Defensive Business Strategy

Protecting against competitor attacks

The objective of defensive business strategy is to fend off competitive attacks. As part of the regular course of business, new threats emerge all the time as challengers try to take a piece of the action. Even when the firm is in a strong defensive position with stable cash flows, it can become exposed to new threats and new vulnerabilities. For these reasons, defensive strategy is vital to the well-being and the existence of the firm.

GPG helps clients confront adversaries with robust defensive business strategy to protect against attacks. Many traditional defensive actions lack important information about the strategic control points that the firm needs to protect its position. As a result, responses are weak, dispersive, and often miss the mark.

The approach to a defensive business strategy must be thorough and precise to be effective. When coming under attack, the firm needs to form a clear and definite read of the situation, get to the fundamental issues underlying the attack, focus on the relevant strategic control points, and counter with the right strategic action.

The Results You Can Expect

  • Clarity of the strategic situation of the business
  • Assessment of the strategic threat
  • Focus on the relevant strategic control points
  • Formulation of defensive response
  • Quantification of impact

How We Help

We assist clients in building a robust, powerful defensive strategies.

Nature of the threat vs.
Barriers to entry
Economies of scale
Product differences
Brand identity
Switching costs
Capital requirements
Access to distribution
Cost advantages
Government policy
Expected retaliation
Strategic control points at stake determine
Severity of business vulnerability
Form of competitive attack and
Intensity of rivalry
Industry growth
Competitor concentration
Profit model
Fixed cost / value added
Competitive advantage
Capacity added in large chunks
Product differentiation
Brand strength
Switching costs
Business complexity
Exit barriers
Strategic control points at stake determine
Severity of business vulnerability
Defensive Business Strategy Process

We provide pre-entry and post-entry defensive strategies as dictated by the threat.

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Pre-entry defensive strategy

We assist clients in building a pre-entry defensive strategy that discourages a challenger from entering the market, making the entry too difficult or too costly to pursue ...

Pre-entry defensive strategy

The objective of a pre-entry defensive strategy is to discourage a challenger from entering the market by making the entry too difficult or too costly.

Pre-entry threats are staged by new entrants. Usually, it is much easier to fend off challengers before they enter the market than once they make significant investments. For this reason, the firm needs to take timely action.

The type of response depends on the strategic position of the company and the relevant strategic control points in its industry. Typical actions include locking up delivery systems, blocking access to suppliers, expanding capacity, and much more.

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Post-entry defensive strategy

We help clients bolster a post-entry defensive strategy that keeps the competition from building a strong market position or gain share with new forms of participation ...

Post-entry defensive strategy

The objective of a post-entry defensive strategy is to keep the new entrant from building a strong market position.

Post-entry threats come from firms that have already entered the market or from incumbents that are threatening to gain market share with new forms of participation. By this stage, new entrants or incumbents will have made investments, so the stakes are high.

Frequent actions involve introducing “firewall” brands, widening product lines, adopting continuous improvement to outdistance competitors, cross-parrying on a specific market segment, and much more. The logic is to defend one’s market position when the rival is small and weak before it becomes a serious threat.

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Defense Against Substitutes

The objective of defending against a substitute is to preclude the substitute product from taking hold. Factors that determine a higher threat of substitutes in the industry include ...

Defense Against Substitutes

The objective of defending against a substitute is to preclude the substitute product from taking hold. Factors that determine a higher threat of substitutes in the industry include the following:

  • Customer can easily switch between existing products and new substitutes
  • Substitutes are readily available
  • They have better features, quality or value comparable to products in the market
  • They have a lower cost

Examples of defensive actions against substitutes include the following:

  • Increase product differentiation by innovating. improving product features and engaging in tactical pricing
  • Develop, maintain, and re-enforce a strong brand and image to preclude switchovers
  • Re-frame your market focus to a profitable niche
  • Adopt special offers, including discounts, trials, gifts, special packages
  • Recognize evolving key customer expectations and improve satisfaction
  • Improve customer relations through the acquisition of customer data and proper communication
  • Research customer needs and wants and competitive threats from substitute products early on in their development

The end game is to focus on the right strategic control points to block substitutes early on.