Week 3

This week we read in the Lehmann and Winer text, the chapters focused on the background analysis of the market. It reviewed competition, the industry as a whole and the competitors. One of the questions that came up during out lecture was, who actually defines the competition? Is it the customers of the company?  I think it is a combination of the customer and the company.  The companies need to develop products that meet the needs of their customers. BMW competes with Mercedes Benz in the luxury car market. Each company develops the cars they think best meets the needs of the customers. A customer picks one product over the other because it meets their needs. The BMW might have better handling or MPG but the Mercedes has more horsepower and more comfortable interior. The customers are the ones buying the product, they determine what attributes a product needs to meet their expectations. If the customer picks the BMW, it could be because of the better MPG. Mercedes now needs to develop a car to meet that customer need. The competition is defined by both the customer and the company. The products go through a cycle of being produced then improved upon and released again based on what the customer wants and what the competing company is doing.

Competitive strategy is different then competitive analysis. The competitive strategy needs to take a broad focus on everything that could affect the company. The competitive analysis is focused more on your direct competitors. While thinking about the difference between the two I came across and article from the Harvard Business Review. "The Five Competitive Forces That Shape Strategy".   The article talks about how competition for profits goes beyond  industry rivals. The other competitive forces that affect a business are customers, suppliers, potential entrants, and substitute products. Once area that companies can often get hurt in is by missing out on potential new products that entrepreneurs bring into the market. It is hard to protect yourself from entrepreneurs entering the market. Businesses do not always know when new competitors might enter the market. Businesses need to protect against to segments of competition, the products that are imitators of your product or service and those that are substitutes. Competitive strategy is much more then just analyzing your direct competitors. There are other factors in the market that can affect for profits, like indirect competition. I work for Signature Construction Group, a general contractor/construction manager. We compete directly with other general contractors like Malkin Construction and AP Construction. We also compete with construction management/owner rep firms like Jones Lang LaSalle, Cushman & Wakefield and CB Richard Ellis. Some of our indirect competitors would also be out subcontractors. These subcontractors could be working for a GC that we compete with or even work directly for the client. In either situation we are missing potential profits.  All businesses need to be aware of their competition, those that they directly or indirectly compete with and those that might be new entrance to the markets.