Competitor scenarios

Abstract

Several leading companies have employed scenarios to better understand both current competitors’ potential moves as well as the possible emergence of new rivals. They have learned several principles and some ways to avoid various pitfalls. Competitor scenarios examine three broad aspects of marketplace strategy: in which product‐customer segments the competitor chooses to compete (scope); how it competes (competitive posture); and what it seeks to achieve (goals). Competitors are always at the heart of every significant analysis of the competitive or industry context. Experienced managers use competitor scenarios as a source of learning about the broader competitive context and of the implications for their firm’s strategy and operations. Competitor scenarios work best when they produce knowledge and insight that broadly informs and prepares decision makers to act rapidly as competitive conditions change. There are two distinct types of competitor scenarios that originate in two quite different forms of what‐if questions: unconstrained what‐if scenarios and constrained what‐if competitor scenarios. Unconstrained or open‐ended questions encourage scenario developers to pose any question that occurs to them pertaining to one or more rivals’ marketplace strategies. Such questions are limited only by the experience, imagination and creativity of those involved in thinking about the possible strategies of rivals. Unconstrained competitor scenarios are ideal for answering: How might new types of competitors come into the market? A distinct class of competitor scenarios revolves around invented competitors, that is, competitors that do not exist today but which could exist at some point in the future. Invented competitors shift the frame of reference to one or more rivals that, by definition, are strikingly dissimilar to any rival managers have had to contemplate to date. In contrast, constrained competitor scenarios ask: What would the competitor do if a specific set of marketplace or macro environmental end‐states or conditions were to arise? In almost all cases, competitor scenarios lead to rich insight into the firm’s own strategy alternatives‐and sometimes to alternatives not previously on the firm’s radar screen.

Citation

Fahey, L. (2003), "Competitor scenarios", Strategy & Leadership, Vol. 31 No. 1, pp. 32-44. https://doi.org/10.1108/10878570310455033