share

 Understanding how much of the market your competitor controls.

 Example: If Brand A controls 40% of the market for smartphones in Bangladesh, it
indicates dominance in the sector.

3. Products and Services

 Analyzing the quality, variety, and pricing of the competitor’s products.

 Example: If a competitor is offering more affordable electronics with similar features,
that might attract price-sensitive customers..
4. Pricing Strategy

 Evaluating how competitors price their products and services.

 Example: A competitor in the restaurant industry might be using discounts and combo
offers to attract customers in Dhaka.

5. Marketing and Sales Strategies

 Looking into how competitors market their products (e.g., social media, print media,
promotions).
 Example: A competing e-commerce platform in Bangladesh might rely heavily on social
media ads and influencer marketing.

6. Strengths and Weaknesses

 Identifying where competitors excel and where they fall short.

 Example: A competitor may have strong distribution networks but poor customer
service.

7. Customer Reviews and Feedback

 Analyzing customer opinions about competitors.

 Example: Reading online reviews on platforms like Facebook or Google to understand
how people perceive competitors in the retail industry.

8. Technology and Innovation

 Assessing the level of technological advancement or innovation used by competitors.

 Example: Competitors using advanced e-payment systems or delivery tracking in
Bangladesh.

9. Financial Performance

 Looking at the revenue, profit margins, and overall financial health of competitors.
 Example: A competitor showing consistent revenue growth may indicate effective
strategies in a competitive market.

10. Distribution Channels

 Understanding how competitors deliver their products (e.g., online, physical stores).
 Example: A competitor with a strong online presence might have an edge in reaching
remote areas in Bangladesh.

By studying these components, businesses can make informed decisions to outperform their
competition.
The Competitor Response Profile

This refers to how a firm anticipates its competitors will react to changes in the market or
strategic moves made by other firms. It helps businesses predict competitive behavior and plan
their responses effectively.
For example, if Grameenphone launches a new data plan at a lower price, Robi might respond by
introducing more flexible plans or improving its customer service. Understanding the
competitor’s priorities helps predict the intensity and nature of their response. Here’s a basic
rundown of how it works:

1. Identify Competitors: Determine who your main competitors are. This could include
direct competitors offering similar products or services, or indirect competitors who
address the same customer needs differently.
2. Analyze Competitor Strategies: Look into their marketing, pricing, distribution, and
product development strategies. Understanding their approach gives you insights into
their strengths and weaknesses.
3. Predict Reactions: Based on their past behavior and current strategies, anticipate how
they might respond to your actions. For instance, if you plan to launch a new product,
consider if they might launch a similar product or adjust their prices.
4. Develop Counterstrategies: Create plans to address potential competitive responses. For
example, if a competitor might lower prices in reaction to your new product, you might
prepare a promotional campaign to maintain your market position.
5. Monitor and Adapt: Continuously track your competitors’ actions and adjust your
strategies as needed. The market is dynamic, and staying flexible is key

Market signal and its types;

A market signal is a piece of information or an indicator that helps people understand what is
happening in a market. It can guide their decisions about buying, selling, or investing.

Example: Imagine you're looking to buy a new smartphone. If you notice that many people are
buying a particular model and the price of that model is going up, this could be a market signal.
It suggests that the smartphone is in high demand. You might decide to buy it soon before the
price goes even higher, or you might choose to wait if you think the price will drop later.

Here are some common types of market signals:

1. Price Movements: Changes in the price of goods or services can indicate shifts in supply
and demand. For example, if the price of rice rises in Bangladesh, it might signal
increased demand or reduced supply.
2. Volume: The amount of goods or services sold can reflect market activity. High sales
volumes might indicate strong demand, while low volumes could suggest weaker interest.
3. Economic Indicators: Metrics like GDP growth, inflation rates, and unemployment
figures provide a snapshot of the overall economic health, influencing market conditions.
 For instance, a rise in GDP in Bangladesh could signal a growing economy, affecting
various markets.
4. Consumer Behavior: Trends in what consumers are buying or their spending habits can
signal market shifts. If people in Bangladesh start buying more mobile phones, it might
indicate a growing tech market.
5. Competitor Actions: Changes in what competitors are doing, such as launching new
products or changing prices, can signal potential shifts in the market.
6. Government Policies: New regulations or changes in policy can affect markets. For
instance, if the Bangladeshi government introduces subsidies for renewable energy, it
might signal growth opportunities in the green energy sector.

Understanding these signals helps in anticipating market changes and making informed
decisions.

Competitive Moves:

Competitive moves refer to the actions taken by a company to improve its position in the market
relative to its competitors. These moves can be categorized into various types and strategies:

Types of Competitive Moves

1. Pricing Moves: Adjusting the price of products or services to gain a competitive

advantage. This can include discounting, price skimming, or penetration pricing.
Example: A local supermarket in Dhaka might lower the prices of essential goods to
attract more customers from a nearby competitor.
2. Product Moves: Enhancing or diversifying products to make them more appealing. This
could involve improving quality, adding features, or launching new products. Example:
A Bangladeshi smartphone company might introduce a new model with advanced
features to stand out in the crowded market.
3. Marketing Moves: Developing and implementing marketing campaigns to increase
brand awareness and attract customers. Example: A clothing brand in Chattogram might
launch a social media campaign highlighting its unique designs to draw attention from
fashion-conscious consumers.
4. Distribution Moves: Changing or expanding distribution channels to reach more
customers or improve service. Example: A local electronics retailer in Sylhet might
partner with an online marketplace to sell their products to a broader audience.
5. Service Moves: Enhancing customer service to differentiate from competitors and build
customer loyalty. Example: A bank in Dhaka might offer extended customer service
hours or more personalized financial advice.
6. Operational Moves: Improving operational efficiency to reduce costs or enhance
production capabilities. Example: A garment factory in Bangladesh might invest in new
machinery to speed up production and lower manufacturing costs.

Strategies for Competitive Moves

 1. Cost Leadership: Becoming the lowest-cost producer in the industry to attract price-
sensitive customers. Example: A local furniture manufacturer might focus on efficient
production processes to offer lower prices than competitors.
2. Differentiation: Offering unique products or services that stand out from competitors to
attract customers willing to pay a premium. Example: A boutique hotel in Cox's Bazar
might offer unique cultural experiences and luxury amenities to differentiate itself from
other accommodations.
3. Focus Strategy: Targeting a specific market segment with tailored products or services.
Example: A company specializing in organic farming might focus on health-conscious
consumers in urban areas like Dhaka.
4. Innovation: Continuously introducing new ideas, products, or processes to stay ahead of
competitors. Example: A tech startup in Dhaka might invest heavily in research and
development to create cutting-edge software solutions.
5. Market Penetration: Increasing market share within existing markets through
aggressive marketing, promotions, or enhanced customer experiences. Example: A fast-
food chain might offer promotions and loyalty programs to increase its customer base in
Dhaka.
6. Expansion: Entering new markets or regions to grow the business. Example: A
successful local brand in Dhaka might expand to other major cities in Bangladesh, like
Chattogram or Sylhet.

Each of these moves and strategies involves assessing the competitive landscape, understanding
customer needs, and aligning actions with overall business objectives.