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How to Compete against global leaders

Staying below the radar, and focusing on a niche market that more powerful global companies may be ignoring are good strategies to consider when competing against a stronger global leader. The book “Transnational management” focused on companies such as Dell, Cemex and Electrolux that successfully followed this strategy to international success.

The key to this strategy is to focus just on one niche market, but to develop multiple layers of competitive advantages in that product or service. A company may start out as an OEM supplier to more powerful international companies, or they may focus on serving industries that established leaders consider insignificant. The goal is to develop strength and infrastructure.

Then, when the company is ready, they should move quickly to expand with its own brand and challenge quickly. This was seen in the BSkyB case when Sky chose to enter the satellite TV market which BBC considered to be a peripheral market that it was not interested in. By staying under the radar, they were able to build on their strengths and eventually challenge BBC for mainstream viewers (and ad dollars).

Examples:

Asustek grows from an outsource supplier of computer motherboards, to contract manufacturer to a global force by focusing on cheap laptop niche that companies like Apple are ignoring.  By focuing on the cheap end of the market, this company is proving again how to grow a global company in the niches that stronger competitors are ignoring.  Take a look: Asustek

The fundamental principles involved are:

1. Avoid areas of likely confrontation. A flanking move always occurs in an uncontested area.
2. Make your move quickly and stealthfully. The element of surprise is worth more than a thousand tanks.
3. Make moves that the target will not find threatening enough to respond decisively to.

Flanking strategy (aggressive)

In business terms, a flanking attack involves competing in a market segment that the target does not consider mission critical. The target competitor will not be as concerned about your activities if they occur in market niches that it considers peripheral.

It usually involves subtle advertising campaigns and other discrete promotional measures, like personal selling and public relations. It often entails customizing a product for that particular niche. Rather than finding uncontested market niches, the attacker could also look for uncontested geographical areas.

The strategy is suitable when:

• the market is segmented
• there are some segments that are not well served by the existing competitors
• the target competitor has relatively strong resources and is well able to withstand a head-on attack
• the attacker has moderately strong resources, enough to successfully defend several niches

Flanking Position (defensive)

This involves the re-deployment of your resources to deter a flanking attack.

The disadvantage of this defense is that it can distract you from your primary objective and siphon resources away from where they are needed most.

In business terms, this involves the introduction of new products, product lines, or brands, the defensive re-positioning of existing products, or additional promotional activity in a market niche.

It requires market segmentation and/or product differentiation. You protect against potential loss of market share in a segment by strengthening your competitive position there.

Links

http://en.wikipedia.org/wiki/Flanking_marketing_warfare_strategies