Chapter 6 Strengthening a Company's Competitive Position ‘as British Air and Aer Lingus, by first cutting costs to the bone and then targeting lei- Sore passengers who care more about low price than in-flight amenities and service.* - Leapfrogging competitors by being first to market with next-generation products. In technology-based industries, the opportune time to overtake an entrenched com- Petitor is when there is a shift to the next generation of the technology. Microsoft got Hy next-generation Xbox 360 to market a full 12 months ahead of Sony's PlayStation 3 and Nintendo's Wii, helping it build a sizeable market share and develop a reputa- __ tion for cutting-edge innovation in the video game industry. Pursuing continuous product innovation to draw sales and market share away from = ess innovative rivals. Ongoing introductions of new and improved products can put rivals under tremen \dous competitive pressure, especially when rivals’ new product _ development capabilities are weak. But such offensives can be sustained only if a company can keep its pipeline full and maintain buyer enthusiasm for its new and better product offerings Adopting and improving on the good ideas of other companies (rivals or otherwise). The idea of warchouse-type home improvement centers did not originate with Home Depot cofounders Arthur Blank and Bernie Marcus; they got the “big-box” concept from their former employer Handy Dan Home Improvement, But they were quick to improve on Handy Dan's business model and take Home Depot to the next plateau in terms of product line breadth and customer service. Offense-minded companies are often quick to adopt any good idea (not nailed down by a patent or other legal Protection) and build upon it to create competitive advantage for themselves, Using hit-and-run or guerrilla warfare tactics to grab market share from complacent or distracted rivals. Options for “guerrilla offensives” include occasional lowballing on Price (to win a big order or steal a key account from a rival), surprising rivals with sporadic but intense bursts of promotional activity (offering a special trial offer to draw customers away from rival brands), or undertaking special campaigns to attract, the customers of rivals plagued with a strike or problems in meeting buyer demand? Guerrilla offensives are particularly well suited to small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders. Launching a preemptive strike to secure an advantageous position that rivals are pre- vented or discouraged from duplicating.’ What makes a move preemptive is its one-of- ackind nature—whoever strikes first stands to acquire competitive assets that rivals cantt readily match. Examples of preemptive moves include (1) securing the best dis- tributors in a particular geographic region or country, (2) moving to obtain the most favorable site at a new interchange or intersection, in a new shopping mall, and so on, (3) tying up the most reliable, high-quality suppliers via exclusive partnerships, long-term contracts, or acquisition, and (4) moving swiftly to acquire the assets of distressed rivals at bargain prices. To be successful, a preemptive move doesrit have to totally block rivals from following; it merely needs to give a firm a prime position that is not easily circumvented. i i ies with the competitive cir- How long it takes for an offensive to yield good results varies wit cumstances It can be short if buyers respond immediately (s can occur with a dramatic cost-based price cut, an imaginative ad campaign, or an especially appealing new prod Uat). Securing a competitive edge can take much longer if winning consumer acceptance i ict will take some time or if the firm may need several years to Ep ers reese we rc ipl Dating ne foran offensive move to improve a company’s market standing (and: whether it can do so) ist