These may be classified as attack strategies or defence strategies.
Attack Strategies
1.Direct challenge (differential advantage)
This is a high-risk strategy with a potentially high pay-off. Because market leaders are in a very strong position a large financial investment as well as great determination, is required to pursue this strategy.
This strategy involves removing the leader's competitive advantage by means of an innovative product. It is a very effective method, provided the advantages are
valued by the target market.3.Direct attack (market share)
This is the process of taking over smaller firms in the marketplace in order to build up market share. The clever part with this strategy is the retention of customers from those businesses taken over.
4.Flank attack
In this strategy it is necessary to find a slot in the market which is not currently filled. The niche is identified by segmentation analysis. Having discovered the gap it is essential to determine whether or not it is untenable. If it is not untenable then it can be used as a base from which to attack in order to build market presence and share.
5.Encirclement
This is an attempt to overwhelm a competitor on every front. It is very expensive to mount, but also very expensive to resist. Japanese companies in the electronics market often pursued this strategy successfully by producing a constant stream of ever-better, ever-cheaper products until they achieved dominance.
6.Bypass
This is a method of indirect attack by broadening a resource base until the attacker is strategically prepared for actual confrontation.
7.Guerrilla
Small competitors who are unable to attack a big competitor on a broad front can hit them aggressively in areas where they know they will be slow to respond. Although this strategy is unlikely to defeat a market leader, it can enable the smaller firm to take a substantial profit from the market.
(b)Defence Strategies
1.Position defence
This consists of flexible consolidation. No company can remain static, since others will be trying to increase their own market share. Product innovation is necessary in order to remain tenable and maintain market position, even with well established products. An entrenched market leader will need to pursue promotional innovation to keep its product in front of the eyes of its customers. This is likely to give the leader massive cost advantages and help it to defend even a sustained attack.
2.Pre-emptive defence
Attack is often the best means of defence, and an attack on a potential challenger can distract them through their need to defend themselves. It might be described as "getting your retaliation in first", and is a strategy successfully pursued by a number of well-known companies.
3.Counter-offensive
This involves carrying out an aggressive response to an attack in order to protect market share.
4.Mobile defence
This involves a company keeping on the move through innovation, market expansion and diversification into new marketplaces. This type of entrepreneurial strategy is pursued even when there is no apparent attacker in sight. Richard Branson's expansion of Virgin from records to air travel to trains, etc. is a good example of this type of strategy.
5.Flanking defence
In this strategy companies which are under attack may try to match the products of an attacking competitor. However, this can misfire, as the American motor companies found when they tried to compete against imports of smaller foreign cars by producing similar-sized ones of their own. The strategy failed because the foreign designs were proven, whereas the Americans were working in an area unknown to them, and hence their designs were not as good.
6.Contracting defence
If this means pulling back to a position of strength from which to mount a counter- attack it can be a successful strategy. However, if it means continually falling back, then, rather like a football team's defence which retreats as the opposition advances until their strikers can shoot at goal, a company can reach a point where it has to contract.
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