What Is an Offensive Competitive Strategy?
Let me explain what an offensive competitive strategy really is. It's a corporate strategy where you actively push for changes in your industry. If you're running a company that adopts this, you're making acquisitions and pouring money into research and development (R&D) and technology to stay ahead of everyone else. You'll also challenge competitors by targeting new or underserved markets, or by going directly against them.
On the flip side, defensive competitive strategies are all about countering these offensive moves.
Key Takeaways
- Offensive competitive strategies seek to shape an industry through first-mover and other aggressive moves.
- This can be an expensive strategy as it may include mergers & acquisitions, R&D investment, and intellectual property protection.
- Offensive strategies may be contrasted with defensive ones, which instead focus on establishing a wide moat through building brand loyalty, offering high quality goods, and customer service.
Understanding Offensive Competitive Strategies
You can use various techniques and strategies either on their own or together to build an offensive competitive strategy. Companies might even switch strategies depending on the location or market. For instance, think about how a global soft drink company handles a competitor in its established home market versus a new startup in an emerging market. This kind of flexibility can create complex offensive strategies, and sometimes you'll even mix in defensive elements as part of your offensive plan.
The most aggressive form is when companies go out and acquire other firms to drive growth or cut down competition. These companies are seen as higher risk than defensive ones because they're often fully invested or leveraged, which can backfire during market slowdowns. Remember, all offensive strategies tend to cost a lot.
Offensive Competitive Strategy Types
There are several types of offensive competitive strategies, and each comes with its own pros and cons.
An 'end run strategy' avoids direct fights and instead targets untouched markets or neglected segments, demographics, or areas.
A 'pre-emptive strategy' gives you the natural edge when you're the first to enter a marketplace or serve a demographic—it's tough for others to displace you. This is also called 'first-mover' advantage.
A 'direct attack strategy' is more aggressive than the end run or pre-emptive ones. It might involve unflattering comparisons to competitors' products, starting a price war, or racing to add new features faster. This strategy can pull in elements from the others, all aimed at controlling the narrative through marketing.
An 'acquisition strategy' means buying out a competitor to remove them. It's typically used by the richest or best-funded players. The upside is quickly gaining new markets, customers, or intel. But it's very costly, so use it carefully, keeping antitrust rules and local laws in mind.
Defensive Strategies
Defensive strategies are your countermeasures. Here are some examples: You might start a pricing war by committing to match or beat a competitor's prices. Or add more features to stay ahead. Offering better service or warranties shows your products are superior. Ramp up advertising and marketing to highlight improvements. Partner with suppliers or retailers to block competitors. If a rival enters your home market, counter by entering theirs. And there are various ways to defend against hostile takeovers.
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