As important as the dimensions of rivalry is whether rivals compete on the same dimensions. When all or many competitors aim to meet the same needs or compete on the same attributes, the result is zero-sum competition.
– Michael E. Porter, HBR’s 10 Must Reads on Strategy
Several competitive strategies are short-sighted because they do not adequately define the competitive landscape facing a firm. All products should not aim to be alike. Imitating and matching rivals in your immediate sphere of competition does not create value for your customers. Value is created when your product is innovative and unique, thereby providing customers with a real choice and creating a winning marketing strategy for business.
A cola such as Diet Pepsi is competing directly with Diet Coke. Its physical attributes (calories, carbonation, cola taste, etc.) are closest to this rival drink. This is the narrowest form of competition based on proximity of physical attributes and is called product form competition. These brands appeal to similar customers: those looking for a cola taste with low calories. It would, however, be dangerous for Diet Pepsi to disregard a wider competitive set as it is also competing with other regular colas and aerated drinks such as Sprite or Fanta. A customer may, at times, be indifferent between Diet Pepsi and Sprite. All these soft drinks form a market. This traditional style of defining competition, also based on product features, is called product category competition and is slightly broader than product form competition although still taking a short run view of describing the market.
The third level of competition to be kept in mind while creating a marketing strategy for business is called generic competition. This is a longer term and is based on substitutable product categories. The market is defined as consisting of those products that satisfy the same customer need. Diet Cola 1 should not lose sight of the fact that it is also competing with orange juices, iced teas and hot beverages to quench the customer’s thirst. Product form and product category competitors are defined by those products that look alike and is looking inward into the firm. Generic competition looks outside the firm to the customer. An even more general level of competition is budget competition which is the broadest form of competition. It considers all products or services competing for the same customer rupee as forming a market and the list of competitors is infinite. A customer’s discretionary disposable income could be spent buying Diet Cola 1. However, it could also be spent on buying a cone of ice cream, buying a new pair of shoes or buying tickets to a movie. This form of competition, although conceptually useful, is difficult to implement strategically due to the countless competitors.
The definition of the competitive set determines what strategy is pursued and the definition can be too narrow or too broad depending on the market environment. The timely entry of Cola companies into the health drink and health food market is a positive example of a company recognizing competitors outside its immediate product category and meeting changing customer needs. Misidentification of the competitive set can have a negative impact on the success of a marketing strategy for business, especially in the long run, as overlooking an important competitive threat can be ruinous.
VentureBean Consulting is a business consulting firm in Bangalore focused on growth consulting.
Our business consulting practice advises on growth issues facing small and medium scale businesses across functional areas including strategy, business development, sales and marketing, finance, human resources, operations and technology. Our clients approach us from a range of industr
Most businesses fail because of poor financial management or a lack of planning. Often companies prepare business plans with the sole objective of raising funds or becoming eligible for any one of the startup funding options in India. More often than not, the business plan that was used to help raise finance is put aside, and instead of walking the path, different objectives start getting precedence. The business plan ends up becoming just another document gathering dust.
When it comes to addressing business success, developing and implementing sound financial and management systems internally, or using the right professional support to enable the same for you, is vital.
To move forward in this direction, the first task would be to start updating the original business plan. This gives the company a chance to revisit all the objectives that were initially set and do a quick SWEAT analysis.
While reviewing the financial structure of startup firms one must consider the following:
This is the balance of all of the money flowing in and out of the business. Make sure that the forecast is regularly reviewed and updated.
Have the requirements changed? If so, explain the reasons for any movement. Compare this to the industry norm. If necessary, take steps to source additional capital.
Keep the costs under constant review. Make sure that the costs are covered in your selling price – but don’t expect customers to pay for any business inefficiencies. If required, conduct a zero-based budget to address any aspects that have been missed.
What is the position of any lines of credit or loans? Are there more appropriate or cheaper forms of finance that the business could use?
Do you have plans in place to alter the financing to accommodate the changing needs and growth of the business? Understand the equity fundraising process in order to assess if this is a possible option.
Growth Business Plan
Once the above has been completed, companies should proceed to draw up a Growth Business Plan.
VentureBean Consulting is a business consulting firm in Bangalore focused on growth consulting.
Our Corporate Finance practice works with entrepreneurs, private equity firms, and management teams in middle-market as well as early-stage enterprises with an aim to achieve strategic growth through our financial advisory services. Our practice studies and advices
Groups vs. Teams: Know the difference
Every business has groups of people working together, but a common workplace and common boss aren’t enough to transform them into a team. Interestingly, the word “Strategy” comes from the Latin words Stratos meaning “army” and again meaning “lead”. Thus, understanding work teams is a foundational strategic management concept. Knowing what makes a team is the first step to being able to create and manage one. Here are some defining characteristics:
A Shared Goal
Teams work towards shared goals within the larger organizational ones. While groups are incidental, teams come together to work on specific tasks or projects and dissipate once they have completed them.
Internally Set Goals
The goals line up with organizational goals but are not dictated by the organization, giving team members both flexibility and self-motivation.
Each member of a team has a specific role to play. Leadership roles too are shared and rotated, and not restricted to a singular authority figure. A team working on designing a bicycle may have an engineer on board to help them a prototype. At this stage, the engineer is in the position to make decisions and may ask the designer to make certain changes for the sake of functionality.
Members of a team rely on each other, making sure that everyone does their part.
Collective Success Factors and Collective Rewards
These make it easier for people to support each other, making the team more cohesive. For example, the members of a sales team could get a bonus based on how much the team sells as a whole, as opposed to giving individual rewards based on individual sales performances.
A lot of effort goes into teamwork and it may seem to take up more time, but on the contrary, it can accomplish goals more efficiently. Putting effort into understanding work teams means identifying the need for and strategically forming teams. This can really boost quality performance.
Creating a Culture for Teamwork
Bringing a team together is just the beginning. Its success depends less on who is on the team, and more on how these members interact which is the foundation of group behavior. There are two very simple behavioral guidelines that team members can follow to considerably increase its efficiency – equality in conversational turn-taking and attentive listening. This simply means that in any discussion, every individual should contribute equally to the conversation and that every other member should make them feel heard.
The most important outcome of these behaviors is the creation of a ‘Psychological Safety’, the notion that each team member can express their point of view and that their opinions are valued. This has direct implications on the teams’ success as it brings out people’s best ideas, their ability to work together and their innovative capacities.
It is not uncommon for team members to have difficulties trusting and confronting each other. While negotiation and conflict resolution may be called for, it’s important to understand the human dynamics that are at play in these situations. For instance, team members may hold back when they are afraid to admit their weaknesses or mistakes, and others may not call them out on it for fear of conflict. When their opinions have not been heard, it makes it hard for people to get on board with decisions that have been made.
The solution lies in creating the opportunity for voicing concerns and healthy debate. People are more comfortable talking about their challenges when they feel they will be supported, and that decisions will be based on efficiently achieving the job at hand. Success needs to be measured collectively so that people can hold each other accountable.
The interaction of different types of people from a multitude of backgrounds can make team building a complex task. The solutions, however, can be staggeringly simple. Look out for Part 2 where we address personality types as well as how to lead and strengthen your team.
VentureBean Consulting is a management consulting firm in Bangalore focused on growth consulting.
Our People Practice advises on three determinants of behavior in organizations: individuals, groups, and the effect of organizational design on behavior for these organizations to function more effectively. Through proprietary frameworks, Venture Bean will guide your leadership with a systematic approach to studying and improving the behavioral interactions within your company.
Over the last 6 years, VentureBean has provided consulting services to over 200 clients globally.