Wednesday, April 3, 2013

May the best strategist win ! ..

Every organization today requires a framework for analyzing their competitors. Michael Porter’s Competitor Analysis Framework is one of the most widely used ones. It consists of 4 components - Competitor Objectives, Competitor Assumptions, Competitor’s Strategies and Competitors Capabilities.
All components are related and their knowledge can help any organization fight fierce competition from their competitors. I believe that the most important aspect is to be aware of your competitors’ strategies. The question arises, how to find this? There are two main sources – what a competitor says and what a competitor does. What a competitor says can be found out in annual shareholder reports, 10K reports, interviews, press releases etc. It is not necessary that a competitor actually does what is being said. Their capital investments, promotional campaigns, strategic partnerships, hiring activity and mergers and acquisitions can be a good source for information on what a competitor actually does. Let’s look at some examples to observe how competitor strategy analysis has driven some organizations towards success. 

AT&T and T-Mobile 

These are currently two of the biggest mobile network carriers in the US. The news article ‘T-Mobile's New Strategy: Can It Be Sure Verizon, AT&T Won't Follow?’ published in eWeek in Jan 2013 talks about T-Mobile’s strategy to launch unsubsidized smartphones with monthly financing plans and no contracts. It also highlights their plans of launching the iPhone. AT&T took account of this and announced that they would closely “watch” how well this strategy does. The iPhone was first launched with AT&T. They had the first mover advantage. So why should they worry about T-Mobile joining this league? This is so because T-Mobile is a potential competitor and can turn out to be a potential threat in the long run. They might slowly take away AT&T iPhone customers! AT&T can prevent this if they tailor their strategy in accordance with T-Mobile’s strategy. This can be achieved by closely monitoring T-Mobile public reports, interviews and announcements.

 Amazon & Barnes & Noble (B&N)

Amazon was able to target B&N customers with their unique product offerings and pricing strategies. But this also required a thorough research of B&N’s strategies, their strengths and weaknesses. It was evident that B&N had a better brand name and a farther reach than anyone else in the book selling business. They lacked in self-publishing. Amazon closely monitored this and came up with their ePublishing platform to attract small time writers. They also capitalized on Nook Reader’s weaknesses and enhanced their Kindle Reader. Hence, Amazon gained a better market position by tweaking their strategies after closely studying the competitor’s strategies.

 Microsoft  - Apple - IBM

IBM and Apple had great marketing strategies but suffered from some weaknesses. Apple’s Macintosh did not support many of the popular business applications which were readily available on DOS or Windows. The programs specifically produced for IBM OS/2 were also small in number. Microsoft was able to exploit these weaknesses and design their strategy to gain dominance in the market of operating systems.

 I believe that finding out the one best possible approach to analyze your competitor’s strategy is quite unlikely and highly improbable. The idea could be to build upon 2 or 3 approaches and work towards them. Even if one clicks, it is definitely worth it! Furthermore, how much time and resources should be invested in this? This too does not have any definite answer.

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