competitive interaction
DESCRIPTION
Competitive Interaction. Competitive Outcomes. Hardball?. Organizational Characteristics. Industry Characteristics. Dethronement of the Leader. Wal-Mart. Market Share. Sears. JC Penney. 1950 1960 1970 1980 1990 2000. - PowerPoint PPT PresentationTRANSCRIPT
Page 1
Competitive Interaction
Hardball?
CompetitiveOutcomes
IndustryCharacteristics
OrganizationalCharacteristics
Page 3
Dethronement of the Leader
Market Share
1950 1960 1970 1980 1990 2000
Wal-MartSears
JC Penney
Page 4
Dethronement of the Leader
Market Share
1950 1960 1970 1980 1990 2000
McDonnell-Douglass
Boeing
Airbus
Page 5
Dethronement of the Leader
Market Share(U.S.)
1980 1990 2005
Adidas
Nike
Reebok
Page 6
King of the Hill – Fizzy Beverages
Market Share
1970 1980 1990 2000 2010 2020
Other ?Coke
Pepsi
Page 7
Simple Rivalry: Prisoner’s Dilemma
What to say to police?
Criminal 1
Criminal 2
Confess
Confess
Keep Quiet
Keep Quiet
Both Serve 1 Year in Jail
Both Serve 5 Years in Jail
#2 Serves 10 Years in jail
#1 Goes Free
#1 Serves 10 Years in Jail
#2 Goes Free
Page 8
Three Stooges
Larry, Moe, and Curley are in a 3-way duel and agree to take turns shooting each other, in that order
Accuracy statistics:– Larry hits target 20% of the time– Moe hits target 80% of the time– Curley hits target 100% of the time
When the duel starts, what should Larry do?
Page 9
Competitive Intelligence
A systematic and ethical program forgathering information about competitorsand general business trends to further yourown company’s goals
Page 10
Why CI?Play the Game Differently• New market opportunity• New customers• Develop/leverage new value
chain strengths• New strategies/tactics• New “flow” of the game
Figuring out what drives behavior• Environment/industry drivers• Organizational drivers• Managerial drivers
Playing the Game Better• Focus on existing
competitors/strategic position• Leverage value chain strengths• Incrementally improve existing
strategies/tactics
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Competitor Intelligence Pyramid
Sources of Data
Analysis of Data
Recommendations
Page 12
Competitor Intelligence Pyramid
• Industry experts/analysts• Industry publications• Trade shows/conferences• Advertisements/PR• University research centers• Financial• Court documents/patents• Suppliers/customers• Newspapers• Help wanted ads• Reverse engineering labs
Page 13
Your Rival’s News-based Competitive Actions July-October 2009
• Contract with Spike Lee for TV ad• Increase R&D budget by 30%• Buy warehouse facility near airport in Germany,
Re-tool with robotic material handling system• License Oracle’s newest technology• Cut prices on older version of product by 33%• Endorsement contract with famous World Cup
soccer athletes• Create multifunctional new product design team
Reverse Engineering – Your Rival’s Product
Page 14
Page 15
Competitor Intelligence Pyramid
• Value chain analysis• Ratio analysis• Benchmarking• Cost analysis• Trend analysis• Personality profiling• Wargaming or scenario planning• Competitive behavior analysis
Page 16
Competitor Intelligence Pyramid
• Track Existing Rivals• Anticipate New Rivals• Inform Strategy:
– Identify own/competitor’s strengths/weaknesses
–Early warning system–Plan of attack/retaliation
Page 17
The Cola Wars
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Cok
e’s
Mar
ket S
hare
MKT MKTPRICE PRODMKTCAP SIG PROD
Competitive Action RepertoireThe set of competitive actions carried out in a given time period
Repertoire
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Your Rival’s Competitive Actions
• Contract with famous movie director, Spike Lee, for TV ad
• Increase R&D budget by 30%• Buy warehouse facility near airport in Germany, Re-
tool with robotic material handling system• License Oracle’s newest technology• Cut prices on older version of product by 33%• Endorsement contract with famous U.S. Olympic
athletes• Create multifunctional new product design team
a b c d e
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Competitive Dynamics Analysis• Observe competitive moves• Organize competitive moves
–Action/response pairs–Action repertoires (year-end tallies)–Competitive attacks/sequences
• Measurement/Analysis of Characteristics– Action pattern characteristics that improve:
• Market share• Stock price• Profitability
ActionPair 1
ActionPair 2
ActionPair 3
ActionPair 4
Coca-Cola
Pepsi
Action-Reaction “Pairs”
timeAction
Response
• Profits• Growth• Mkt. Share
a
cd
e
d d
a c
Action “Repertoires”
time
• Profits• Growth• Mkt. Share
Year-EndTallies
• Total Actions• Complexity
Coca-Cola
Pepsi
a
c
e
cc
a
a c
d
a b c d e f g h
Strategy and Adaptive Maneuvering
8
7
6
5
4
3
2
1
Chess:• Epaulette’s Mate• Sicilian Defense
Sequence Applications...
LANGUAGE:
BOXING: DNA:
qcheaTiueissesne. hsiT si a cesneueq.
This is a sequence.
Jab...Jab…Uppercut
CA
GTA
CAT
AG
TAC
GAT
AC
GA
MUSIC:
COMPUTER PROGRAM:data actions2; subj = _n_; do i = 1 to max; output = matrix; end;run;
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abcde
ca bec a b de ca bd
Coke Pepsi
d
aa
b
e
c
e
b
a
d
b
c c
Observed Sequence Observed Sequence
Competitive Actions Over Time
Page 26
abcde
ca bec a b de ca bd
Coke Industry Norm
d
aa
b
e
c
e
b
a
d
b
c c
Observed Sequence Observed Sequence
Coke Strategic Non-Conformity
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abcde
ca beca b de cab d
Pepsi
d
aa
b
e
c
e
b
a
d
b
c c
Observed Sequence Observed Sequence
Pepsi Strategic Conformity
Industry Norm
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abcde
c ab eca bde ca bd
Coke in time1
de
b
aa a
d
bb
e
c cc
Coke in time2
Observed Sequence Observed Sequence
Coke Strategic Unpredictability
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abcd
e
ca beca bde ca bd
de
aa a
d
bb
e
c cc
Pepsi in time1 Pepsi in time2
b
Observed Sequence Observed Sequence
Pepsi Strategic Predictability
Page 30
King of the Hill – Fizzy Beverages
Market Share
1950 1960 1970 1980 1990 2000
Other ?Coke
Pepsi
Page 31
“Hardball” Competition• Total Actions
–More actions are better• Average Response Time
–Faster response time is better• Repertoire Complexity
–Complex repertoire is better• Attack [Un-]Predictability
–Unpredictability is better
Page 32
Group Exercise: Coke vs. Pepsi• Total Actions
–Count of total actions• Average Response Time
–Avg. number of time units between last competitive move in Coke’s attack and Pepsi’s first competitive response, etc.
• Repertoire Complexity–Extent to which entire pattern/repertoire is skewed/simple vs. balanced/complex
• Attack [Un-]Predictability–Recognizable repetition or action combinations in the sequence of actions?
Page 33
Scoring the Fight
Total Actions
Faster Responses
More Complex Repertoire
Unpredictable Attacks
Coke Pepsi
Who will win?
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Implications for CI:
Predict Future Behavior of Rivals
Rivals’ prior behavior• Patterns• Tendencies• Type & order of moves
• Proactiveness• Reactiveness
Drivers of Behavior• Management orientation• Decision-making• Financial constraints• Industry characteristics
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Implications for CI:
Monitor Your Own Behavior
• Objectively measures of competitive behavior• Safeguard against complacency, predictability, simplicity of your own company
• Keep rivals off balance / disruption / guessing• What combinations of moves are effective? …which are ineffective? …smoke signals or bluffs?