Strategy_Moves.pdf

Strategy Moves

14 Complete Attack and Defense Strategies for Competitive Advantage

Publisher:

Jorge Vasconcellos e Sá

Prentice Hall

Date of Publication:

2005

ISBN:

Number of Pages:

212 pages

About the Author

The Big Idea

Jorge

Vasconcellos e Sá

This book lays down 14 strategies for competitive advantage - 6

attacks and 8 defenses, the success of which depends on

mastering the rules of timing (when to perform each type of

strategy); method (how to implement it); and alliances (whether to

do it alone or in alliance).

Jorge Vasconcellos e Sá is a Portuguese

citizen of Brasilian and French

ascendents. He has two undergraduate

degrees one in Economics (Technical

University) and one in Business

Administration (Catholic University). He

also has a graduate degree in

Macroeconomics from Gulbenkian

Foundation and a masters degree from

The Peter F. Drucker Graduate School of

Management in California. He has a

doctorate (PhD) in Business

Administration from Columbia University,

in New York.

He was awarded the Jean Monnet Chair in

1997, the highest European academic

award, and has in the past received

several distinctions including Fulbright,

and Beta, Gamma and Sigma fellowships.

In January 2004 he was nominated to the

five member commitee reporting directly

to the Prime Minister on the Portuguese

economic strategic development. On

this subject, but as an independent

scholar, he has been asked to

address the Portuguese Parliament

(special economics commission).

He has written numerous articles and

published thirteen books, among which

are Practical Management and The

Neglected Firm.

Published by BusinessSummaries, Building 3005 Unit 258, 4440 NW 73rd Ave, Miami, Florida 33166

in any form or by any means, electronic, photocopying, or otherwise, without prior notice of

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Author:

0-273-70167-3

Defense Strategy by Jorge Vasconcellos e Sá

On January 22, 1879, 5,000 British forces stationed at Isandlwana were massacred

by 24,000 Zulu army warriors. In the afternoon of the same day in Rorke's drift, 100

British army men had defeated 4,000 Zulu warriors.

The British forces were established at a camp at Natal, and an officer, Major

Dartwell, left the camp and hunted Zulus. Along the way he encountered a Zulu army

of 1,000. The British army sent the company of Chelmsford to help the forces

engaged in the on-going battle, but little did they know that the 1,000-man Zulu army

was just a pawn of the Zulu to divert their attention away from their real target,

Isandlwana.

While the concentration of the British was the on-going battle, The Zulu attacked the

British camp and massacred everything in it.

Chapter 2 - The reason for victory and defeat - and the lessons for

business

What happened at Isandlwana and Rorke's Drift was to be expected.

The factors that led to the triumph of the Zulus over the British can be summarized in

four variables:

· Knowledge of the enemy

· Focus

· Choice of terrain

· Surprise

Knowledge of the enemy’s characteristics and plans

War guru Zun Tsu, states: Know the enemy and know yourself and you do not have

to fear a hundred battles.

Focus

In every endeavor, whether in business and war, there must be focus. Without it, a

company or army will be easily dissuaded and lose sight of their primary objective.

Take the case of IBM. Originally IBM manufactured typewriters and

supercomputers. However, as time went by it expanded its business ventures and

started producing mainframes and mini-computers, even providing information

processing and ancillary business, losing its focus and wasting billions and billions

of dollars for nothing.

Choice of terrain

In the art of war, Zun Tsu recommends to always choose the higher ground when

going into battle, to be able to see oncoming enemies.

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Chapter 1 - You can win with ten or lose with a hundred: two

examples from the field of war

Chapter 1 - You can win with ten or lose with a hundred: two

examples from the field of war

Chapter 2 - The reason for victory and defeat - and the lessons for

business

Defense Strategy by Jorge Vasconcellos e Sá

When the Zulus attacked Rorke's drift, they were in a bad position because the

environmental elements were not in their favor. When they attacked Isandlwana,

however, the opposite was true.

The same principle can be applied in business. A good example of choosing a terrain

is Federal Express (FedEx). Established in 1973, FedEx had its own plane and

trucks and a unique hub-and-spoke distribution system in Memphis, Tennessee. Its

main competitor was Emery Air Freight. Because Fedex did not have the financial

capacity to offer cheaper prices, it specialized instead in delivering packages faster

than its rivals. Fedex chose a terrain where it had the advantage: delivery speed

and reliability.

Fight where it suits you. Choose the terms of engagement. Be the company in control

and not being controlled. Choose the nature of the battleground and the kind of

terrain in which to hold a fight.

Surprise

In battle, the enemy must not have information about one's plan of action. The key in

winning battle is to catch the enemy in the open and unaware.

In business, if a company is caught unawares by a new and timely strategy

implemented by its rival, it will take time for them to react and recover, and it

demoralizes competition.

Take the case of Johnson and Johnson and Bristol-Meyers. Bristol launched Datril,

which was meant to challenge Johnson and Johnson's Tylenol. Datril's edge based

on the fact that it was 10% cheaper than Tylenol. However, on the eve of Datril's

launch date, Johnson & Johnson sent a credit note to all its retailers for 10% of

Tylenols value, and instructed them to reduce the retail price of the product

accordingly.

The effect of this on Datril's sales was immense. Why change from Tylenol, which

was already a trusted product, to a newcomer that claimed to be its equal, consumers

reasoned. Datril was dead in the water.

Chapter 3 - Attack: the six strategic movements

A move can be called an attack if someone enters a new geographical area, a new

industry, and/or new segment within the same industry and geographical area

(Entry), and this movement occurs with an initiative to gain profits or synergy

(Unprovoked).

ATTACK = (1) Entry + (2) Unprovoked

There are six possible ways to attack an opponent:

1. Guerilla

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Defense Strategy by Jorge Vasconcellos e Sá

2. Bypass

3. Flanking

4. Frontal attack

5. Undifferentiated circle

6. Differentiated circle

The first four types are concerned with entry into a single segment, while the

remaining two refer to entry into two or more segments.

To further understand this, let us take Pizza hut, the leader in pizza industry, as an

example. We all know that in the pizza service industry there are four segments that

have to be considered:

· High quality/service restaurants with an excellent menu

· Sit-in with enhanced price and speed of service

· Takeaways

· Home deliveries

Assume that Pizza hut scores 0% in high quality/service, 80% in low-price and fast

serve, 20% in takeaways and 0% in home delivery.

Given the leader's market position, there are four ways to attack it:

1. If one opens a sit-in restaurant with low prices and fast service it is a frontal

attack , because Pizza Hut is already in this segment and it represents 80%

of its turnover.

2. If we open a small restaurant with a counter and specialized in takeaway it is

a flanking attack , because Pizza Hut is already in that segment but is not a

leader (representing only 20% of its turnover)

3. If we open a high quality restaurant it will be a bypass , because Pizza hut is

not in that segment and one may steal some customers.

4. Finally, if one opens a restaurant that specializes in home deliveries but is

not limited to pizza, it will be a guerilla attack because Pizza hut is not in that

segment and the business is not stealing any of its customers, because its

products is a complement of theirs.

5. If one opens a restaurant entering two segments - takeaway and home

deliveries, this would be an undifferentiated attack .

6. Finally, if we open a high price restaurant with a side counter for takeaways,

the strategy would be differentiated circle .

Chapter 4 Defense : the eight strategic movements

Essentially, there are eight (8) defensive strategies:

1. Signaling

2. Creating entry barriers (fixed and mobile)

3. Global service

4. Pre-emptive strike

5. Blocking

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Defense Strategy by Jorge Vasconcellos e Sá

Mr. Shmooze by Richard Abraham

6. Counter-attack

7. Holding the ground

8. Withdrawal

Signaling

The main objective is to verbally warn the enemy/competitor attempting to enter the

market. This can be done through advertisement and media mileage. The main idea

of this strategy is to discourage industry neophytes from engaging in their segment.

Barriers to entry

Is the second type of defense which involves, literally, creating obstacles that are

difficult to overcome and discourages competitor's entry into the market segment. An

example of such is introducing new products on a yearly basis that offer higher

returns and benefits to its consumers.

Global service

This concept is distinct from globalization, it means enlarging the product portfolio of

a company.

Global service is a defense strategy and not an attack for the sole reason that the

company enters a new segment in order to protect the position of the product.

Pre-emptive strike

There are two (2) major characteristics of Pre-emptive strike:

· There is entry into new market, which differentiates it from defenses where

no movement is involved

· The movement occurs before the competitor's move

Pre-emptive strike is of two (2) kinds: the product and client.

An example of a product pre-emptive strike is when Fedex immediately entered its

rival's test markets in Cleveland, Philadelphia and Harford with its own product.

A client pre-emptive strike can be seen in American Broadcasting Corporation (ABC)

allotment their daytime TV serials and dramas for women.

Blocking

Blocking is different from signaling and holding the ground because there is

movement. It is also different from a pre-emptive strike, counter-attack and strategic

withdrawal because the movement is towards the segment which the competitor has

entered.

The essence of blocking is to enter a given segment where a company is not present

in order to protect the said company.

Counter-attack

Counter-attack is distinct from blocking because it means entry into a different

segment from that which the competitor has attacked. The segment can be one in

which the competitor is present or absent - as long as one's presence there threatens

the competitor.

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