Attacking leaders and industry structure

A final test for attacking a leader is to weigh the effect on overall industry structure. A challenger’s attack on a leader is unwise if it destroys industry structure. Challengers must find a new way of com­ peting compared  to the   leader’s to   succeed.   However,  the   new   way of competing, in some cases, may undercut possibilities for differentia­ tion, lower entry barriers, or have other adverse structural effects as described in Chapter 1. A closely related risk is where  a challenger gains market share but does not gain a clear advantage over the  leader, and the leader and the challenger are thus relatively balanced in compe­ titive position. This may guarantee a long period of instability in the industry. The resulting war can be protracted  and expensive for both sides, creating a situation  where no firm has any competitive advantage. It is also im portant  to recognize that  some   leaders   are   “ good” leaders, as was discussed in Chapter 6. Attacking a good leader may worsen, not improve, a challenger’s profitability if the umbrella  pro­ vided by the good leader is lost in the process. In such cases a challenger should refrain from attacking the leader at all. Instead, it should choose another industry as a vehicle for growth.

Source: Porter Michael E. (1998), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press; Illustrated edition.

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