Kim Warren on Strategy
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Strategy Dynamics Briefing 35: Undermining a competitor
Appraising competitors often involves assessing their strengths and weaknesses in some way, comparable to parts of the SWOT approach that management might use to assess their own business. But such approaches are qualitative and high-level, and quite inadequate for designing and implementing specific competitive campaigns. A more rigorous approach builds on two principles:
Issues to consider
Briefing 34 already discussed the need to pick a specific competitor to target, rather than spread competitive efforts widely, and how to make that choice. Two other key questions arise:
Whether to be open or covert about the attack.
In the restaurant case, secrecy was important because, had the competitor been aware of the plan, it could have looked out for those units that were under attack and responded. In both these cases, the strength of the competitor made it important to be covert. In other cases, it can be appropriate to be open about the attack if it helps the competitor decide early on to admit defeat and withdraw.
Choosing which resources to use as the basis for a competitive attack.
The quality curve can sometimes be constructed, for example, for the profit a competitor makes from individual items in its product range. The attack can then focus on products that are weak, even though they contribute significantly to the competitor’s performance – perhaps a product that is becoming obsolete or is poorly supported. US car makers, for example have repeatedly been picked off by European and Japanese rivals offering superior models in product segments seen as secondary, such as compact cars, performance saloons and hybrid vehicles. The result was, as pundit Tom Peters remarked, that the US auto industry was not defeated by overwhelming force, but was instead “nibbled to death,” piece by piece, over four decades.
This briefing summarises material from chapter 5 of Strategic Management Dynamics, pages 203-308.
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- A competitor operating in our own industry will likely have both a similar set of resources and a similar architecture for organizing them to ourselves. Competitors may differ in exactly which segments they serve, what products and services they offer, and so on, but the elements will be largely the same. Even where they differ (e.g. outsourcing certain activities that we do ourselves) many of the remaining parts of their resource system will be similar to our own.
- Like us, a competitor will have a range of “quality” for each of its resources—larger and smaller customers, products that perform well and not so well, stronger and weaker sales people, and so on.
- The tactics were not led by price cuts. Reductions significant enough for customers to notice would have hit profit margins hard.
- Promotions offering extra value for customers were less costly, and more difficult to retaliate against. Those promotions were selectively targeted at specific neighborhoods from which the competing restaurant drew its customers.
- The next principle is to address every item on consumers’ value curve – service quality, the environment and product quality. Local tactics therefore included ensuring that restaurants were oversupplied with staff and fitted out to give the best possible customer experience.
- Finally, the units leading the attack were allocated the best unit managers – those most skilled at motivating staff, at ensuring high quality of product and service, and at befriending customers.

- The pressure to sustain profits drove them into system-wide policies that did further damage, such as price discounting and cuts in staffing, marketing, product development and maintenance, all of which undermined critical resources in their strategic architecture.
- The competitor’s central management started to lose motivation and commitment, and many left for better opportunities—often with the attacker!
- The confidence of investors was damaged—in this particular case, the business was one of several similar operations operated by the competitor’s corporate owners—so requests for capital were turned down, making it impossible for the rival to match the high quality new units that were being added to the aggressor’s business.

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