chapter 6

Strengthening a
Company’s
Competitive
Position:
Strategic Moves,
Timing, and
Scope of
Operations

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 Maximizing the Power of a Strategy
Making choices that complement a competitive
approach and maximize the power of strategy

Offensive and Competitive Scope of

defensive dynamics and the operations
competitive timing of strategic along the
actions moves industry’s value
chain

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 Principal Offensive Strategy Options
1. Offering an equally good or better product at a lower price
2. Leapfrogging competitors by being first to market with next-
generation products
3. Pursuing continuous product innovation to draw sales and
market share away from less innovative rivals (flank attack)
4. Pursuing disruptive product innovations to create new
markets
5. Adopting and improving on the good ideas of other
companies (rivals or otherwise) (benchmarking)
6. Using hit-and-run or guerrilla marketing tactics to grab
market share from complacent or distracted rivals
7. Launching a preemptive strike to secure an industry’s limited
resources or capture a rare opportunity
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 Competitive Strategy Real Organization Example Brief Description

Xiaomi offers feature-rich

electronics, comparable to
Offering an equally good or better Xiaomi (Smartphones and premium brands, at significantly
product at a lower price Electronics) lower prices by leveraging lean
operations and online sales
channels.

Tesla pioneered the mass-

market, high-performance, long-
Leapfrogging competitors by
range electric vehicle,
being first to market with next- Tesla (Electric Vehicles)
establishing a new market
generation products
segment and forcing traditional
automakers to adapt.

Dyson consistently introduces

Pursuing continuous product technologically superior home
innovation to draw sales and appliances (e.g., bagless
Dyson (Home Appliances)
market share away from less vacuums, bladeless fans),
innovative rivals (flank attack) attracting customers from rivals
offering less innovative products.

Netflix first disrupted video

rentals with DVD-by-mail, then
Pursuing disruptive product
created a new market for on-
innovations to create new Netflix (Home Entertainment)
demand streaming,
markets
fundamentally changing
entertainment consumption.
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 Competitive Strategy Real Organization Example Brief Description

Samsung observed Apple's

iPhone success, adopted key
Adopting and improving on
features, and then rapidly
the good ideas of other
Samsung (Smartphones) innovated and improved
companies (rivals or
upon them with its Galaxy
otherwise) (benchmarking)
line, adding diverse features
and form factors.

Oatly uses bold,

Using hit-and-run or guerrilla unconventional, and often
marketing tactics to grab provocative marketing
Oatly (Oat Milk & Dairy
market share from campaigns to challenge the
Alternatives)
complacent or distracted dominant dairy industry and
rivals rapidly gain attention and
market share.
De Beers historically secured
Launching a preemptive control over global diamond
strike to secure an industry’s De Beers (Diamonds - mining and distribution,
limited resources or capture historically) preemptively limiting
a rare opportunity competition by controlling
essential industry resources.

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 Blue-Ocean Strategy—A Special Kind of
Offensive
The business universe is divided into:
• An existing market with boundaries and rules
in which rival firms compete for advantage.
• A “blue ocean” market space, where the
industry has not yet taken shape, with no
rivals and wide-open long-term growth and
profit potential for a firm that can create
demand for new types of products.

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 Defensive Strategies—Protecting Market
Position and Competitive Advantage

Purposes of Defensive Strategies

Lower the firm’s risk of being attacked

Weaken the impact of an attack that does occur

Influence challengers to aim their efforts at other rivals

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 Forms of Defensive Strategies

Defensive strategies can take

either of two forms:
• Actions to block challengers.
• Actions to signal the likelihood
of strong retaliation.

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 Actions to block challengers
• Structural barrier
• Exclusive agreement with distributors
• Patenting or licensing
• Exclusive rights with suppliers
• Cautious of suppliers
• Increase your competitive advantage
• Urge government

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 Actions to signal the likelihood of strong retaliation
1. Your strength
2. Lower price
3. Product differentiation
4. Customer loyalty

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 Exercise

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 https://forms.office.com/r/KA0CxEZzvR?origin=lprLink

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 Table 1: First Mover vs. Fast Follower

Feature/Aspect First Mover Fast Follower

Innovator, Market Improver, Market
Primary Role
Creator Challenger
Creates new Refines/enhances
Innovation
product/market existing product/market
Lower (learns from
Risk Level High
pioneer)
Educates & builds Leverages existing
Market Creation
market market awareness
R&D Costs High Lower (adapts/improves)

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 Table 1 (cont’d): First Mover vs. Fast Follower

Feature/Aspect First Mover Fast Follower

Via direct, often costly, Observes pioneer's
Learning
experience successes & mistakes
Timing First to market Enters soon after pioneer
Builds on or differentiates
Brand Focus Establishes "original"
from original
Proving viability, Gaining share, effective
Challenge
surviving uncertainty differentiation
Set standards, build Offer superior value,
Opportunity
strong initial loyalty capture proven demand

Netflix (Subscription Samsung (Smartphones,

Example Org.
Streaming) following Apple's iPhone)

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 Horizontal Merger and Acquisition
Strategies
Merger:
• Is the combining of two or more firms into a
single corporate entity that often takes on a
new name.
Acquisition:
• Is a combination in which one firm, the
"acquirer," purchases and absorbs the
operations of another firm, the "acquired."

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 Exercise

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 https://forms.office.com/r/Y1DzRzTdu8?origin=lprLink

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 Why Mergers and Acquisitions Sometimes
Fail to Produce Anticipated Results
Strategic issues
• Cost savings may prove smaller than expected.
• Gains in competitive capabilities take longer to realize or never
materialize at all.

Organizational issues
• Cultures, operating systems and management styles fail to mesh
due to resistance to change from organization members.
• Key employees at the acquired firm are lost.
• Managers overseeing integration make mistakes in melding the
acquired firm into their own.

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