Reading the Competition
As I was reviewing the results of an NAPL eKG Competitive Edge Profile we conducted for a member/client, I decided to do some reading on the subject of competitive industries, especially those experiencing volume decline and transformation.
While reading one article a few points resonated with me:
“Rivalry among existing competitors takes the form of jockeying for position–using tactics like price competition…. Intense rivalry is related to the presence of a number of factors:
- Competitors are numerous or are roughly equal in size and power
- Industry growth is slow, precipitating fights for market share
- The product or service lacks differentiation
- Fixed costs are high…creating strong temptation to cut prices
- Capacity is normally augmented in large increments…and leads to periods of over-capacity and price-cutting
- Exit barriers are high…(this) keeps companies competing even though they may be earning low or even negative returns on investment. Excess capacity remains functioning, and the profitability of the healthy competitors suffers as the sick ones hang on.
- The rivals are diverse in strategies, origins and “personalities.” They have different ideas about how to compete and continually run head-on into each other in the process.”
If these observations seem familiar, that is no surprise. What may surprise you is this. They are taken from an article titled “How Competitive Forces Shape Strategy” by Michael E. Porter. The article first appeared in the Harvard Business Review in their March-April, 1979 issue!
I don’t know what you were doing in the spring of 1979, but how many of you were thinking at this level about strategic planning? I think it is safe to say the greatest thought leaders of our generation are that not only because of the timeliness of their observations, but mostly because of the timelessness of their thinking.
In my travels, I have noticed several consistent characteristics among executives of high-performing companies. They are active learners, and that means they are active readers. If you are not taking advantage of the wealth of information available to entrepreneurs and making time to read the many works of business thought leaders, you are missing out!
So how are competitive forces shaping your strategy? As a starting point, you’ll want to know your competitive position in the market place now. The best way to find out is to ask your customers and the best way to ask is NAPL’s eKG Competitive Edge Profile.
To help you get started I would like to offer you a complimentary download of Porter’s article, which was updated in 2008, “The Five Competitive Forces That Shape Strategy.”
To learn how NAPL’s eKG Competitive Edge Profile can help your business, call me at (800) 642-6275, ext. 6310 or, email me at email@example.com.