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ARVIND GUPTA
Introduction
Having a competitive advantage is necessary for a
firm to compete in the market
But what is more important is whether the competitive
advantage is sustainable
A firm must identify its position relative to the
competition in the market
By knowing if it is a leader, challenger, follower or
nicher, it can adopt appropriate strategies to compete
Sustainable Competitive
Advantage
A good strategist seeks not only to “win the hill,
but hold on to it.” Subash Jain
Sustaining competitive advantage requires
erecting barriers against the competition
Aakers suggested looking at the following:
How you compete
Basis of competition
Where you compete
Whom you are competing against
Examples of SCA
For many years, Singapore Airlines were riding
on its SCA of having the best in-flight service
As more airlines improved their service and
narrowed the gap, SIA sought other competitive
advantages among which are
The most modern fleet
Outstanding Service on the Ground
A super entertainment system in its cabins
Comfort in its First Class cabins at an unparallel level
Sun Tze’s defensive strategy
40%
40% 30%
30% 20%
20% 10%
10%
(3) Preemptive
(3) Preemptive
defense
defense (1) (6)
ATTACKER (6)
ATTACKER Position Contraction
Contraction
(4) Counter-
(4) Counter-
offense
offense
DEFENDER
DEFENDER
(5)
(5)
Mobile
Mobile
Defense Strategy
A market leader should generally adopt a
defense strategy
Six commonly used defense strategies
Position Defense
Mobile Defense
Flanking Defense
Contraction Defense
Pre-emptive Defense
Counter-Offensive Defense
Defense Strategy (cont’d)
Position Defense
Least successful of the defense strategies
“A company attempting a fortress defense will
find itself retreating from line after line of
fortification into shrinking product markets.”
Saunders (1987)
e.g. Mercedes was using a position defense
strategy until Toyota launched a frontal attack
with its Lexus.
Defense Strategy (cont’d)
Mobile Defense
By market broadening and
diversification
For marketing broadening, there is a
need to
Redefine the business (principle of
objective), and
Focus efforts on the competition (the
principle of mass)
Defense Strategy (cont’d)
Flanking Defense:
Secondary markets (flanks) are the
weaker areas and prone to being
attacked
Pay attention to the flanks
Defense Strategy (cont’d)
Contraction Defense
Withdraw from the most vulnerable
segments and redirect resources to those
that are more defendable
By planned contraction or strategic
withdrawal
e.g. India’s TATA Group sold its soaps and
detergents business units to Unilever in
1993
Defense Strategy (cont’d)
Pre-emptive Defense
Detect potential attacks and attack
the enemies first
Let it be known how it will retaliate
Product or brand proliferation is a
form of pre-emptive defense e.g.
Seiko has over 2,000 models
Defense Strategy (cont’d)
Counter-Offensive Defense
Responding to competitors’ head-on
attack by identifying the attacker’s
weakness and then launch a counter
attack
e.g. Toyota launched the Lexus to
respond to Mercedes attack
Market Challenger Strategies
The market challengers’ strategic objective is
to gain market share and to become the
leader eventually
How?
By attacking the market leader
By attacking other firms of the same size
By attacking smaller firms
Market Challenger Strategies
(cont’d)
Types of Attack Strategies
Frontal attack
Flank attack
Encirclement attack
Bypass attack
Guerrilla attack
Attack Strategies
(4) Bypass attack
(2) Flank attack