1. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-1 Competitor Analysis Chapter Three Copyright © 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

2. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-2 Competitor Identification Customer-Based Approaches –Customer choices – What brand would you buy if your favorite was unavailable? –Application associations – What applications? What brands for each application? –What product substitutes?

3. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-3 Competitor Identification Strategic Groups –Pursue similar competitive strategies –Have similar characteristics –Have similar assets and competencies

4. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-4 Competitor Analysis Potential Competitors –Market expansion –Product expansion –Backward integration –Forward integration –Export assets or competencies –Retaliatory or defensive strategies

5. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-5 Understanding the Competitors Objectives and Commitment Image and Positioning Size, Growth & Profitability Size, Growth & Profitability Current and Past Strategies Strengths and Weaknesses Cost Structure Exit Barriers Organization and Culture Competitor Actions Figure 3.3

6. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-6 Identify Assets and Competencies 1) What businesses have been successful over time? What assets or competencies contributed to their success? What businesses have had chronically low performance? Why? What assets or competencies do they lack?

7. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-7 2)What are the key customer motivations? What is really important to the customer? 3)What are the large mobility barriers (both entry and exit)? Relevant Assets and Competencies

8. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-8 4)Consider the components of the value chain. Do any provide the potential to generate a competitive advantage? Relevant Assets and Competencies

9. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-9 The Value Chain Source: Reprinted with permission ã 1985 Michael Porter Margin ServiceOperations Outbound Logistics Inbound Logistics Marketing & Sales Primary Activities Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement

10. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-10 Key Learnings Competitors can be identified by customer choice (the set from which customers select) or by clustering them into strategic groups, (firms that pursue similar strategies and have similar assets, competencies, and other characteristics). In either case, competitors will vary in terms of how intensely they compete. Competitors should be analyzed along several dimensions, including their size, growth and profitability, image, objectives, business strategies, organizational culture, cost structure, exit barriers, and strengths and weaknesses. Potential strengths and weaknesses can be identified by considering the characteristics of successful and unsuccessful businesses, key customer motivations, and value-added components. The competitive strength grid, which arrays competitors or strategic groups on each of the relevant assets and competencies, provides a compact summary of key strategic information.

12. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-12 Ancillary Slides

13. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-13 “Induce your competitors not to invest in those products, markets and services where you expect to invest the most… that is the fundamental role of strategy.” - Bruce Henderson Founder of BCG

14. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-14 “There is nothing more exhilarating than to be shot at without result.” - Winston Churchill

15. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-15 “The best and fastest way to learn a sport is to watch and imitate a champion.” - Jean-Claude Killy, Skier

16. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-16 “There is one rule for industrialists and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” - Henry Ford

17. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-17 “We often give our enemies the means for our own destruction.” - Aesop

18. © 2007 John Wiley & Sons Chapter 3 - Competitor AnalysisPPT 3-18 “In business, the competition will bite you if you keep running, if you stand still, they will swallow you.” - William Knudsen