Competitive Strategy: Techniques for Analyzing Industries and Competitors

The final generic strategy is focusing on a particular buyer group, segment of the product line, or geographic market;

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.

“Who should we pick a fight with in the industry, and with what sequence of

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.

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.

Capital Requirements. The need to invest large financial resources in order to compete creates a barrier to entry, particularly if the capital is required for risky or unrecoverable up-front advertising or research and development (R&D).

Government Policy. The last major source of entry barriers is government policy. Government can limit or even foreclose entry into industries with such controls as licensing requirements and limits on access to raw materials (like coal lands or mountains on which to build ski areas).

goals, current strategy, assumptions, and capabilities.1

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

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