Is your biggest competitor ready for a fall? Vulnerable to attack? Michael Porter lists the following signs that a business might be vulnerable. Do you see any of these in your big competitor? If so, the timing might be right for you to devise a novel plan and go after their customers.
Stuck in the Middle. Your competitor is trying to be all things to all people and is not fully satisfying anyone.
Unhappy Buyers. Unhappy buyers suggest that the leader is exercising its bargaining power or that the leader’s personnel have developed an attitude of arrogance because of past success. Unhappy buyers may actively encourage and support a challenger.
Pioneer of Current Industry Technology. A leader who pioneered the current generation of industry technology may be reluctant to embrace the next one and may also be inflexible because of its investment in the current technology.
Very High Profitability. A leader making extraordinary profits may provide an umbrella for a challenger, if high profits more than offset the costs of attack. Very profitable leaders can also be reluctant to diminish their profits to retaliate. Moreover, extraordinary returns may also signal that a leader might yield share in less profitable parts of the product line, providing opportunities for focus by challengers.
Weak Performer in the Parent Company Portfolio. A leader perceived as a weak performer by its parent company may not receive the capital needed to keep up with the latest technological change, or have sufficient discretion over profitability to retaliate vigorously against challengers.
From Competitive Advantage by Michael Porter.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2012.
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