Hitting back: strategic responses to low‐cost rivals

Abstract

Purpose of this paper

No company is safe from low‐cost rivals. Almost overnight, nimble low‐cost competitors can exploit their offshore advantage, partnerships, and inexpensive technologies to break down barriers and rewrite the rules of competition. This paper aims to show how to counterattack.

Design/methodology/approach

The paper shows that way to beat low‐cost competitors that have the potential to become serious competitors is to identify and deal with them early, before they get a foothold in a market.

Findings

The paper finds that the best way to identify and thwart a low‐cost rival is to adopt its mindset, anticipate its next competitive move and measure your costs against its costs. This best practice analysis requires four steps.

Practical implications

“What to do” to defeat low‐cost competitors involves two separate but related tasks: First, “stop the bleeding”, and second, reposition the company for success in the new market. The paper shows how to break down potential moves into short‐term tactics and long‐term strategies.

Originality/value

The paper shows how to win the battle with a low‐cost competitor by identifying the genuine threats, taking on the serious competition, adapting its tactics quickly and hitting back with a well‐placed blow.

Citation

Morehouse, J., O'Meara, B., Hagen, C. and Huseby, T. (2008), "Hitting back: strategic responses to low‐cost rivals", Strategy & Leadership, Vol. 36 No. 1, pp. 4-13. https://doi.org/10.1108/10878570810840634