Module 4

Offensive and defencive

strategies
Offensive Defensive Strategies
considering strategic options from a
competitor rather than customer
orientation is referred to as competitive
marketing strategy.
 Offensive warfare
• Offensive warfare
• 1. Frontal attack – This is the direct, head on attack meeting competitors with the
same product line, price, promotion, etc. Because attack is on the enemy’s strengths
rather than weakness it is considered the most risky and least advised strategy.
2. Flanking attack – The aim here is to engage competitors in those products
markets where they are weak or have no presence at all. Its overreaching goal is to
build a position from which to launch, an attack on the battlefield later.
3. Encirclement attack – Multi pronged attack aimed at diluting the defenders ability
to retaliate in strength. The attacker stands ready to block the competitor no matter
which way he turns the product market. Product proliferation supplying different types
of the same product to the market. Market encirclement consists of expanding the
products into all segments and distribution channels.
4. Bypass attack – This is the most indirect form of competitive strategy as it avoids
confrontation by moving into new and as yet uncontested fields. Three type of bypass
are possible; develop new products, diversify into unrelated products or diversify into
new geographical markets.
5. Guerilla warfare – Less ambitious in scope, this involves making small attacks in
different locations whilst remaining mobile. Such attacks take several forms. The aim
is to destabilize the competitor by small attacks.
 Defensive warfare
• 1. Position defence – static defence of a current position, retaining current
product markets by consolidating resources within existing areas. Exclusive
reliance on a position defence effectively means that a business is a sitting
target for competition.
2. Mobile defence – A high degree of mobility prevents the attackers
chances of localizing the defence and accumulating its forces for a decisive
battle. A business should seek market development, product development
and diversification to create a stronger base.
3. Pre-emptive defence – Attack is the best form of defence. Pre-emptive
defence is launched in a segment where an attack is anticipated instead of
moving into related or new segments.
4. Flank position defence – This is used to occupy a position of potential
future importance in order to deny that position to an opponent. Leaders
need to develop and hold secondary markets to prevent competitors from
using them as a spring board into the primary market.
5. Counter offensive defence – This is attacking where the company is
being attacked. This requires immediate response to any competitor
entering a segment or initiating new moves.
6. Strategic withdrawal.
 Strategic withdrawal
• 6. Strategic withdrawal.
• Withdrawal
• It might be the right decision to cease producing a product and/ or to pull out of a market
completely. This is a hard decision for managers to take if they have invested or if the decision
involves redundancies.
• Exit barriers make this difficult.a. Cost barriers include redundancy costs, the difficulty of selling
assets.
b. Managers might fail to grasp the principles of opportunity costing
c. Political barriers includes government attitudes
d. Marketing considerations may delay withdrawal
e. Psychology – managers hate to admit failure
• Reasons for exita. The company’s business may be buying firms turning them around and selling
them at a profit.
b. Resource limitations mean that less profitable businesses have to be abandoned. A business
might be sold to a competitor or occasionally to management.
c. A company may be forced to close because of insolvency.
d. Change of competitive strategy.
e. Decline in attractiveness of the market.
f. Funds can earn more elsewhere.
 Co evolving
• Coevolving: At Last, a Way to Make Synergies Work
• by Kathleen M. Eisenhardt, D. Charles Galunic
11 pages.  Publication date: Jan 01, 2000. Prod. #: R00103-PDF-ENG
• The promise of synergy is the prime rationale for the existence of the multibusiness corporation.
Yet for most corporations, the "1-plus-1-equals-3" arithmetic of cross-business synergies doesn't
add up. Companies that do achieve synergistic success use a corporate strategic process called
coevolving; they routinely change the web of collaborative links among businesses to exploit
fresh opportunities for synergies and drop deteriorating ones. The term coevolution originated in
biology. It refers to the way two or more ecologically interdependent species become intertwined
over time. As these species adapt to their environment, they also adapt to one another. Today's
multibusiness companies need to take their cue from biology to survive: They should assume that
links among businesses are temporary and that the number of connections--not just their
content--matters. Rather than plan collaborative strategy from the top, as traditional companies
do, corporate executives in coevolving companies should simply set the context and then let
collaboration (and competition) emerge from business units. Incentives, too, are different than
they are in traditional companies. Coevolving companies reward business units for individual
performance, not for collaboration. So collaboration occurs only when two business-unit
managers both believe that a link makes sense for their respective businesses, not because
collaboration per se is useful. Managers in coevolving companies also need to recognize the
importance of business systems that support the process: frequent data-focused meetings
among business-unit leaders, external metrics to gauge individual business performance, and
incentives that favor self-interest.
 Organisational Agility
• The
• Organisational Agility (OA) Assessment questionnaire generates scores for the five following
• organizational dimensions on a scale ranging from industrial era types of organization to
• organic, self-organising forms of organisation:
• Alignment - Organizational commitment to a shared vision, values, and goals
• Adaptability - Employees’ freedom and accountability to take appropriate action
• Collaboration - Ability and willingness to cooperate to achieve win-win outcomes
• Innovation - Ability to generate and sustain a high-level of innovation
• Vitality - Level of energy and commitment that employees bring to their work
• For each dimension, the organization is assessed as being at one of four developmental levels:
• 1. Bureaucratic - hierarchical structure; focus on rules, procedures and financial numbers
• 2. Managerial - focus still on management systems but with a paternalistic culture and HR
• practices
• 3. Agile - efforts made to gain employee commitment to inspiring corporate vision and to tap
• employee creativity
• 4. Dynamic - practically no bureaucracy. Authority derives from know-how. Risk-taking,
• experimentation, and innovation are the norm. Information flows freely and people
• collaborate enthusiastically. Responses to marketplace changes occur almost
• immediately. Employees tend to be excited, energized, and totally committed to creating
• something that they care about.
Amity Business School
 Strategy as Simple Rules

• The success of Yahoo!, eBay, Enron, and

other companies that have become adept
at morphing to meet the demands of
changing markets can't be explained using
traditional thinking about competitive
strategy.
• Yahoo!, eBay, Enron have succeeded by
pursuing constantly evolving strategies in
market spaces that were considered
unattractive according to traditional
measures
Traditional strategy
Traditional strategy
 Strategy as Simple Rules
The companies know that
• the greatest opportunities for competitive advantage lie in market
confusion,
• but they recognize the need for a few crucial strategic processes
and a few simple rules.
• In traditional strategy, advantage comes from exploiting resources
or stable market positions.
• In strategy as simple rules, advantage comes from successfully
seizing fleeting opportunities.
• Key strategic processes, such as product innovation, partnering, or
spinout creation, place the company where the flow of opportunities
is greatest.
• Simple rules then provide the guidelines within which managers can
pursue such opportunities.
 Three approaches to Strategy
Position resources Simple rules
Strategic logic Establish position Leverage resources Pursue opportunities

Strategic steps Identify market,locate Establish vision ,build resources Jump into confusion,sieze
position,Fortify and ,leverage markets opportunities, finish strong
defend
Strategic questions Where should we be? What should we be ? Hoe should we proceed ?

Sources of advantage Unique, value position Unique,valuable imitible Key processes and unique
,integrate activity system resources simple rules
Works best in Slow chancing markets Moderately changing markets Rapidly changing amigious
Well structured markets

Duration of advantage Sustained Sustained Unperdictable

Risk Difficult to alter position Company will be slow to Manager too tentative
reallocate ersources
Performance Goal Profitibility Long term dominance Growth
 Strategy as Simple Rules
Simple rules, which grow out of experience,
fall into five broad categories:
• how-to rules,
• boundary conditions,
• priority rules,
• timing rules,
• and exit rules.
 Simple rules summarized
Type Purpose Remarks
How to Rule Key features of how the process is •R&D must rotate through customer service
executed • every quesrion must be answered on first call
•Staff nust consist of technical gurus

Boundary rules Focus managers –opportunities Acquire companies over 75% engineers and having 75
which can pursed & those outside employees
rules
Priority rules Help managers to RANK Allot manufacturing capacity based on Products gross
opportunities margin

Timing rules Synchronize managers opportunity
with emerging opportunities in the
company
Exit rules Decide when to pull mout of
yesterday,s oppoutunity
Intel,s new product time less than 18 months timed at
decline point
If a key member chooses to walk out

Strategic management exhibit 8 – 11

 Simple rules some remarks ?

Broad Do not confuse guiding principles with rules example encourse innovation but not assess a new
venture partner/

Vague All investments must be undervalued???--- a simple screen will help in such a task.

Mindless Rules may destroy rather than create value… reverse engineer them and thow out those not
relevant

stale If your share price is dropping compared to rivals?

 Strategy as Simple rules

Conclusion
 Companies with simple-rules strategies must follow
the rules religiously and avoid the temptation to
change them too frequently.
 A consistent strategy helps managers sort through
opportunities and gain short-term advantage by
exploiting the attractive ones.
Co evolving
 Patching

• Patching is a processby corporative

executives routinely “revamp”their
business to match rapidly changing market
opportunities – adding,
splitting,transferring,exiting or combining
chunks of business
 Patching
Strategic Processes
• Decision making,operational activities and
sales activities that are critical to business
processess
 Patching
Strategic Positioning
• The way business is designed and
processed to serve target markets
 Parenting framework
• The perspective that the role of corporate
headquarters (the parent) in multibusiness
(the children) companies is that of a parent
sharing wisdom,insight,and guidance to
help developing its various business to
excel
 Parenting
• Size and age • Special expertise
• Management • External relations
• Business definition • Major decisions
• Predictable Errors • Major changes
• Linkages
• Common Capabilities
Strategy choice