1. COMPETITIVE STRATEGY
- Dolly Dhamodiwala

2. UNDERSTANDING COMPETITION IN MY INDUSTRY
What is driving Competition in my Industry?
What Actions are Competitors likely to take?
What is the best way to respond?
How will my Industry evolve?
How can my firm be best positioned to compete in the long run?

3. FRAMEWORK FOR ANALYZING THE STRUCTURE OF INDUSTRY
What are the Competitive Forces acting on an Industry?
What are the Implications of these Forces?
What are the techniques for Analyzing Competitors and their Moves?

4. WHEEL OF COMPETITIVE STRATEGY
Competitive Strategy is a combination of the Ends (Goals) for which the firm is striving and the Means (Policies) by which is it seeking to get there

5. WHEEL OF COMPETITIVE STRATEGY
GOALS form the hub of the wheel
The objectives of the firm- profitability, growth in sales, market share, social responsiveness, etc.
The SPOKES of the wheel are the policies which radiate from and reflect the goals

6. FACTORS DETERMINING COMPETITIVE STRATEGY
STRENGTHS
&
WEAKNESSES
OPPORTUNITIES
&
THREATS
Factors
Internal
to the
Company
Factors
External
to the
Company
COMPETITIVE
STRATEGY
PERSONAL
VALUES
BROADER
SOCIETAL
EXPECTATIONS

7. FACTORS DETERMINING COMPETITIVE STRATEGY
Internal Factors
Company’s Strengths & Weaknesses
Its Assets & Skills relative to Competitors
Financial Resources
Technological Posture
Brand Identification
Personal Values of the Organization
Motivation & Needs of Key Executives and other Personnel

8. FACTORS DETERMINING COMPETITIVE STRATEGY
External Factors
Industry Opportunities & Threats
Competitive Environment
Its Risks and Potential Rewards
Societal Expectations
Impact of Government Policies
Impact of Social Concerns

9. UNDERSTANDING 5 FORCES DRIVING INDUSTRY COMPETITION
Essence of formulating a Competitive Strategy is relating a company to its environment
The environment for a company is the industry in which it operates
Competition in industry depends on 5 basic forces
Collective strength of these forces determines the profit potential in the industry
Profit is determined by long term return on invested capital
Effective competitive strategy involves finding an ideal position in the industry where the company can best defend against these forces or influence them in its favor

10. UNDERSTANDING 5 FORCES DRIVING INDUSTRY COMPETITION
POTENTIAL
ENTRANTS
Threat of new entrants
INDUSTRY
COMPETITORS
Rivalry among
existing firms
Bargaining power
of suppliers
Bargaining power
of buyers
SUPPLIERS
BUYERS
Threat of new substitute products & services
SUBSTITUES

11. UNDERSTANDING 5 FORCES DRIVING INDUSTRY COMPETITION
All 5 forces jointly determine the intensity of industry competition
Assessing these forces helps in:
Understanding strengths & weaknesses of the company
Identifying areas where strategic changes yield greatest payoff
Highlighting areas where industry trends promise to hold greatest significance as opportunities or threats
Considering areas for diversification

12. THREAT OF NEW ENTRANTS Threat of new entrants depends on :
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages independent of Scale
Government Policy
Expected Retaliation
Entry deterring Price

13. RIVALRY AMONG EXISTING COMPETITORS
Intensity of rivalry among existing competitors depends on:
Numerous or few equally balanced competitors
Slow industrial growth
High fixed or storage costs
Lack of product differentiation
Over capacity
Diverse competitors
High strategic stakes
High exit barriers

14. THREAT OF NEW SUBSTITUTES
Substitutes limit the potential returns of an industry in terms of profits
Substitutes limit the ability of the company to charge higher prices
It is crucial to identify substitute products that can perform same or similar functions

15. BARGAINING POWER OF BUYERS
Bargaining Power of Buyers depends on :
Large volumes of purchases relative to sellers’ sales
Products purchased represent a substantial proportion of the buyers’ overall purchasing costs
Products purchased are standard or undifferentiated
Switching costs are low
Buyers’ profits are low

16. BARGAINING POWER OF BUYERS
Buyers pose a credible threat of backward integration
Products purchased are not critically important to the quality of the final products
Buyers are knowledgeable about demand, market price & supply costs
Retailers can influence the purchasers
Government policies are in favor of buyers

17. BARGAINING POWER OF SUPPLIERS
A supplier group is powerful if:
It is dominated by a few companies
Competition from substitutes is marginal
The buyer groups are not critical customers of suppliers
Inputs supplied are critical to the buyers
Suppliers’ products are differentiated and have high switching costs
Suppliers pose threats of forward integration
Government policies favor suppliers

18. EFFECTIVE COMPETITIVE STRATEGY
Competitive strategy must place the firm in a defendable position against all the five forces
This entails:
Positioning the firm in the best defense or most favorable position i.e. matching company’s strengths and weaknesses to the structure of the industry
Influencing the balance of forces through strategic moves – altering the forces through innovative marketing and production techniques
Anticipating shifts in the factors affecting the forces and responding to them - responding effectively to changes in growth rates, vertical integration, maturity of markets, etc.

19. GENERIC COMPETITIVE STRATEGIES
Creating a defendable position in the industry means coping effectively with the five competitive forces
Three approaches to successful competitive strategy ;
Overall cost leadership – Low cost relative to competitors
Product differentiation – through innovative technologies, design or brand image
Focus – Serving a particular target market, geographical location or product line more effectively than competitors