Competitive Advantage: Analysis and Strategy

Competitive Advantage: Analysis and Strategy

DOI: 10.4018/978-1-4666-0969-3.ch010
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Abstract

Many factors determine the nature of competition, including not only rivals, but also the economics of particular industries, new entrants, the bargaining power of customers and suppliers, and the threat of substitute services or products. This chapter emphasizes that outmaneuvering the rivals is the core of changing the rules of marketplace and argues that the strategy for outperforming the competitor is largely based on two basic issues- the performance parameters and assessment criteria of the performance. The discussion also guides understanding and analyzing each move of the competitor, and using the output to develop counter strategy may be defined as the process of competitor learning. Learning, as the detection and correction process, has varied implications for outwitting, outmaneuvering, and outperforming competitors.
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Introduction

…the more complex, knowledge-based, and dynamic the world economy becomes, the more competition is true. Competitive advantage lies increasingly in local things including knowledge, relationships, and motivation that distant rivals cannot replicate…

Porter (1998)

With the emergence of virtual shopping, liberalization of economic policies in the developing countries all over the world competition has become like a traditional derby in which many companies participate for neck-to-neck race. In this business game the rules are subject to change without notice, the prize money may change in short notice, the route and finish line is also likely to change after the race begins, new entrants may join at any time during the race, the racers may form strong alliances, all creative strategies are allowed in the game and the governmental laws may change without notice and sometimes with retrospective effect. Hence to win the race any company should acquire the strategies of outwitting, outmaneuvering and outperforming the competitors. In this process a company must understand thoroughly all the moves of the rival firms from various sources. The locales of the business rivalry have to be spotted to assess their strengths. An intriguing aspect of the marketplace is that the nature of competition can change over time. A technology, company, or product does not need to remain prey to another forever. Competitive roles can be radically altered with technological advances or with the right marketing decisions. External light meters, used for accurate diaphragm and speed setting on photographic cameras, enjoyed a stable, symbiotic (win–win) relationship with cameras for decades. As camera sales grew, so did light-meter sales. But eventually, technological developments enabled camera companies to incorporate light meters into their own boxes. Soon, the whole light-meter industry became prey to the camera industry. Sales of external light meters diminished while sales of cameras enjoyed a boost, and the relationship passed from win–win to predator–prey (Modis, 1998). Table 1 exhibits the competitors’ arena, which has to be studied comprehensively, and strategies to be build accordingly.

Table 1.
Possible locales of business rivalry
Business FactorsCustomer LocaleGeographyChannelsInstitutions and Patrons
• Supply Chain
• Promotion
• Investment
• Market Place
• Segments
• Individual
• Spread
• Regional
• C&F Agents
• Retailers
• Wholesalers
• Franchisees
• Mailers
• Government agencies
• Cooperatives

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