Competitive Strategy: Techniques for Analyzing Industries and Competitors

Finding a situation that catches the key competitor or competitors with conflicting goals is at the heart of many company success stories.

Forecasting potential competitors is not an easy task, but they can often be identified from the following groups: • firms not in the industry but who could overcome entry barriers particularly cheaply; • firms for whom there is obvious synergy from being in the industry; • firms for whom competing in the industry is an obvious extension of the cor

Finding strategic moves that will benefit from a lag in retaliation, or making moves so as to maximize the lag, are key principles of competitive interaction. However, seeking to delay retaliation cannot be made a principle of strategy without qualification. A slow but tough retaliation may leave the initiating firm worse off than a quick but less

1. How likely is retaliation? 2. How soon will retaliation come? 3. How effective will retaliation potentially be? 4. How tough will retaliation be, where toughness refers to the willingness of the competitor to retaliate strongly even at its own expense? 5. Can retaliation be influenced?

Multiple bargaining areas, or situations in which firms are interacting in more than one competitive arena, can also facilitate a stable outcome in an industry.

There are four diagnostic components to a competitor analysis (see Figure 3-1): future

Although the framework and questions presented here are stated in terms of competitors, the same ideas can also be turned around to provide a framework for self-analysis.

goals, current strategy, assumptions, and capabilities.1

However, at the broadest level we can identify three internally consistent generic strategies (which can be used singly or in combination) for creating such a defendable position in the long run and outperforming competitors in an industry.