Five Targets of Competitive Attack On Your Business

When your business finds success, it will be attacked. The reality is, success invites competition.  In classical strategy there are five targets commonly attacked. This article explains the five targets and provides suggestions on how to defend them. If you are an entrepreneur, small business owner, or CEO of a Fortune 500 company, you know that success breeds competition. No matter the venture, once it demonstrates a solid customer base and profit, it will come under attack from existing and new businesses. While your keen business sense may create a profitable business, your ability to think strategically will ensure your survival. YOUR FIRST LINE OF DEFENSE Your first line of defense is to pursue opportunities that are easy to defend. Simply put, don't start a new venture that is easy to imitate. The more barriers to entry that naturally exist or that you can create, the easier it will be to defend yourself later. The second line of defense is to respond to the competitive situation appropriately.  This is a matter of risk management and the proper handling of uncertainty. The final line of defense is protecting your business from direct competitive attacks. THE FIVE TARGETS OF ATTACK When a competitor chooses to attack a successful enterprise there are five viable targets. Your job is to defend these five areas by making them impossible or too costly to attack. The five targets of attack include: (1) People, (2) Suppliers, (3) Ideas, (4) Location, and (5) Suppliers. The first thing you will want to do after a successful venture is to secure your business against imitation. Find ways to offer your product or service that cannot be easily copied. Since imitation requires work and competitors are not usually very innovative, imitation usually takes the form of stealing. ATTACKS AGAINST YOUR PEOPLE First, competitors will try to hire your people. They will assume your rise to profits is directly related to your team and seek to steal them away. This can be a serious problem if your venture relies on specific talent. If you build a catchy website that is popular only because of its innovative technology and a well-financed competitor hires your genius, you're in big trouble. This form of attack can be hard to defend against when competitors have deeper pockets than you do. DEFENSE: Your people must be attracted to your business by more than a paycheck. Be sure to offer great rewards to such people in a form that is reinforcing for them. Everybody is motivated by different things so don't attempt to keep your best people with rewards that are satisfying to you - ask them. People will stay unless you give them a reason to leave. In the event they do leave be sure to keep the door open for their return. It's hard to have a team member "defect." Even so, no matter the terms of their departure, make it clear you value them and look forward to their return. When they are past the honeymoon period with your competitor and the money isn't buying happiness, you want them to return, if for no other reason than to deny their skills to your competition. Once they return, provide them opportunities to share why they came back. This will discourage others from making the same decision. Keep your talent busy and their jobs interesting. Many employees leave simply because they are being underutilized and don't feel appreciated. Give them challenging work and make sure they never get bored. When you identify new competitors make your people feel threatened personally. Make your decisions and priorities very clear. Nobody should second-guess his or her actions. Treat your people like family without becoming their best friend. They should respect your leadership and believe in you without having to explain your reasoning. ATTACKS AGAINST SUPPLIERS Whatever your business, it survives due to its suppliers. This is a bigger threat for those offering third-party products (retail) or manufacturing than simple services. This is a more serious threat when your suppliers industry is in a slow down and they lower their prices to stay in business. Lower prices invite more competition as availability increases. This lowers the cost of entry for competitors. DEFENSE: When feasible and it makes sense, setup exclusive contracts with suppliers. Also, develop excellent relationships with suppliers and get to know them on a first-name basis. It's much harder (though not impossible) to turn on a friend. Another defense is to find ways where your business makes their business easier to own and operate. Toyota is known for sending engineers and other experts to their suppliers to help them become more profitable. If you own a restaurant and can offer expertise in shipping and packaging to local farms, you can create a dependency that protects the relationship. If your suppliers lower their prices, it will also invite more competitors. In such cases, it may be smart to lower your prices to increase the payback period for new entrants. ATTACKS AGAINST IDEAS The third threat to defend against is stealing your product and service ideas. Take Starbucks as an example. When Starbucks introduced the bistro style coffee shop, they were effectively the only game in town. They were smart to flood the market with their shops and cut off competitors. Another example is iPod vs. the Zune. Every successful business brings copies. DEFENSE: Copying products takes time as they have to duplicate all you've done. Therefore, your first line of defense is to stay ahead of them. If it takes about six months to copy and ship your product (or service) you have to change it within that time frame. This will make anything they sell behind the innovation curve and lowers interest in their offer. Pay attention to the business climate. When your product is so popular that you cannot keep up with demand it invites more competition. To avoid this, don't invest in marketing campaigns that stimulate market demand that you cannot satisfy completely. ATTACKS AGAINST LOCATIONS The next form of attack is when competitors try to undermine your location. This one is well understood and everyone knows the three most important aspects of business; location, location, location. DEFENSE: You will want to tie up the ideal locations for your business as quickly as possible to deny your competition. If you're in a strip mall, be certain to get a lease that prevents competitors from moving in next door. Location can also be related to how you deliver your products and services. If physical property is too costly, find a way to bring your product to the customer much like Amazon has stolen the market from many bookstores without ever opening a physical location. ATTACKS AGAINST CUSTOMERS The final attack we will discuss is trying to steal your customers. This one is relatively straightforward and is often the first one a business owner, not thinking competitively, will notice. They will offer deals, lower prices, and other incentives to encourage your customers to defect. DEFENSE: Know your customers. What entices them to buy? Is it price, quality, or some other factor? Stay focused on their needs rather than your product or service. It's easy to become internally focused on your business and begin to develop your processes to make your life easier and your business cheaper to operate. This often leads to methods that ignore customer satisfaction and creates an opening for competitors. You have to defend all five of these targets. The only way a competitive attack will succeed is if you leave an opening. If you fill the needs that your competitors attempt to attack, you can block them and win.    2009-03-29T07:21:03Z

2009-03-31T04:14:32Z

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five-targets-of-competitive-attack-on-your-business

2009-03-31T04:14:27Z

2009-03-31T04:14:32Z

When your business finds success, it will be attacked. The reality is, success invites competition. In classical strategy there are five targets commonly attacked. This article explains the five targets and provides suggestions on how to defend against them.

Five Targets of Competitive Attack On Your Business

2009-03-31T04:14:32Z