The way of defense strategy

In a highly competitive market, all companies will be challenged by other companies. Attacks in the market may come from new entrants to the industry and existing companies seeking to improve their existing positions. The purpose of defense strategy is to reduce the risk of being attacked, weaken the influence of any existing competitive actions, influence challengers, and make their actions target other competitors. Although on the one hand, defensive strategy usually does not improve the company's competitive advantage, on the other hand, it is organized to strengthen the company's competitive position, defend the company's most valuable resources and capabilities from being imitated, and maintain the company's existing competitive advantage. There are several ways of defense strategy:

One way is to try to block some ways for the challenger to take offensive action: the options are:

1. Recruit additional employees to expand or deepen the company's core competence in key areas, thus defeating competitors who imitate the company's skills and resources.

2. Improve the flexibility of the company's resource assets and capabilities, so that the company can redistribute resources well and quickly, or make adjustments according to the changing market environment, so that the company is more agile in adapting to the new development situation than its competitors.

3. Expand the company's product line and block the market points and gaps that challengers may enter.

4. Introduce new models or brands to match the characteristics of challenger models.

Keep the price low for those models that can compete with competitors.

6. Sign exclusive contracts with special dealers and distributors, so that our competitors can't use these channels.

7. Give special dealers and distributors certain sales discounts to prevent them from trying to sell products from other suppliers.

8. Provide free or low-cost training for product users. By (1) providing lottery tickets and free samples to those buyers who are easily tempted by trial products, trying to prevent buyers from using competitors' brands; (2) Announce the upcoming new products or price changes in advance, so as to obtain the previous buyers and delay the brand conversion.

9. Improve the financing services provided to special dealers and distributors.

10. Reduce the delivery time of spare parts.

1 1. Extend the time and scope of insurance.

12. Participate in alternative technologies.

13. Protect know-how in product design, product production technology and other value chain activities.

14. Signing contracts for most or all products provided by the best suppliers makes it more difficult for competitors to obtain parts with the same quality.

15. Avoid dealing with suppliers and competitors who provide the same service.

16. Purchase natural resources before actual demand, making it difficult for competitors to obtain them.

17. products or practices that challenge competitors in terms of management procedures.

These actions can not only build a solid fortress for the company's current position, but also make itself a "moving target" for competitors. It is not enough to protect the status quo. It is necessary to make rapid adjustments to the changing industry environment, and in some cases, take action to stop possible challengers or take action before challengers. Mobile defense is better than fixed defense. The second way of defense strategy is to send a signal to the challenger that if the challenger attacks, they will be strongly retaliated. Its purpose is to persuade challengers not to attack at all, or at least let them take actions that pose less threat to defenders. The following actions can be seen as a signal to the challenger:

1. publicly stated that the management of the company will maintain the company's existing market share.

2. Publicly announce that the company will plan to build enough production capacity to meet and possibly exceed the expected growth of industry production capacity.

3. Release relevant information about new products, technological breakthroughs and important new brands or models planned to be launched in advance. Among them, the company plans to launch important new brands or models, hoping that challengers will postpone their actions until they see whether these announced actions will really happen.

4. Publicly announce that the company will implement policies that can match the conditions or prices of competitors.

5. Maintain a certain "strategic reserve" of cash and convertible bonds.

6. occasionally give a strong counterattack to the actions of weak competitors, thus enhancing the company's image as a strong defender.

Another way to stop competitors is to try to reduce the profit temptation of challengers to launch offensive actions. If the profitability of the manufacturer or industry is high enough, the challenger is also willing to cross high defense obstacles and encounter strong retaliation. Defenders can divert attacks, especially those from new entrants, artificially fabricate some short-term profit levels and use accounting methods to cover up some profitability.