COMPETITIVE

DYNAMICS
Session I
Business is a game of war and sports
-Andre Maurois (1885-1967)

12/02/2021 2
COMPETITION
• Competition in an industry is defined as a tension between the value generated from
transactions that a firm undertakes with a given set of agents and the forgone value it
could have generated from transactions with other agents. (Brandenburger and
Harborne, 1996); Article published in HBR entitled, ‘ The New Dynamics of
Competition’.

12/02/2021 3
GAME THEORY
Propounded by: John von Neumann and Oskar Morgenstern
Book: Theory of Games and Economic Behaviour, 1944
Game theory is the study of human conflict and cooperation within a competitive
situation.
Zero Sum Game
Prisoner’s Dilemma
Any alternative?
Answer for head-too-head collusion?

12/02/2021 4
TYPE OF STRATEGIC
INTERACTION
Strategic interactions occur when a firm’s business model affects the performance of
its competitors, suppliers, customers, and complementors. Four types of strategic
interactions can occur along two dimensions:
Value creation(creating a bigger pie)
Value capture (How to divide the pie)
Competitive interaction (how others might shrink the pie)
Cooperative interaction (how a firm work with others to make the pie bigger)

12/02/2021 5
FOUR TYPES OF STRATEGIC
INTERACTIONS

12/02/2021 6
12/02/2021 7
MARKET PLACE POSITIONS
Total market share
New customers
New markets
More usage
Different usage

12/02/2021 8
 A Dynamic Process Model for Managing
Marketplace Competition

12/02/2021 9
MICHAEL PORTER’S
INTEGRATIVE FRAMEWORK
FOR PLAYER ANALYSIS

12/02/2021 10
 Google’s Competitive Landscape

12/02/2021 11
 Examples of Marketplace Positions

12/02/2021 12
 SUV Competitive-Strength Assessment

12/02/2021 13
 Examples of Companies That
Changed the Game

12/02/2021 14
 The Comparative Ad War
Between Audi and BMW

12/02/2021 15
TYPES OF DEFENSE
STRATEGIES

12/02/2021 16
MARKET CHALLENGERS
Define the strategic objective and opponents
Choose a general attack strategy
 Frontal attack
 Flank attack
 Encirclement attack
 Bypass attack
 Guerilla warfare
 Attack from regional champions

Choose a specific attack strategy

12/02/2021 17
12/02/2021 18
MARKET FOLLOWERS
Counterfeiter

 Cloner
 Imitator
 Adapter

12/02/2021 19
NICHE STRATEGIES
Create
Expand
Protect

12/02/2021 20
JUDO STRATEGY
Article: Judo Strategy: The competitive Dynamics of Internet times
Author(s): David B. Yoffie and Michael A. Cusumano
Year: 1999
What is Judo Strategy?
Judo strategy is based on three elements:
•Rapid movement
•Flexibility
•Leverage

12/02/2021 21
PRINCIPLES
1. Move rapidly to uncontested ground to avoid head –to-head conflict
2. Be flexible and five way when attacked directly by superior forces
3. Exploit leverage that uses the weight and strength of opponents against them

12/02/2021 22
SALES AND PROFIT LIFE
CYCLES

12/02/2021 23
COMMON PLC PATTERNS: GROWTH-
SLUMP-MATURITY

12/02/2021 24
COMMON PLC PATTERNS:
CYCLE-RECYCLE

12/02/2021 25
COMMON PLC PATTERNS:
SCALLOPED

12/02/2021 26
STYLE, FASHION, AND FAD
LIFE CYCLES

12/02/2021 27
12/02/2021 28
MARKETING IN AN ECONOMIC
DOWNTURN
Invest
Get close to customers
Review budgets
Use a compelling value proposition
Fine-tune offerings

12/02/2021 29
 Marketing
Resources and
Capabilities

12/02/2021 30