Chapter 1 competition the right mind set

C H A P T E R 1 : B U S I N E S S

S T R AT E G YP R O U D LY P R E S E N T

P h . D . V i p u t O n g s a k u l

G R O U P 1

COMPETITION : The R igh t M ind -Set

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วิสยัทศัน์

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VISION เราให้บริการความสะดวกกบัทกุชมุชน

วิสยัทศัน์VISION

วิสยัทศัน์VISION เพื่อเป็น “ ดจิิตอล-Ecompany ”

ท่ีดีท่ีสดุ

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วิสยัทศัน์VISION

• Telling goal or aspiration

• Highlight key action

But Core question is :

Performance

in the face

of competition

Strategy• Strategy explains how an organization,

faced with competition, will achieve

superior performance

competition Find competitiveadvantage

• One of the reasons so many companies fail to develop good strategies is that the people running them operate with fundamental misconceptions about what competition is and how it works.

No

competitionNo need

for strategy

No need tocome up witha way to win

• Competition will define the choices you make

about how you are going to compete.

“May the best car win”

General motor in 2010Dan Akerson (CEO)

Because their belief about the nature of competition

Companies proudly proclaim that

they produce the “BEST”

products, provide the “BEST”

service , and attract the “BEST” talent.

It will lead you inevitably to a flawed strategy

and that will lead to mediocre performance.

If you want to win, its obvious that

you should be the best. Or is it ?

To be the best Competition to be

the best syndrome

Warfare Business competition

- Only one winner

- Destroy enemies

- Enable to win without

annihilating your rivals

“everyday low price” “flair along with low prices”

Companies can choose to create

their own event

Sport Business competition- Focus on outperforming their rivals

- One contest with one set of rules

- Only one winner

- More open ended and

multidimensional

“Fast burgers” “Slow burgers”

Focus more on meeting customer needs

than on demolishing rivals.

The best hotel for one customer is not the best for another.

The best sales encounter for one customer is not the best for another

There is no best art museum, no one best way to

promote environmental sustainability

Want customer to shop?

“don’t want seats that are

too comfortable”

Flexibility

“reconfigure waiting area”

Seating in airport areas

Companies will benchmark each other’s

practices and products

(One upman ship is not strategy)

Hilton - serenity bedMarriott - revive collection

Radisson - sleep number bed

Browne plazw - sleep

advantage program

Hyatt - Hyatt grant bed

Bed war

ended in 2006 because large investments developing,

installing and promoting its offering.

Low profit

All rivals compete on the same dimension,

no one gains a competitive advantage




Bed war

But guests will not differentiate one

hotel from another just “bed quality”

Competition to be the best = impossible goal

ONE BEST WAYListening

same advice

Follow same

prescription




Zero-sum competition

(no one can win)

price competition leads to the suffers of:

Destroyed an industry’s profitability + limit competition

+ Swallow each other up + reducing the no.

of rivals and allowing on or few companies to dominate the market

Because rivals are squeezed for

resources and forced to cut cost.

Producers Customers Supplier Employees

Isn’t “The best’ good for

customers?

“What’s good for customers

(lower prices) is bad for

companies (lower profits)”

Perfect competition in classical economic =Evenly matched rivals selling equivalent products go head to head,

driving prices (and profits) down.

“MOST EFFICIENT WAY TO PROMOTE SOCIAL

WELFARE”

Some customers want more

and some want less

There will be individuals in both groups who will not

be well served by the average


customers?

Limited choice = destroy value

Pay too much for extra or forced to make do with

what is offered, even if it’s not really what you need.

• With all companies heading for the same place, it is difficult

to stay in the lead for long. Competitive advantage will be

temporary.

• Companies work hard, but their gains in quality and cost are

not rewarded with attractive profitability.

• Poor profitability undermines investment in future, making it

harder to improve value for customers


customers?

Zero-sum competition that has come increasingly

To dominate management thinking

Should compete to be unique

This concept is all about value

• It’s about uniqueness in the value you create and how you create it.

Madrid to Barcelona

Car or train Short flightCompete between

airline

High speed train

Offer reclining seat,

computr outlets, food ,

entertainment + lower

Co2

Security screening ,

carry-on restriction, delay

Competition to be unique

rival

Customer

shift Po

sit

ive

ad

va

nta

ge

Cu

sto

mer

sh

ift

Race to the bottom Produces better outcomes

CUSTOMERS CAN GET

REAL CHOICE

Zero-sum game Positive-sum game


Red ocean vs. Blue ocean

Defining Red and Blue Ocean

What’s Red, What’s Blue ?

Red Ocean Strategy

• Compete in existing market

space

• Beat the competition

• Exploit existing demand

• Make the value-cost trade off

• Align strategy choice of

differentiation or low cost

Blue Ocean Strategy

• Create uncontested market

space

• Make the competition irrelevant

• Create & capture new demand

• Break the value-cost trade off

• Simultaneous pursuit strategy of

differentiation and low cost

The right mind-set for competition

• Managers must understand that their choices will influence the kind of competition that prevails in their industry.

• Beware of anyone who claims there is only one way to win

• Competition is multidimensional, and strategy is about making choices along many dimensions not just one.

• No single prescription about which choices to make is valid for every company in every industry


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