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Lesson 10. BASES OF COMPETITION. GREAT BRITAIN. REVIEW “COMPLEX OBJECT”

The key bases of competition represent what a business must do (what activities it must undertake) if it is to be successful. They are often referred as strategy elements, and as such are important in strategy formulation, for they help to define which resources are needed.

The relative importance of the different bases of competition varies widely from industry to industry and across strategic groups within an industry. For example, the competitive bases in the computer and laundry detergent industries are very different. In the soft-drink Industry, the more important elements include advertising. In-store promotions, product avail ability, and new-product development.
Typically, each element has several dimensions. For example, the product itself is always a critical strategy element that has much to do with success or failure in a given industry. Too often we think of product primarily on the basis of how its physical characteristics can be differentiated and ignore or minimize the importance of service features. Other important dimensions to consider ere the extent to which a full line is needed and the importance of new products. These latter two dimensions, as well as container type and size, are important in the soft-drink industry.
A firm must consider what resources it needs to make a given strategy element successful. Product differentiation, for example, requires not only product engineering skills, but also management capabilities to decide which combination of product attributes is apt to be most successful. It takes other resources to effectively communicate the product’s differences to the target audiences and to obtain the needed distribution.
The sports shoe industry requires a number of operational strategy elements, including low-cost overseas sourcing (manufacturing). This requires decentralized quality control, plants in various countries to spread the risks, accurate forecasting to avoid overages and underage’s in production, funds or credit to finance the large buildup in preseason inventory, and strong physical logistics capabilities.
A large company needs a full line of running, walking, exercise, basketball, and tennis shoes for man and women and perhaps children, at a variety of prices. This is necessary because of scale effects and the need of large retailers to carry a full line of sports shoes. R&D skills, a sense of style, and fashion trends are obviously important, too. Large advertising investments are necessary to presell the product, as mass merchandisers provide little sales support. Merchandising is also important here. The sales force must be versatile enough to sell specialty shoe/sports stores, department stores, and mass merchandisers and be large enough to handle thousands of accounts.
The scope of a successful mass seller in this industry probably must be international to permit a varied response to acts of aggression by other international companies. An example is responding to a price cut here by a European company-such as Adidas-by cutting price in the aggressor’s home country.