Competitive Strategy: Techniques for Analyzing Industries and Competitors

Moves that do not threaten competitors’ goals are a place to begin in searching for ways to improve position.

Slow industry growth turns competition into a market share game for firms seeking expansion. Market share competition is a great deal more volatile than is the situation in which rapid industry growth insures that firms can improve results just by keeping up with the industry, and where all their financial and managerial resources may be consumed b

Substitute products that deserve the most attention are those that (1) are subject to trends improving their price-performance tradeoff with the industry’s product, or (2) are produced by industries earning high profits.

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

Product differentiation is perhaps the most important entry barrier in baby care products, over-the-counter drugs, cosmetics, investment banking, and public accounting.

goals, current strategy, assumptions, and capabilities.1

Even though the focus strategy does not achieve low cost or differentiation from the perspective of the market as a whole, it does achieve one or both of these positions vis-à-vis its narrow market target.

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?

The significant characteristic of costs is fixed costs relative to value added, and not fixed costs as a proportion of total costs.