Wednesday, March 30, 2011

Knowing Your Competitors and Knowing Yourself (Blog 2_Week 3)

This week’s reading all share a similar conclusion that a key part of understanding the role of competition in strategy development is a full-scale examination of your competitors under changeable global environment and trends. Only after you successfully identified your competitors and their situation in terms of market share, main strategies, advantage/disadvantages, etc, one can start to formulate the right competitive strategy. As the author of “Competitor Analysis: Understand Your Opponents” mentioned, “No effective marketing program is complete without a thoughtful analysis of competitors and the competitive arena[1]”.

With all these theories presented, I start to wonder, is it possible that the result of a competition analysis shows that you and your competitor actually have a lot of things in common and you end up complement the same strategy as your competitors do? For example, the competition analysis shows that your competitors are following different strategies while pursuing the same business objectives as you are. What are you going to do? One example will be Burger King and McDonald’s. One of the major issues for McDonald’s is it competitors. Burger King is the second largest hamburger fast-food chain in the world and is the number one competitor for McDonald’s. Although they distinguished themselves in several ways, when Wendy’s implemented the 99 cent value menu as an offensive strategy to gain customers , they in response took a similar defensive approach to instituted a value menu in their respective stores so that they wouldn’t lose market share and customers to Wendy’s.

This example reminds me a famous Chinese saying “Know the enemy and know yourself, and you can fight a hundred battles with no danger of defeat” (知己知彼百战不殆). Sun Tzu, the man who said such words also wrote the great book “The Art of War” (mentioned in the first lecture). Obviously this argument contains two parts: knowing your competitors and knowing yourself. I will stop before this topic gets too carried away, but here is a question that maybe helpful when you want to think thought it:

Are these two parts enjoying an equal importance? Which one is more difficult to achieve?

[1] Harvard Business School, Competitor Analysis: Understand Your Opponents, Marketer’s Toolkit: The 10 Strategies You Need to Succeed. 2006

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