February 2011 | What if Your Top Competitor Slipped?
February 2011
What if Your Top Competitor Slipped?
Suppose for a minute you are a U.S.-based company that produces pet food or drywall or children’s toys. Tomorrow morning, you open the newspaper and you see a headline about one of your fiercest competitors linked to dangerous pet food, toxic drywall, or lead-paint used in children’s toys.
How do you respond to this potential opportunity? Are you fast enough to quickly capitalize on your sudden competitive advantage? If your competitor has incredibly low production costs, price superiority, and an iron-plated global distribution network, competing with those strengths is probably futile. Instead, it makes more sense to try to attack the weaknesses that those strengths can sometimes create.
In the toy industry, two great examples of small companies breaking the rules and attacking Chinese competitors’ points of weakness are Toys of USA and Green Toys. These companies carry toys that are much more expensive than similar toys made in China. But the difference is that they are made in the USA and only with rigorously safety-tested materials and paints, points that resonate strongly with U.S. parents and that overcome the price differential (click here to see a CBS news-clip of Green Toys’ approach).
Size and global reach are formidable advantages. But a big, low-cost supplier has weaknesses that can be exploited. If you are flexible, nimble, and agile, you can use bigger competitors’ weaknesses to your advantage. And if your competitors try to eliminate their weaknesses, they often erase their core competitive strengths in the process.
What competitive advantage beyond low-cost or scale does your company have over your competitors? What would you immediately do if your biggest competitor slipped?
If you’d like to read additional information on this topic, take a look at this article by Malcolm Gladwell titled: How David Beats Goliath: When underdogs break the rules