1. Tailoring Strategy to Fit Specific
Industry and Company Situations
Firdaus Khan,
Assoc. Professor, ICBM-SBE

3. Match the strategy to your stituation

4. Within which industry life-cycle stage
are you operating?

5. 1. Competing in an Emerging
Industry

6. Features of an Emerging Industry
• New and unproven market
• Proprietary technology
• Lack of consensus regarding which of
several competing technologies will win out
• Low entry barriers
• Experience curve effects may permit
cost reductions as volume builds
• Buyers are first-time users and marketing involves inducing initial
purchase and overcoming customer concerns
• First-generation products are expected to be rapidly improved so
buyers delay purchase until technology matures
• Possible difficulties in securing raw materials
• Firms struggle to fund R&D, operations and build resource
capabilities for rapid growth

7. Strategy Options for Competing
in Emerging Industries

8. • Win early race for industry leadership by employing a
bold, creative strategy
• Push hard to perfect technology, improve product
quality, and develop attractive performance features
• Move quickly when technological uncertainty clears
and a dominant technology emerges
• Form strategic alliances with
– Key suppliers or
– Companies having related technological expertise
Strategic Moves

9. • Capture potential first-mover advantages
• Pursue
– New customers and user applications
– Entry into new geographical areas
• Focus advertising emphasis on
– Increasing frequency of use
– Creating brand loyalty
• Use price cuts to attract price-sensitive buyers
Strategic Moves

10. 2.Competing in Turbulent, High Velocity Markets

11. What makes the industry “High-Velocity”?
• Rapid technological changes
• Short product life cycles
• Frequent launches of new competitive
moves
• Rapidly evolving customer requirements
& expectations

12. Positioning of Firms to Cope with Rapid ChangePositioning of Firms to Cope with Rapid ChangePositioning of Firms to Cope with Rapid ChangePositioning of Firms to Cope with Rapid Change

13. Must-have Competence
• To constantly reshape firm’s strategy & basis for
competitive advantage in response to rapid &
sometimes unpredictable changes in competitive
conditions

14. Strategic Options in High-Velocity Markets

15. Which Position will the company
take?
• REACT TO CHANGE
• ANTICIPATE CHANGE
• LEAD CHANGE

16. Objective: Stay on leading edge of technological
advances
Translate technological advances into innovative
new products
Focus R&D on critical areas
Deepen expertise by mastering technology &
capturing learning curve effects
INVEST AGGRESSIVELY IN R&D

17. DEVELOP QUICK RESPONSE
CAPABILITIES
– Shift resources
– Adapt competencies
– Create new competitive capabilities
– Speed new products to market
RELY ON STRATEGIC PARTNERSHIPS
- With other companies to quickly develop technology
- With OEMs for components
- Backward outsourcing, building internal resources

18. STAY FRESH
• Initiate fresh action, every few months –
new/improved products, new geographic
markets, refresh existing brands every 2 years.
• STAY IN THE LIMELIGHT
• STAY INNOVATIVE & WELL-MATCHED TO
CHANGES IN MARKET PLACE.

19. 3.Strategic Options in Mature Industries

20. Features of a Mature Industry

21. Strategy Options for Competing
in a Mature Industry
• Prune marginal products and models
• Emphasize innovation in the value chain
• Strong focus on cost reduction
• Increase sales to present customers
• Purchase rivals at bargain prices
• Expand internationally
• Build new, more flexible competitive capabilities

22. Strategic Pitfalls in a Maturing Industry
• Employing a ho-hum strategy with no distinctive
features thus leaving firm “stuck in the middle”
• Concentrating on short-term profits rather than
strengthening long-term competitiveness
• Being slow to adapt competencies to
changing customer expectations
• Being slow to respond to price-cutting
• Having too much excess capacity
• Overspending on marketing
• Failing to pursue cost reductions aggressively

23. 4.Strategy in Stagnant or Declining
Industries

24. Features of Stagnant or Declining Industries
• Growth in Demand is less than economy’s
growth rate. In fact demand could be falling.
• Competitive pressures intensify – rival firms
fiercely battle for each other’s market share.
• Industry consolidation is visible through
numerous mergers and acquisitions. No. of
firms in the industry gets low.

25. Strategic Options for Competing
in a Stagnant or Declining Industry
• Apply FOCUS strategy to zero in on the industry’s
few fastest growing market segments.
• Build DIFFERENTIATION through quality
improvement or product innovation to keep one’s
customers loyal and locked-in.
• Fanatically DRIVE DOWN COSTS
– Cut marginal activities from value chain, use
outsourcing
– Consolidate under-utilized production facilities
– Close low-volume, high-cost distribution outlets
– Prune marginal products
– Redesign internal processes to focus on niche segments

26. 5.Strategy in Fragmented Industries

27. Features of Fragmented Industries
• No clear market leader. Industry is young and
crowded with aspiring contenders
• Demand is diverse and geographically scattered
• Low entry barriers & absence of scale economies
• Buyers usually order in small quantity and
require customized or made-to-order products
• Product/service may be global in nature, thus
putting many companies across the world in the
same market arena

28. Strategy Horizons for Sustaining Rapid Growth

29. Strategy Based on Role in Industry
(Competitive Strategy)

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Industry Concept of Competition
• Number of sellers and degree of differentiation
• Entry, mobility, and exit barriers
• Cost structure
• Degree of vertical integration
• Degree of globalization

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If Dell wants to expand …

32. Advantage in the market
Share of marketShare of market
Share of mindShare of mind
Share of heartShare of heart

33. Hypothetical Market Structure
10%
Market
Nichers
20%
Market
Follower
30%
Market
Challenger
40%
Market
Leader

34. Competitive Positions & Moves
• Market Challenger - Offensive Strategy:
OBJECTIVE(S)
• build new or stronger market positions and/or
• create competitive advantage
• Market Leader - Defensive Strategy:
OBJECTIVES
• protect competitive advantage
• reduce risk of being attacked
• discourage the offensive strategies of rivals
• Blunt the impact of any attack

35. 6.MARKET CHALLENGER
STRATEGIES

36. Who is a Market Challenger?
• Firm has a strong, but not dominant position in
the market.
• Wants to aggressively gain market share
• Typically targets the market leader, but also
targets other smaller, more vulnerable
companies

37. Strategizing to Challenge the
Market Leader
• Define the strategic objective and opponents
• Choose a general attack strategy
• Choose a specific attack strategy

38. (A)General Attack Strategies
Frontal Attack
Encirclement
Attack
Bypass Attack
Flank Attack
Guerrilla Warfare

39. Frontal Attack
• Direct, head-on assault on Leader’s star
product, prime markets or strategic customers
• Rarely used, since it is expensive
• Attacking the leader’s strength will require
R&D, intensive advertising, better
service/quality = ‘Fire Power’
• Be prepared for retaliation from Leader firm

40. Eg: McDonalds frontal attack on
market leader Starbucks by
launching McCafe

41. Frontal Attack best suitable when..
• Market is relatively homogeneous
• Brand equity is low or customer loyalty is low
• Products have poor/peripheral level of
differentiation
• Leader has resource constraints, cannot quickly
release funds to fight back

42. Flank Attack
• Attack the leader at its weakest point – a blind
spot (ignored segment), least important
markets or products/brands that have low
strategic importance.
• Objectives:
Gain a foothold before frontal attack
Distract the leader

43. Eg: In terms of the narrow biscuits market, ITC
challenged Britannia by a ‘flank’ product – Orange
Sunfeast. Cream biscuits was a segment the leader
ignored.
In terms of terms of broad FMCG market, ITC built a
‘bypass’ biscuits brand Sunfeast (HUL ignored it
since it was biscuits segment) then moved to HUL’s
domain with ‘frontal attack’ Vivel & Fiama de Wills
and ‘flank’ attack Aashirwad staples

44. Encirclement Attack
• Attack strengths & weaknesses of the Leader
simultaneously
• Surround the leader with issues to that need
urgent attention and resources
• Challenger must have superior resources and a
decentralized structure.

45. Samsung vs. Apple in Smartphone
Market
• Samsung gave ‘phablets’ to Asian users (Asian
languages have characters that be drawn
faster)
• It is into chips and display screen, etc. therefore
can compete on price and features with Apple.
Samsung is the world’s largest chip maker
• Advertising budget increased 5 fold & patents
filed were the second highest (after IBM)
• Adopted android to challenge iOS.

46. Samsung’s new ads directly compare
Apple’s iPhone5S to Galaxy S III

47. Bypass Attack
• Challenger diversifies products into markets
and segments overlooked by Leader
• Challenger wants to avoid a head-on collision
with leader, does not have enough resources or
wants to creep up to the leader through
stealth.
• The objective is to confront the leader indirectly
and it surprise it

48. • As discussed earlier, ITC bypassed HUL by
building a biscuits brand – Sunfeast.
• Then it added other food items under Sunfeast
such as Pasta, used Shahrukh as brand
ambassador. It also built classmates brand
• Having built a stronghold in FMCG business, it
attacked HUL in shampoos, soaps, skincare,
staples, etc.
• Sun bypassed Star & Zee by getting into
regional south Indian languages for expat
viewers across the world & gaining in numbers

49. Guerilla Attack
• Challenger launches small, intermittent hit-and-run
attacks to harass and destabilize leader
• Attack across unpredictable geographies and in
different forms
• Objective: keep the leader busy in putting out small
bush fires so that overall strategic focus wanes
• It is not a long term strategy, has limited usefulness

50. (B) Specific Attack Strategies
• Price discounts
• Lower-priced goods
• Value-priced goods
• Prestige goods
• Product proliferation
• Product innovation
• Improved services
• Distribution innovation
• Manufacturing-cost
reduction
• Intensive advertising
promotion

51. Offensive Strategies for Runner-Up
Firms• Best “mover-and-shaker” offensives
– Pioneer a leapfrog technological breakthrough
– Get new/better products into market ahead of
rivals and build reputation for product leadership
– Be more agile and innovative in adapting to
evolving market conditions and customer needs
– Forge attractive strategic alliances with key
distributors and/or marketers of similar products
– Find innovative ways to dramatically drive down
costs to win customers from higher-cost rivals
– Craft an attractive differentiation strategy

52. 7.MARKET LEADER STRATEGIES

53. The firm with Industry Leadership has
• A strong to powerful market position
• A well-known reputation
• A proven strategy

54. Key strategic concern of Leader-
How to sustain
dominant leadership position?

55. 7. Strategic Options for Industry Leaders
Stay-on-the-offensive strategy
Fortify-and-defend strategy
Muscle-flexing strategy

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Figure 11.6 Six Types of
Defense Strategies

58. POSITION DEFENSE
• Position defense involves occupying the most
desirable market space in the minds of the
consumers, making the brand almost
impregnable.
• Dettol (“Be 100% sure)

59. FLANK DEFENSE
The market leader should erect outposts to
protect a weak front or possibly serve as an
invasion base for a counterattack.
Eg: Flipkart found small challengers such as
Jabong & Myntra driving online shoppers to
their sites based on fashion, so Flipkart decided
to remedy this neglected category.

60. PRE-EMPTIVE DEFENSE
• A more aggressive strategy is to attack before
the challenger launches its offense.
• Eg: Sam Walton in early days – Ben & Franklin
stores restrained Dunham’s Sterling Store
• Phil Knight of Nike has an aggressive celebtity
endorsement strategy.
• Xerox has 500+ patents to deter rivals from
entering market
• MS ploy to bundle internet explorer with
Windows os.

61. COUNTER OFFENSIVE DEFENSE
• When attacked most market leaders will
respond with a counterattack.
• P&G’s Oral B launch
• Inundate market with products
• BOGO strategy
• 4.5mn retail outlets, P&G was elbowed out of
shelf space

62. Counter-Offensive Defense
• It is throwing toothbrushes, pastes, and brand
events and promotions with trade partners, and
discounts, all to deny or delay giving P&G even
a toehold
• Colgate has hiked its advertising and promotion
spends by 31% during the first half of this
calendar year.

63. MOBILE DEFENSE
• In mobile defense, the leader stretches its domain over
new territories that can serve as future centers for
defense and offense through market broadening and
market diversification.
• Market broadening involves shifting focus from the
current product to underlying generic need. ( Example.
Petroleum companies get involved into oil, coal, nuclear
and hydroelectric industries.
• Market diversification involves shifting into unrelated
industries ( Reynolds, Philips, cigarette companies,
moved to produce beer, liquor, soft drinks and frozen
industries)

64. 8.Market Follower Strategies
Counterfeiter
Cloner
Imitator
Adapter

65. 9. Niche Specialist Roles
• End-User Specialist
• Vertical-Level
Specialist
• Customer-Size
Specialist
• Specific-Customer
Specialist
• Geographic Specialist
• Product-Line
Specialist
• Job-Shop Specialist
• Quality-Price
Specialist
• Service-Specialist
• Channel Specialist

66. 10. Strategy for Crisis-ridden, Weak
businesses

67. Strategic Options
• Launch an offensive turnaround strategy
(if resources permit) or
• Employ a fortify-and-defend strategy
(to the extent resources permit) or
• Pursue a fast-exit strategy or
• Adopt an End-Game strategy

68. (A) Undertaking a Turnaround
• Sell off assets to generate cash and/or reduce
debt
• Revise existing strategy
• Launch efforts to boost revenues
• Cut costs
• Combination of efforts

69. (B) Liquidation Strategy
• Wisest strategic option in certain situations
– Lack of resources
– Dim profit prospects
– May serve stockholder interests
better than bankruptcy
• But unpleasant in implementing
– Hardship of job eliminations
– Effects of closing on local community

70. (C) End-Game Strategy
• Steers middle course between status quo and
exiting quickly
• Involves gradually sacrificing market position
in return for bigger near-term cash flow/profit
• Objectives
– Short-term - Generate largest
feasible cash flow
– Long-term - Exit market

71. When Is End-Game Strategy the Choice ?
• Industry’s long-term prospects are unattractive
• Building up business would be too costly
• Market share is increasingly costly to maintain
• Reduced levels of competitive effort will not
trigger immediate fall-off in sales
• Firm can re-deploy freed-up resources
in higher opportunity areas
• Business is not a major component of
diversified firm’s portfolio of businesses

72. 11. Making Cooperative Moves
• Share resources, not duplicate
• Learn from each others’ strengths
• Share risks……However,
• Loss of control over operations
• Possible transfer of valuable trade secrets
• Threat of partner taking undue advantage

73. • (A) JOINT VENTURE
Sun Pharma & Merck – to create & sell generic
drugs in developing countries
SAB Miller & Molson Coors Brewing co. – new JV
for US operations to challenge giant rival
Anheuser Busch
Options in Cooperative Moves

74. • (B) STRATEGIC ALLIANCE
- June 2011 Twitter announced a strategic
alliance with Yahoo! Japan regarding tweets
under various functions in Yahoo! Japan
- Merck & PAREXEL – contract manufacturing of
biosimilars
Options in Cooperative Moves

75. • (C) CO-LOCATION
- Clustering of fast-food
brands/restaurants/automobile manufacturing
in a particular location
- Ramkote – second-hand two wheelers &
components market
- Dharavi – largest slum, but more known now
for export quality leather business.
- Oxford street, Bond street, Fashion street, etc
Options in Cooperative Moves

76. • (D) CO-OPETITION
- Put aside rivalry for critical initiatives
- Merck & Roche developing tests to detect
cancer & to promote Hepatitis treatment
- NEC, Japan & HP are frenemies. 3 relationships:
Customer, Supplier & Competitor.
- NUMMI, California manufactures Toyota & GM
cars ( to compete against Honda & Nissan)
Options in Cooperative Moves

77. 10 Commandments for Crafting Successful
Business Strategies
1. Its always about improving CORE COMPETENCE
….therefore enhancing SUSTAINABLE
COMPETITIVE ADVANTAGE
2. Necessary skill – PROMPTNESS… in adapting &
responding to changing market conditions such as
unmet customer needs & buyer wishes for
something better, emerging technological
alternatives, new initiatives of rivals.

78. 10 Commandments (contd)
3. Look at the business environment realistically:
Hope for the best but PREPARE FOR THE WORST
4. NEVER UNDERESTIMATE YOUR OPPONENT’S
RETALIATORY POWER & RESOLVE
5. NEVER indulge in a price war. Cut prices ONLY
through an established cost advantage
6. Continuously scan for strategic gaps, avoid red
oceans

79. 10 Commandments
7. Keep making incremental improvements if not
exponential ones. Running a business = treadmill
8. Keep focus on the strategic buyer and engage all
stakeholders, use cooperation strategies
9. A happy/committed employee is the best
customer!
10. Its all about the MISSION….what is your “raison
d’etre”? Why are you here?