Competition

Question 1

What is the product-related definition of competition?

Answer 1

We compete with all companies offering similar goods in terms of architechture, design, main technical properties, manufacturing process or process of delivery

Question 2

What is the Benefit or need-related definition?

Answer 2

We compete with all companies that in specific use context provide the same benefit or fulfill the same need for their customers

Question 3

What is the goal of timing?

Answer 3

Reach advantages by entering markets at the right time or find conclusive evidence to leave markets when conditions imply insufficient success potential

Question 4

Describe the three types of timing strategies?

Answer 4

Pioneer - First to provide a new product or service in the market, often a new market.
Early follower - Follows short after Pioneers, often with improved products or services.
Late follower - Steps into market after it stabilizes and the demand has evolved

Question 5

What can be a companys complementary assets?

Answer 5

• Distribution and sales (exclusive access to communication channels, close customer relationship, long market experience of the sales of staff)
• Advertising, public relations or sales promotion
• Product and service execution
• Supply (long term contracts with high-quality suppliers)

Question 6

Explain switching costs

Answer 6

Switching costs are the costs that a consumer incurs as a result of changing brands, suppliers or products. Ex: Phone company (cancellation fees), or switching computer brand (Microsoft - Apple) - new software (money), but also costs in time and effort to learn it
-> prevent customer from leaving

Question 7

What are the pros of the Pioneer strategy?

Answer 7

• Building barriers for market entry (Patents, quality leadership image, strategic determent of imitators)
• Efficiency (Realizing learning curve effects, developing complementary resources, high efficiency of promotional activities)
• Positioning and commitment (Benefiting from switching costs, customers have quality uncertainty regarding followers)
  . Shaping customer preferences (Image advantage of pioneers, intensive learning on the product, pioneer product becomes mental prototype)

Question 8

What are the cons of the pioneer strategy?

Answer 8

• Free riding followers (Pioneer has the highest R&D investment, and highest investment for opening and developing a new market)
• Technologies and customer requirements change quickly (followers may use more efficient tech., followers may meet new emerging customer needs in a better way, followers may develop a more attractive market position)
• Pioneer Inertia (Investment in fixed and specilized production facilities, specilized sales organization, hesitation due to product cannibalization)

Question 9

Why can it be difficult for pioneers to adapt to environmental change because of the various types of pioneer inertia?

Answer 9

• Pioneer may be locked into a specific set of fixed assets
• The firm may be reluctant to cannibalize excisting product lines
• The firm may become organisationally blind with the current product and technology it has that it might underestimate the value of innovation