Wednesday, March 30, 2011

How to Own the Market

This weeks readings, especially "A fresh look at industry and market analysis," by Stanley F. Slater and Eric M. Olson, emphasized the dynamic operation a company has to take on if they wish to be successful for a substantial amount of time. When Michael Porter introduced the Five Forces Model of Industry Competition, he generated a model for how companies and organizations can position their business within the competitive environments they operate in. Much emphasis was put on the competition (new & old) that companies must deal with, and the sometimes turbulent markets they must constantly adapt to.

The augmented model of Porter's Five Forces-by Slater & Olson-is much more fitting for today's dynamic markets. Some additions include: 'complementors,' market turbulence/growth, composite competition (competitors/substitutes), and risk. Slater & Olson made sure not to undermine the validity of Porter's original model, and instead concentrated on "new ways of thinking about the original forces."

The root of Porter, Slater & Olson's premises is a companies yearning to find strategic positioning in competitive markets. All three authors make it very obvious that achieving this positioning is a tireless and ceaseless effort. Those that do it well thrive, and those who don't fail. In a competitive market, using a dynamic market analysis approach is the only way to survive. As Slater & Olson talked about the numerous companies that had been met with an array of challenges, resulting in major losses (i.e., Kodak due to introduction of digital photography), I though about companies that have been models of strategic positioning.

Apple, Inc., is by no means a new company, nor did they start as a portable media player company. However, they entered the portable media market with the iPod in 2001, and have held a relentless stronghold on that market since then.

Steve Jobs and the Apple team have mastered the art of strategic positioning in the portable media player market. This market is competitive and dynamic by every definition i.e., diversity of competitors (Microsoft, Sony, Dell), similar products across board, etc... The only explanation to Apple's ability to maintain footing as the sole leader in portable media players is to attribute it to their strategic positioning and exceptional awareness of what drives consumers in the market. I think it's fair to assume that their approach to maintaining their positioning takes every piece of Porter, Slater & Olson's premises into account.

Is there a better example of a company's utilization of industry and market analysis? I would like to know.

i. http://crunchgear.com/wp-content/uploads/ipod_market_share.jpg
ii. Competitor Analysis: Understand Your Opponents. Harvard Business School Press. 2006

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