Insights into Competitive Strategy
Insights into effective competitive strategy based on creating legal barriers to market entry by competitors, is based on case studies and experiences from a range of businesses that have learned how to survive and succeeded in a turbulent and often politically cyclical fast changing market environment since the 1980's.
After WW2 the UK still had many businesses reaching across the globe but weakened by the war years. Investing for the future and developing strategies to fight a tide of competition from the US and Japan was not fully understood until many long established businesses started to fail, or were taken over for quick profits by asset strippers realising the sum of the parts were more than the value of whole. This resulted in business's being broken up or swallowed up and slowly disappearing into history (once proud household names).
In the late 1970's British business learned lessons from past decades mistakes and developed better ways to compete and prevent competition by legal means. CEO's, MD's, Directors and Senior managers were schooled into better business practices in higher education courses typically Master in Business Administrator (MBA).
I was one of these disciples of better business practice getting my MBA from Bath University in 1986 after 3 years of part time study (learning from case study reviews), shortly after pioneering a new business unit in future communication products - optical fibre interconnection systems for an emerging technology today vital for all communications.
In the development of this new business unit one of the key strategies learnt from my MBA was competitive strategies "Legal Barriers to market entry". From day one of the start-up they were the blue print for success, with products sold today around the world.
Typical examples of "Legal Barriers to market entry" are listed below. Some of these examples will vary depending on the industry your business is operating in (3 and 4 particularly).
1). Intellectual property (IP): patents, (20 year protection) copyright, (70 year protection) and trademarks (indefinitely). To gain a patent you first have an "Inventive Step" that has not entered the public domain or a patent cannot be granted. IP is one of the strongest methods to prevent your competitors competing. Creativity and Innovation is the precursors to gaining IP.
2). International standards: BSI, (UK) CENELEC (European) and IEC (Global) are all legally accepted standards by each participating Nation; they offer Global democratic standards structure accepted anywhere. Each product group has a formal Technical Committee (TC) with members recruited as industry experts. They have to declare lP to avoid an unfair advantage. However, concepts in the public domain, written in terms of functionality or as product standards are acceptable. Many leading businesses are represented on committees more to ensure their company is not disadvantaged. This is still a vital part of a competitive strategy.
3). Trade body standards: ITU (International Telecommunications Union), TIA (Telecom Industry Association), ETSI (European Telecommunications Standards Institution) and Telcordia GR (Generic Requirement) most setting commercial requirements with limited appeal, except in specific historical areas were interface requirements allowed flexible interchangeably in product use. Many members of International Standards bodies also sit on Trade bodies, a wise competitive strategy to understand and manage change.
4). Customer driven standards: typically dominant players (i.e. B.T, C&W and Virgin) have in-house specifications, many predating International and Trade standards. To have a product written into this document would have a competitive advantage (functionality and environmental performance). Cooperation between a supplier and customer, particularly in development work was mutually beneficial.
5). Distinctive competence: secret polymer compound formulations, in-house built special purpose machinery and a work forces unique knowledge and skills sets
6). Economies of scale: large scale market size and penetration offering lower manufacturing prices, higher stock holding and technical support can squeeze out market entrants.
7). Brand recognition: known quality and reliability instilling customer loyalty and confidence, often would be the preferred choice when price and service was similar.
8). Political establishment lobbyists: promoting changes in the laws that are favourable to a larger company or trade organisation, would help neutralise unfair competition practices between network builders during privatisation
9). Customer service: willing to go much further than other competitors in good trading practices and after care. Customers have loyalty to suppliers who provide regular support (sales and technical)
10). Key staff retention - loosing employees to the completion hits in many ways: a need to recruit and retrain, customer and company sensitive information lose helps to create stronger competitors
11). Security of company information: from computer hacking, staff interfacing with customers (sales and technical support) can leak too much information that can be past to the competitors by customers even product samples in development, allowing competitors to provide counter strategies.
12). Disposal of fixed assets: to start-up companies, particularly machinery, can be bought for scrap prices by potential competitors who come back to bit them in the years to come
13). networking groups: often put competing CEO's, MD's, and senior managers together in the same room where information can be leaked unintentionally
This article is not covering in detail the "Illegal barriers to market entry of competitors" other than to list typical practices and comment that they cannot be ignored, but be monitored and if evidence emerges, report it to the correct authorities to take action to stop or neutralise it.
A). Price and channel fixing: helping to monopolise the market by charging high prices from reduced price competitiveness,
B). Corruption : in many facets, typically, customers receiving payments or favours to win contracts, passing on competitors information, making false negative internal claims about a competitive offering (product suitability).
C). Industrial espionage: employees embedded into a competitor, Government Agency's researcher gathering information on overseas competitive bids for national interests
D). Customer misinformation: sales staff spreading lies, half troughs or spreading false claims
E). Delaying techniques: Unfair litigation over IP, encouraging longer term contacts
F). Unfair media campaigning: advertising aimed at denigrating a competitor unfairly, widely exaggerated claims (using weasels words for protection in the media)
G). False product claims: over performance and safety, or standards qualification testing.
H). Counterfeiting: reducing Brand image and profit lose.
Stratergy Insights by way of the following quotations
The following quotations from many learned and famous people on the subject of strategy can help to understand issues more clearly (Winston Churchill, Peter Drucker, Henry Mintzberg, Michael Porter, Albert Einstein, Leonardo Da Vinci, Chuck Martin and Bill Gates).
“Strategy execution is a specific set of behaviors and techniques that companies need to master in order to have competitive advantage. It’s a discipline of its own” —Ram Charan and Larry Bossidy
"Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat.” —Sun Tsu
“Strategy is a pattern in a stream of decisions” —Henry Mintzberg
“The essence of strategy is choosing what not to do.” —Michael Porter
"In strategy it is important to see distant things as if they were close and to take a distanced view of close things” —Miyamoto Musashi
“However beautiful the strategy, you should occasionally look at the results” – Sir Winston Churchill
“Persistence is what makes the impossible possible, the possible likely, and the likely definite” —Robert Half
“Strategy Execution is the responsibility that makes or breaks executives” —Alan Branche and Sam Bodley-Scott
"There is nothing so useless as doing efficiently that which should not be done at all” —Peter Drucker
"Building a visionary company requires one percent vision and 99 percent alignment” —Jim Collins and Jerry Porras
"After a business implements a strategy, competitors will react, and the firm’s strategy will need to adapt to meet the new challenges. There is no stopping point and no final battle. The competitive cycle continues on perpetually. Produce and compete or perish” —Thomas Timings Holme
“The best time to make up your mind about people is never” —Katharine Hepburn
“Any intelligent fool can make things bigger and more complex. It takes a touch of genius – and a lot of courage – to move in the opposite direction”—Albert Einstein
“The ability to simplify means to eliminate the unnecessary so that the necessary may speak” —Hans Hoffmann
“Simplicity is the ultimate sophistication”—Leonardo Da Vinci
“Plans are only good intentions unless they immediately degenerate into hard work” —Peter Drucker
“An organisation’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” —Jack Welch
“In life, as in football, you won’t go far unless you know where the goalposts are” —Arnold Glasgow
“The reason most people never reach their goals is that they don’t define them, or ever seriously consider them as believable or achievable. Winners can tell you where they are going, what they plan to do along the way, and who will be sharing the adventure with them” —Denis Watley
"We tend to think that, in a traditional organisation, people are producing results because management wants results, but the essence of a high-quality organisation is people producing results because they want the results. It’s puzzling we find that hard to understand, that if people are really enjoying, they’ll innovate, they’ll take risks, they’ll have trust with one another because they are really committed to what they’re doing and it’s fun” —Peter Senge
“Real commitment means doing everything in your power to get things done.”
“Like a human being, a company has to have an internal communication mechanism, a ‘nervous system’, to coordinate its actions” —Bill Gates, co-founder Microsoft
“The result of bad communication is a disconnection between strategy and execution” —Chuck Martin, former Vice President IBM
“A strategy, even a great one, doesn’t implement itself”
“Strategy don’t measure your performance by what you have accomplished, but by what you should have accomplished within your capabilities”