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“Demand for a product is affected by the cost and quality, broadly defined, of substitute products. If the cost of a substitute falls in relative terms, or if its ability improves to satisfy the buyer’s needs, industry growth will be adversely affected (and vice versa). Examples are the inroads that television and radio have made on the demand for live concerts by symphony orchestras and other performing groups; the growth in demand for magazine advertising space as television advertising rates climb sharply and prime advertising television time becomes increasingly scarce; and the depressing effect of rising prices on the demand of such products as chocolate candy and soft drinks relative to their substitutes.”
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
“Early entry is appropriate when the following general circumstances hold: Image and reputation of the firm are important to the buyer, and the firm can develop an enhanced reputation by being a pioneer. Early entry can initiate the learning process in a business in which the learning curve is important, experience is difficult to imitate, and it will not be nullified by successive technological generations. Customer loyalty will be great, so that benefits will accrue to the firm that sells to the customer first. Absolute cost advantages can be gained by early commitment to supplies of raw materials, distribution channels, and so on.”
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
“This is analogous to the situation in which the robber says, “stick ’em up, I want your money,” and the deranged-looking victim says “If you take it, I will explode this bomb and kill us both!”
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
“If a firm can spot an industry in which the fragmented structure does not reflect the underlying economics of competition, this can provide a most significant strategic opportunity. A company can enter such an industry cheaply because of its initial structure. Since there are no underlying economic causes of fragmentation, none of the investment costs or risks of innovations to change underlying economic structure need be borne.”
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
“Another key strategic concept deriving from competitor analysis is creating a situation of mixed motives or conflicting goals for competitors. This strategy involves finding moves for which retaliation, though effective, would hurt the competitor’s broader position. For example, as IBM responds to the threat of the minicomputer with its own minicomputer, it may hasten the decline in growth of its large computers and accelerate the changeover to minicomputers. Placing competitors in a situation of conflicting goals can be a very effective strategic approach for attacking established firms that have been successful in their markets. Small firms and newly entered firms often have very little legacy in the existing strategies in the industry and can reap great rewards from finding strategies that penalize competitors for their stake in these existing strategies.”
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
― Competitive Strategy: Techniques for Analyzing Industries and Competitors
Shannon’s 2025 Year in Books
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