“SPHERE OF INFLUENCE can create profitable biz environment while pushing rivals into a corners” Chaotic change and continuous entry can sometimes be creative, but it can also be wasteful and profitless. It’s time to create order in the competitive environment by building strong and rational Sphere of influence. It is more than a corporate portfolio of products. It is a powerful arsenal that enables a company to project its power and dominate the larger competitive space. The objective is to occupy significant portion of the attractive markets in that space. It consist in: core geographic and product zones: is the centre where people hope to have dominant value leadership and market share * vital interests: are geographic and product zone, maybe complementary products or biz that provide key sources (know. how, raw m, skilled labour). Ex: Microsoft portable device OS. * pivotal zones: markets that creates the balance of power in the long run to combative competitors. Ex: Microsoft MSN * buffer zones: cuscinetti: defendable position in expendable markets that protect from rivals expansion. Ex: Microsoft game applications. forward positions: front line products very near the rival’s core biz. Are used to attack or to maintain the stability. Serious enough but not so strong to initiate a war. To assure Mutual Forbearance and to prevent mutually assured destruction. Sometimes fail to make money but they might win the war. Ex: P&G and J&J, Pampers vs Neutrogena. * Moreover, project power to beget more power or bundling extra products/services to the core ones in order to influence profitability (GMAC) or rivals who lack similar bundles (Microsoft vs Netscape) Buffer zones and forward position are the most successful actions to be taken.
Benefits: * move competitors into a corner * reduce price wars through the equivalent of “mutually assured destruction”, * encourage rivals to grow in non-conflicting markets * shape the industry to partners’ mutual advantage Getting there requires an understanding of the patterns of tacit and formal alliances and MAD between major rivals and a willingness to pressurize or cooperate with less powerful rivals. GLOBAL GAMESMANSHIP The moves an organization makes in one market are designed to achieve goals in another market in ways that aren’t immediately apparent to its rivals.
Ex: Philip Morris vs Reynold/Eastern Europe vs USA). This approach is called CSI: competing under strategic interdependence. How? The process: 1. Set up a table that reflects all your assets and all the territories you compete in 2. Take a rigorous look at where your company stand relative to you main competitor in each arena. Analyze 3 important factors: a. Reactiveness: how much incentive has your competitors to counter your move (subfactors: competitor’s market share, arena’s profitability; competitor’s emotional attachment to the arena) b.
Attractiveness: the measure of how important the arena is to you. Same subfactors. c. Relative clout: who’s in a bette position to launch, defende against, a strategic move (pdct sales, pdct division performance, region sales) 3. Mapping the competitive terrain on a Bubble Chart (reactiveness in the orizontal axis while attractiveness in the vertical axis, the size of the bubble is the clout). There are six types of CSI campaigns to compete skilfully: 1. Onslaught 2. Contest 3. Guerrilla campaign: 4. Feint 5. Gambit 6. Harvesting