Wednesday, November 6, 2013

HYPERCOMPETITION

       “This business is intensely, vigorously, bitterly, savagely competitive”—Robert Crandall, CEO,American Airlines.
        Our current era has seen a great rise in competition, businesses now days function in a hyper-competitive environment.
       "Is the idea of sustained competitive advantage dead?
       Richard D'Aveni, professor of business strategy at the Amos Tuck School at Dartmouth College, believes it is. According to Mr. D'Aveni, business has entered a new era of hyper-competition, shifting dramatically from slow-moving stable oligopolies to an environment characterized by a quick- strike mentality on the part of companies aimed specifically at disrupting the competitive advantage of market leaders."[1]
        Richard D’Aveni is one of the leading experts in the field of competitive strategy. His works have clearly shown that hyper-competition does exist and strategies companies employ are outdated when dealing with this phenomenon. He states that maintaining a sustainable advantage is no more possible in the current market. Companies are not competing to protect their market share but to disrupt their competitors.
        He describes 4 avenues where hyper-competition exists:
       Cost and quality: Competition focuses on the price and value proposition mix to be presented to the customer.
Know-how: Competition focuses on competencies and creating the skills that are required to create future value for the customer.
Strongholds and barriers to entry: Competition focuses on creating advantages that block competitors from entering the market.
Deep pockets: Competition focuses on the use of financial resources to fund and endure the competitive war.[2]
       A great example of hyper competition is the case of BIC v/s Gillette. "BIC revolutionized the disposable ballpoint pen with its mass merchandising skills. Gillette entered the market for disposable pens (PaperMate), overcoming entry barriers (access to distribution channels, economies of scale in advertising, brand equity, etc.) by using its own considerable skills in mass merchandising.
        So BIC counter- attacked by entering Gillette’s stronghold, disposable razors - giving rise to multi-market competition."[2]

REFERENCES:
1. "The Art of Hypercompetition." Strategy Business. N.p., n.d. Web. 06 Nov. 2013.
2.   www.utdallas.edu/~murthi/hypercomptn.ppt

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