Answers:
Defensive Strategies
The classic form of retaining existing
(civil) territory is to mount a position defence by constructing strong
ramparts to keep out the enemy. In business, position is typically built by
developing high levels of customer loyalty. But, the defence is typically built
by developing high levels of customer loyalty. But, the problem with many
organizations is that the defender often becomes complacent and, does not
realize that the enemy is making slow, but steady, inroads into the customer
base. One of the unfortunate examples of this situation is IBM.
The company built a big global
business in the computer industry based on unmatched customer loyalty. But, IBM
ignored the threats, may be unknowingly, posed by the advent of the networked
PC and more powerful operating systems.
The company realized, rather late in
the 1990s, that customer loyalty had been completely eroded by competitors who
were more strongly committed to fulfilling the changing needs of customers.
Counter-offensive strategy has a different advantage. It
has the advantage of not having to respond before one measures up the real
nature of the competitive threat. Nevertheless, it is a belated response, and
there is always the risk that by waiting until ‘you see the whites of the
enemy’s eyes’, a company may be forced to spend massive resources to recover
lost grounds.
Pre-emptive Strategies
‘Attack is the best form of defence’
is the basis of pre-emptive defence strategies. As the name indicates,
in pre-emptive defence strategies, companies, after having identified a
possible threat, take action ahead of competitors. An excellent example of this
strategy is Microsoft. Microsoft watches advances made by competitors in the
software industry and quickly moves to introduce another upgrade to sustain its
market leadership position.
The ability to pre-empt requires
companies to be creative or innovative.
In fact, creativity or innovation is
often a key resource in pre-emption. It allows companies to see the unexpected
opportunity, threat or competition and design the strategy in advance.
Pre-emption is considered by many as
one of the smartest strategies. Pre-emption, as a strategy, requires a close
understanding of the planned and potential moves of competitors for slowing
down or blocking those moves.
Examples of defensive strategies:
Xerox Corporation is an example. Xerox had been forced to make large
investments in R&D, technology, manufacturing process and organizational
structure during the last few years to regain some of the lost ground in the
photocopier market to competitors such as Canon.
Examples
of pre-emptive strategies:
During the 1980s, Lotus lost its
dominant position in the computer-based spreadsheet market to new software
products such as Microsoft’s excel package. After being acquired by IBM, Lotus
is now using its world beating Lotus Notes as a platform from where it can
reposition itself as the leading provider of Internet-based group ware
communication systems