Friday, June 2, 2017

Thought- Provoking : From Understanding Opponents to Strategic positioning

My experience of fostering innovation at my workplace for new products launch made me to look for opportunities to gain an understanding of Strategic planning and Product Management for the high-tech industries and at the same time understanding the competitor analysis.
Also, this will prepare me for my goal of creating self-sustaining business models in future.

The HBS article "Competitor Analysis: Understanding your opponents"  is worth reading and provides thorough understanding of competitive forces. No doubt it is important to understand about your rivals next move, their strength and weak points in a certain industry. However, what next ? "Is understanding your competitor enough to grow successfully?" Business strategies would require the distinctive strategies in this rapidly changing business environment like in case of Microsoft, Apple, Dell. Of course these well established companies follow Porter's 5 forces to understand about their competitors and use Marketer's toolkit to grow.

I feel even for small scale and newly emerging companies in an industry, by assessing where their own competitive assets are most effective, they can gain insights into the breadth of business opportunities available because Giant or well established companies may or may not have a full proof plan to give strong competition by one or the other means . What would be the best way for EMs or 'emerging markets' to overcome these differences and sustain their position in the advanced competitive environment. In such situation, small scale industry leaders assume that they can respond in one of only three ways i.e. taking support from government for trading or exporting, by merging with a big firm having a well established name to launch their product or by selling out their proprietary to big brands. I believe there are other alternatives for companies facing stiff competition.

Bajaj Auto in India- now the country's largest scooters maker company faced the similar situation as many 'emerging market' companies may face. It is the time during mid 1980s when India decided to have its automotive industry. The competition was against Honda, having amazing success rate in selling their motorcycles in International market and other countries like Thailand, Malaysia. Honda possessed sound brand name, quality and powerful technology as compared to Bajaj, and was planning to take entry in Indian market at the same time. Bajaj, an independent-minded company faced Honda's superiority instead of having a joint venture.
Bajaj closely analysed the situation and realised that Honda's stiff competition was not as intimidating as it first appeared. No doubt Honda had advantages in their product development, but Bajaj did not have to spend much to overcome this difference. Moreover, the Indian scooter market structure was different in other ways and Bajaj realised it by focusing on leveraging local assets in the country where its competitor stood weak. Bajaj understood its customers demand related to affordable cost, durability and having maintenance outlets easily available to them when needed. On the other hand, Honda could only run its business by selling fancy designed bikes mostly through agencies or wealthy buyers in major cities only.
Instead , Bajaj was the best fit for an Indian market as its strategy focused on selling cheap, rough and tough scooters via well distribution chain and establishing ubiquitous roadside maintenance stalls as their service network. Bajaj's strategy to stay independent and fight the competition against Honda by strengthening their existing assets paid off well. The company put a step forward to make their distribution network more strong and spent on research and development activities. Honda did tie up with other local companies to hold a market share of 11%  but Bajaj's share was remarkably high holding 77%  share in the Indian scooter market. In 1998, Honda vacated its space from the scooter -manufacturing equity joint venture in India, and Bajaj became the bright future of India's tomorrow.

This example of competition between Bajaj and Honda points to the key questions essential for the leaders in emerging markets to address:
• how well they understand the strength of potential and future threats from their competitors.
• formulate strategies on appropriate products and services for clearly defined markets.
• Effective asset management to develop and produce the products for the market – delivering the right quality for the right price at the right time.

But again my question revolves around : Is understanding your opponents enough?  Or do you feel we should take one step ahead by understanding our strategic positioning against our rivals and becoming specialist by analysing the niche strategies for hidden competitors that aren’t on our current vision?

1. Book Excerpt: Competitor Analysis: Understand Your Opponents (Marketer’s Toolkit: The
10 Strategies You Need to Succeed (HBS Press), 2006)

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