Stratégie

Pages: 12 (2937 mots) Publié le: 23 février 2011
Strategy II

Conditions likely to make rivalry severe: more detail
• • • • • • • • • •
Undifferentiated products Low switching costs for customers Strong exit barriers Excess capacity

Intensity of competition

Ease of collusion Presence of many sellers Some firms’ cost advantage over others Inability to adjust prices quickly Large and infrequent sales orders Absence of “facilitatingpractices” Absence of a history of cooperative pricing

Managing Rivals

• Potential

Entrants • Deter • Accommodate

• Existing

Competitors • Fight • Cooperate • Restructure

Identifying Potential Rivals

Be aware of “outside” firm’s economic motivations

• • •

Firms with relevant capabilities and underutilized resources in stagnant or declining industries (economies of scope)Firms where value chain overlaps (economies of scope) Firms in the same vertical industry chain (vertical integration for bargaining power or economies of coordination)



Be aware of the strategic trajectories of “outside” firms

• • •

Firms that take minority ownership stakes of existing rivals Recent entrants to related industries (see above) Entrants to the same industry in othergeographic markets

Deterrence Strategies (1)
Strategies to increase the cost and risk of entry

• • •

Erect structural barriers: licenses, regulation Reduce the quality of information on costs and demand • Increases uncertainty Make retaliation more credible and accommodation less credible • Raise (your own) exit costs • Build financial reserves • Select high fixed-cost technologies •Establish a reputation for aggressive behavior

Deterrence Strategies (2)
Strategies to reduce the incentive to enter

• •

Use limit pricing: price lower than what is profit maximizing in the short term to deter entry Idea is to exploit a potential entrant’s information disadvantage about true market conditions

When is this strategy likely to deter entry?

• • •

Incumbent holds a truecost advantage Information about costs is poor (signal jamming) Incumbent has a long time horizon and is well-financed, while potential entrant’s costs are increasing over time

Accommodation Strategies
• •
Commit to a position that will soften competition after entry



Differentiation

Make commitments limiting your ability or incentives to compete aggressively

• • •

Contractsthat make price reductions costly Technologies with higher variable and lower fixed-costs Capacity constraints



Organize to facilitate future coordination

Managing Rivals
Consider your strategic response to both …

• Potential

Entrants • Deter • Accommodate

• Existing

Competitors • Fight • Cooperate • Restructure

“Fighting” Strategies
• •
Tactical actions: relativelyeasy to implement or reverse Examples:

• • •

Price cutting Reputation pricing Advertising

Price Cutting
• •
Lowering prices to increase demand for products When might price cutting be beneficial?

• • • • •

Firm cutting prices has a potential cost advantage (scale) Firm has excess capacity & expansion takes time Firm is small relative to competitors Demand is elastic High networkexternalities (winner-take-all markets)

Reputation Pricing
• •
Slashing prices in response to market entry to starve rivals and force out of business. When are competitors likely to exit?

• • •

Incumbent has excess capacity or inventory Incumbent operates in many market segments preventing niche entry/survival Information on cost or demand is poor

Beware predatory pricing - anantitrust violation!

Advertising
• •
Increase advertising expenses in an attempt to build demand or steal market share from rivals. When is advertising not likely to provoke a “war”?

• •

When it serves to increase differentiation -> soften competition • Cross-elasticity of demand may be reduced When following poses a threat to competitor’s survival (competitor can’t afford to respond)...
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