Strategy & Leadership

Competitor scenarios
Liam Fahey

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Liam Fahey, (2003),"Competitor scenarios", Strategy & Leadership, Vol. 31 Iss 1 pp. 32 - 44
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(2009),"Why competitors matter for market orientation", European Journal of Marketing, Vol. 43 Iss 5/6 pp. 735-761 http://
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Competitor scenarios

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Liam Fahey

Liam Fahey is internationally recognized as a

leading consultant on competitor analysis,
competitive strategy, and scenario learning
(liam.fahey@leadershipforuminc.com). Of the
seven books he has published on these
topics, his three most recent are: Learning
from the Future (1998), Competitors:
Outwitting, Outmaneuvering and
Outperforming (1999), and The Portable MBA
in Strategy, Second Edition (2001). Based in
Needham, Massachusetts, he is an adjunct
professor of strategic management at Babson
College, a visiting professor of strategic
management at Craneld School of
Management in the UK, a founder and
principal of Leadership Forum Inc, and a
Contributing Editor of Strategy & Leadership.

Editor's note
This is the second Strategy & Leadership article in Professor Fahey's series on
understanding competitors. The rst one, ``Invented competitors: a new competitor
analysis methodology'' appeared in the November/December issue, Vol. 30 No. 6.
cenario learning and competitor assessment are two tools for looking at the
future that leading edge companies are learning to use efciently and
effectively in combination. Given other demands on management attention,
not many companies can expend the resources to annually investigate a wide range of
future possibilities via scenario planning. Likewise, few companies can afford to
continually track the details of their competitors' every strategic move. But almost all
companies need to periodically weigh potential competitive threats, and now a proven
methodology provides a look at rivals new and old in several scenario settings.

Managers need to be familiar with scenarios of future markets that are not merely
extrapolations of current trends. This is because history teaches that the most
potent competitors often emerge unexpectedly from surprising sources and under
unanticipated circumstances. For example, a decade ago book-retailing chains were
expanding at a record pace as they decimated their competition, small locally owned
bookshops. However, the overnight success of Amazon.com's Internet store a
potent combination of new marketing concepts, new technology, and new channel
strategy forced the chains to reassess the future of book retailing and as a
consequence make signicant changes to their historic strategy.

Liam Fahey

teaches that the most potent competitors

`` History
often emerge unexpectedly from surprising
sources and under unanticipated
circumstances.

''

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VOL. 31 NO. 1 2003, pp. 32-44, MCB UP Limited, ISSN 1087-8572

DOI

Even long-time competitors sometimes do things completely out of character with

their strategic and organizational modus operandi. For example, large diversied rms
may suddenly decide to shed many businesses to concentrate on a few products and
technologies. Another shift of marketplace power can occur unexpectedly when rivals
make acquisitions that provide them with new competitive potential.

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Scenarios are a proven means to identify and examine pathways into alternate futures
for which most managers, because of their focus on taking advantage of current
conditions, are currently unprepared. Scenarios of futures where the business
environment is distinctly different from current or anticipated conditions can help
managers project and analyze competitors' futures: what competitors might do, how
they might do it, and why. After a few years of experience, several leading companies
that employ scenarios to better understand both current competitors' potential moves
as well as the possible emergence of new rivals have learned several principles and
some ways to avoid various pitfalls. Their basic technique, and their suggestions for
avoiding missteps, can now be shared. In almost all cases, competitor scenarios
produced actionable insights about these rms' own strategy alternatives.
To demonstrate how this competitor scenario process works in practice, this article
has a three-part structure:
J First, to acquaint managers with the typical content of a competitor scenario.
J Second, to explain the different types of competitor scenarios that can be created
and the purposes associated with them.
J Third, to show what managers can learn from different competitor scenarios and
how they can use the understanding and information gained to improve strategy
development and execution.

Competitor scenarios: purposes, key elements, and principles

A competitor scenario starts with a logical narrative that considers what a competitor
might do over some specied time period, how its managers would do it, and why
they would choose to do so. As with all scenarios, we must remember that any
competitor scenario represents one projection of what a competitor might do. It is not
a prediction of what it will do.
The following 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).
Competitor scenarios, of course, often focus on other issues or topics including:
J How a competitor might guide and manage its R&D efforts.
J How a competitor might build and manage an integrated supply chain.
J How a competitor might develop and manage a networked enterprise around a
series of alliances with many types of external entities.
Competitor scenarios consist of the four key elements common to all scenarios:
an end-state, plot, logics, and driving forces. For a brief description of each of the
elements, see Exhibit 1. Note that there is no one right way to develop and interrelate
these four elements. As will become evident in the following discussion, constructing
competitor scenarios is an iterative process[1]. End-states are shaped by what is
learned in the process of articulating and detailing the plot and the driving forces. In
this article, we start the scenario process by asking different types of what-if questions

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Exhibit 1 Competitor scenarios: key elements

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The components of every competitor scenario are: an end-state, plot, logics, and driving
forces.
End-state

The end-state details the competitor's marketplace strategy scope,

posture, and goals at the end of the scenario period. A radical new
strategy would require the scenario developers to lay out what is
radical about the strategy: how the products are revolutionary, what
changes the products would imply for channels and customers, and
other ways in which the strategy would be dramatically different from
rivals' current approaches to competing and winning in the
marketplace.

Plot

The plot or story describes what the competitor must do to get to the
end-state. What would the competitor have to do to develop, design,
manufacture, market and sell the revolutionary products? Frequently,
such plots must also address change within the competitor for
example, the change in culture, systems, operating processes, assets,
and leadership that would be required to facilitate and lead the drive
toward a radical new marketplace strategy.

Driving forces

Driving forces constitute the forces that shape or drive the plot. Some
forces may be what is happening or likely to happen in and around the
marketplace: what customers may do, trends related to sales of
particular products, the emergence of new entrants, and governmental
policies and regulations. Other forces are specic to the competitor
such as changes in its goals or leaders, culture, competencies, etc.

Logic

Finally, the scenario logic constitutes the explanation or rationales for

the content, direction and intensity of changes postulated in the plot.
The logic addresses the why questions: Why does the competitor
want to pursue a revolutionary strategy? Why would customers
respond to the proposed products in one particular way or another?

about competitors' likely future marketplace strategies. From the answers we craft the
end-states that describe what the competitor strategy would look like.
Competitors serve as one useful, and in some respects, ideal focal point for scenarios
for a number of reasons. First, competitors are always at the heart of every signicant
analysis of the competitive or industry context[2]. Thus, competitor scenarios
provide one critical means of learning about the current and potential competitive
environment. Second, strategy, however designed and executed, must win against
current, emerging, and potential competitors in the marketplace. Customers and
channels almost always possess the option to switch to rivals. Thus, competitor
scenarios enable unique insights into the rivals that will shape the nature, direction,
and intensity of marketplace rivalry. Third, once the notion of relevant competitors
extends beyond large market share rivals, competitor scenarios generate learning
about both competitors and the competitive context that would otherwise be unlikely
to occur. Finally, because of the frequently intense emotions and feeling about rivals,
managers and others often bring heightened energy and commitment to constructing
and learning from competitor scenarios.
Principles

Some fundamental principles should always guide the construction and use of
competitor scenarios (Exhibit 2). Sometimes these principles may seem counterintuitive. For example, why should learning about competitors not be the prime goal of
competitor scenarios? The answer is that too often, competitor scenario developers
become enamored of the possibility of crafting the most perfect scenario about
the competitor one that is surprisingly comprehensive, self-evidently internally

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Exhibit 2 Competitor scenarios: guiding principles

Scenario purposes
1. The purpose of competitor scenarios is not to learn about competitors
2. Competitor scenarios should be used to learn about the competitive context beyond
competitors (both the competitive or industry context and the macro environment)
3. Competitor scenarios should serve as one input to identifying, challenging and
rening the organization's knowledge (including its beliefs, assumptions and
projections about future)
4. Competitor scenarios should also serve as one input to outwitting, outmaneuvering
and outperforming rivals
5. The ultimate purpose of competitor scenarios is to develop knowledge and insight
that aids decision makers (in identifying strategy alternatives, making decisions
faster, etc)
Scenario analysis
6. Scenario construction and scenario assessment require distinct frames of reference,
skills, and knowledge

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7. A competitor scenario should be fully constructed before it is assessed for its

competitive, strategy, and organization implications
8. However, strategy developers should not seek the perfect scenario before moving to
assessment
9. Scenario developers need to disengage themselves from their own rm
10. Competitor scenarios should be constructed for a range of rivals (and not just large
market share rivals)

consistent, elegantly articulated, and of course strikingly imaginative in everything it

addresses and says about the competitor. Ultimately this commitment to constructing
the perfect scenario limits the usefulness of the scenario project and consumes
resources that are better employed elsewhere. Experienced managers instead use
competitor scenarios as a source of learning about the broader competitive context
and of the implications for their rm'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.
Which competitors should be the focus of competitor scenarios? The guiding principle
should be, apply scenario thinking beyond your current large market share rivals. The
reason is, competitor scenarios that address functional substitute rivals, small
emerging rivals, and even invented rivals (that is, rivals that do not exist today but
might exist at some point in the future) generate insights into the emerging and
potential marketplace that often simply cannot be obtained no matter how acutely
managers develop scenarios around the leading market share rivals.
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.

leading companies have employed

`` Several
scenarios to better understand both current

competitors' potential moves as well as the

possible emergence of new rivals.

''

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Unconstrained what-if 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.
Unconstrained what-if questions are limited only by the experience, imagination and
creativity of those involved in thinking about the possible strategies of rivals. Four
categories of what-if questions lead to competitor scenarios with different foci.
Standard questions

The standard questions that are frequently used to initiate unconstrained scenarios
are noted in Exhibit 3. These questions have high relevance to most rms. Shaping
these questions leads to determination of the relevant end-state a statement of what
the competitor's marketplace strategy might be. Clearly, such statements can be
detailed considerably beyond the examples cited in Exhibit 3. However, they should
not exceed a half-page of carefully constructed narrative.

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A plot can then be detailed that leads to the end-state. This stage severely tests the
knowledge and foresight of the scenario developers. Indeed, plot development all too
often points up issues and questions that require access to external expertise. In this
way, articulation of plots becomes a source of extensive knowledge for those involved.
Sometimes plot elaboration forces managers and others to come face-to-face with
issues and questions that are as challenging and insightful as they as unexpected. As
one computer peripherals rm found, for example, in shaping the plot that explained
how a rival's marketplace strategy resulted in product and technology dominance, it
suddenly discovered how critical alliances in particular components would be to any
rm's future success in this product space.

Base question scenarios

A different but related way to generate unconstrained competitor scenarios stems from
asking a set of questions that are frequently raised in rms about rivals' strategies.
These, unfortunately, rarely receive any kind of formal analysis (see Exhibit 4). This

Exhibit 3 Unconstrained what-if competitor scenarios: some typical

questions
J What if the competitor commits to a diversication of its product line (new products for
existing and new customers) through a combination of current and new technologies?
J What if the competitor launches a series of new products (source internally and
externally)?
J What if the competitor launches a sequence of extensions to its current product lines
(with the specic aim to attract new customers into the market)
J What if the competitor suddenly divests a number of its product lines and/or pulls out of
a number of geographic regions
J What if the competitor moves rapidly to a customization-driven strategy?
J What if the competitor fundamentally changes its core value propositionhow it
competes to win customers in the marketplace?
J What if the competitor commits to gaining signicant market share (and to do so as
quickly as possible) without regard to the its long-term consequences (either for the rm
itself or for the marketplace)?

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Exhibit 4 Competitor scenarios: baseline questions

Scenario title

Basic question

Why create the scenario

Scenario benets

The ``dumb'' scenario

What might the competitor do

that would be least in its own
strategic interest?

Learn what could most

negatively affect one or more
rivals

May be possible to ``aid'' the

competitor to commit to these
actions

The ``ideal'' scenario

What would be the ideal

strategy for the competitor?

Learn what might be in the

short-term interest of the
competitor

May be possible to inhibit some

of these benets accruing to the
competitor

The ``best long-term'' scenario

What would be in the

competitor's long-term best
interest?

Learn what the competitor

would have to do to win in the
long-term

Some of these decisions and

actions may also be appropriate
for us

The ``most helpful'' scenario

Which strategy might the

competitor pursue that would
most ``help'' our rm?

Learn how and why a

competitor's actions might
benet our rm

May indicate new ways to view

actions of rivals; may indicate
actions we should take

The ``most hurtful'' scenario

What strategy might the

competitor pursue that would
most ``hurt'' our rm?

Learn how a competitor could

make our rm most vulnerable

May be possible to identify

preemptive actions

method often produces unique insights into competitors' strategies and their
implications.
These base-question scenarios exemplify how rich insights can many times be
gleaned without fully elaborating and detailing the relevant end-states, plots and
logics. This is so in part because end-states and associated plots and logics based
upon these what-if questions lead in turn to further questions (and insights) about
rivals that in all likelihood would remain unasked (and not obtained).
A case

Consider the case of one electronics rm that asked the ``dumb'' what-if question:
What strategic move might the competitor make that would be least in its own
strategic interest? After an extensive analysis of the change in the marketplace,
including emerging technologies and the recent emergence of new competitors
promoting new product forms, the analysis team concluded that the least
advantageous future strategy for this particular market share leading competitor
would be to stick tenaciously to its current strategy that is, continue to incrementally
improve its current products and to enhance its value added for customers in small
but consistent steps. The team concluded that this strategy would be ``dumb''
because the competitor would likely nd itself losing the competitive, market and
technology war that was about to breakout in this particular market space.
A number of signicant strategy implications emerged that required the electronics
rm's immediate attention:
J First, it needs to quickly analyze whether it would suffer a similar fate if it too did not
radically shift from its current product portfolio.
J Second, the rm had to develop one or more projections, in scenario form, of the
potential paths the technologies might take, and their potential interactions, over
the next ve years.
New competitors

Unconstrained competitor scenarios are ideal for tackling one of the most
fundamental issues that confronts the creators and advocates of any strategy:

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managers use competitor scenarios

`` Experienced
as a source of learning about the broader
competitive context and of the implications for
their rm's strategy and operations.

''

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How might new types of competitors come into the market? New types of competitors
include any organization that would provide a product or solution unlike the rm's
current product or solution but which customers would purchase instead of its
offering.
Although issues and questions pertaining to the emergence of potential new types of
competitors often arise in the course of strategy discussions inside most rms, few
rms seem to devote any serious analytical thinking to them. Most do not consider the
potential impact of such new entrants until either they actually have products in the
market or they announce their imminent arrival. Indeed some management teams
have remained aloof from any attention to such rivals even after the relevant staff teams
such as a competitor analysis unit or a team with strategic planning responsibility had
documented the (potential) emergence and threat of these rivals.

New competitors
Two avenues have proved especially useful in identifying new types of competitors
the search for functional substitute rivals and interactions across technologies.
Functional substitute rivals

Here the dominant unconstrained what-if question is quite straightforward: How might
functional substitute products or solutions come to be and what kind of rm might
create and bring them to the market?
Developing even tentative answers to these questions, however, is not nearly quite so
straightforward. One reason why this is so quickly becomes evident when a team of
managers and others begin to develop this type of competitor scenario. It requires
considerable knowledge and expertise outside the rm's historic comfort zones. Yet
even preliminary efforts to develop this scenario can generate substantial returns
in terms of new knowledge about current and emerging technologies, changing
customer needs, potential new marketplace dynamics, and new competencies in
many functional areas including R&D, manufacturing, marketing, and sales.
The basic what-if question is: What if a functional substitute emerged that had the
following specic product features? Consider the case of a medical equipment
manufacturer manager who asked: What if a pharmaceutical rm were to develop a
drug that would relieve or eliminate the medical problem for which one of our product
lines is used in surgery? The analysis team then had to call upon many external
sources of knowledge and expertise to identify which pharmaceutical rms were
conducting relevant research or already had potential products in the early stages of
development or clinical trials. Then they had to determine what the development and
product lifecycle of such products might be. They used this data to generate an endstate that specied what the product might be, the strategy required to take it to
market, the plot that described how the rm could develop, test, and introduce the

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product, and a set of logics explaining why the rm would go through with the
research, commit the resources required for an expensive product launch, and
eventually win in the market against a number of existing products. In sum, a
pharmaceutical product might be chosen by hospitals and doctors instead of a
surgical procedure as a preferable form of treatment for the particular medical
condition for which surgeons now use one of the rm's product lines.
Consideration of this competitor scenario led to new understanding into:
J How and why pharmaceutical products evolve.
J How they could compete against the rm's traditional medical instruments.
J The forces shaping treatment decisions within hospitals.
J How and why the rm's long established and highly successful products could be
vulnerable to products that many managers simply did not see as being part of ``the
industry''.

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Technology linkages

As evident in the discussion of functional substitutes, technology change leads to the

emergence of new products and solutions. The critical question guiding the efforts of
competitor scenario developers thus becomes: How might technology developments
interact to give rise to new customer offerings? Ultimately, this question becomes:
What if these technologies were to develop in particular ways?
When technology is dened broadly to include all spheres of R&D, technology linkages
as a source of competitor scenarios prove to be critical for rms in almost every
industry. But even in product areas not thought to be technologically advanced,
linkages across a variety of technologies, some of which may seem at rst glance not
terribly related, can sometimes give rise to new competitors. Some nancial services
companies now nd themselves competing directly for the same customers with far
smaller providers who have used Internet and communications technologies along
with database and related technologies to deliver superior value along a number of
dimensions.
Invented competitors

A distinct class of competitor scenarios revolves around invented competitors[3], that

is, competitors that do not exist today but which could exist at some point in the
future[4]. Invented competitors possess the great merit of shifting the frame of
reference in projecting and assessing rivals' strategies from current or emerging rivals
to one or more rivals that, by denition, are strikingly dissimilar to any rival managers
have had to contemplate to date. As a consequence, invented competitors enable
managers and others to challenge their underlying assumptions indeed their whole
world-view of competition in a unique way. Unconstrained what-if questions are
personied by the notion of invented competitors: only the imagination and creativity of
those involved limits the range and character of the competitors that might be invented.
Let us take the case of a nancial services rm that used an invented competitor
scenario to establish a radically distinct perspective on its future marketplace from
which to assess its current strategy and its key underlying assumptions. The guiding
what-if question was, What if a competitor emerged that possessed a marketplace
strategy characterized by:
J Interactions with external entities principally channels and customers that were
exclusively electronic.

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J A full commitment to attracting new customers into the market.

J A driving aim to ``dominate this particular market segment''.
In detailing this end-state, the team carefully built a rich narrative around the following:
J How the rm would reach customers and channels electronically.
J How many types of customers could be reached.
J The electronic methods employed to reach customers.
J How the methods would be used to develop two-way ows of information.
J How the rm could use data and information gathered from customers in almost
real time to amend the ``offer'' to individual customers.
J What the elements of the product offer or solution would be to customers (that is,
what the nancial product would be that customer would actually be purchasing).

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For the next step, the team had to detail what plot or story would explain how the
invented competitor reached this end-state over the next four years. Each year's plot
affected what would or could take place in subsequent years. A signicant element of
the plot described how the invented competitor would actually come to be, that is,
what would have to happen for it to come into existence and then grow and develop
as a company. The chronology of the plot revolved around the following items:
J A small group of individuals with extensive experience in the relevant product
domain exiting an existing nancial services rm.
J Select individuals from other nancial services rms then join them.
J This set of individuals then initially develops a loose alignment with a small boutique
with considerable expertise in a variety of aspects of doing e-business.
J The rm develops a technology platform to interact with customers.
J At the same time, it begins to develop the rst outlines of what the ``offer'' would be
to customers.
J It then works with one large institutional customer as a ``test-bed'' for the offer as a
location to develop a serious trial of the platform technology.
Because of the radical nature of the proposed strategy and especially because of the
degree of change involved for customers for example, all facets of how they would
interact with a nancial services provider it was critical to set out and assess the
logics underlying the plot. Central issues and questions were identied for each major
step in the plot and for the plot as a whole. Key questions included:
J Why would different segments of the invented competitor's customers move to an
electronic mode of doing business?
J What advantages would its customers gain from buying via e-business?
J How would developments in e-technologies facilitate what the invented competitor
wanted to achieve?
J In what ways, might the invented competitor be able to leverage success with the
proposed customer solutions into other customer offerings?

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scenarios work best when they

`` Competitor
produce knowledge and insight that broadly

informs and prepares decision makers to act

rapidly as competitive conditions change.

''

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Constrained what-if competitor scenarios

Constrained competitor scenarios start from a common point of departure: What
would the competitor do if a specic set of marketplace or macro environmental endstates or conditions were to arise? These scenarios start with some specication of
what the world would look like at some point in the future and then ask, ``What would
the competitor do under these conditions?''. Thus, these scenarios explore the
initiatives a competitor might take if it were to nd itself in a particular world endstate (such as emerging new technologies and new product regulations) or how it
might react to the strategic moves of rivals. They are therefore constrained what-if
questions.
Constrained competitor scenarios are especially appropriate when your rm wants to
identify and assess:
J What would a particular competitor do under specied marketplace conditions?

Constrained what-if competitor scenarios

J Why a competitor would adopt one strategy rather than another?
J Which marketplace changes might lead one or more competitors to adopt a
particular strategy?
The competitive context that serves as the ``constrained what-if'' can be established
in at least two distinct ways. First, industry or competitive scenarios, if already
developed for other purposes, provide one ideal context.
Second, carefully articulated what-ifs that describe a brief set of future competitive
conditions can also serve as the backdrop for constrained competitor scenarios. A
number of such constrained what-ifs are briey described in Exhibit 4. Although at
rst glance they may seem relatively simple and obvious, more often than not,
development of such short what-if lists typically requires extensive reection on what
could happen in the next few years and which what-if questions would give rise to the
most productive competitor scenarios. It may require considerable dialogue around
what could happen, before scenario developers converge on one or two what-ifs that
raise interesting and perplexing questions about how one or more categories of rivals
might respond to the stipulated competitive conditions. For example, a projected
competitive context dominated by e-business may not lead to difcult strategy
choices for a particular competitor but the potential emergence of a substitute product
might lead to strategy choices ranging from divestment from the industry to acquiring
or aligning with a provider of the substitute product.
When existing industry or competitive scenarios constitute the rst critical step in
shaping and using constrained competitor scenarios, the end-states serve as the
principle focus of the competitive conditions. Although industry or competitive

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scenarios can be created in multiple ways, constrained industry or competitive endstates are typically crafted around a small set of key uncertainties. Exhibit 5 illustrates
one such set of constrained competitive end-states constructed by a research and
development intensive company that was confronting two key uncertainties:
(1) A number of emerging ``technologies'' at varying stages of development that may
or may not advance further, but if they did, they could dramatically affect research
breakthroughs and thus new products; and
(2) Considerable regulatory ux that could directly effect the ability of all current rivals
to market and sell new and existing products or major product line extensions in
various channels and to different end-customer segments.
The four scenario cells shown in Exhibit 5 depict four quite different worlds. A strategy
designed to win in one world, for example, extended status quo, could well fail
miserably in the unbridled battle world.
The steps in constructing competitor scenarios are then relatively straightforward:

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J Identify the strategy issues for the competitor.

J Develop the scenario plot outline.
J Detail the scenario plot.
J Articulate the logics.
J Determine the business issues to be addressed.
When a rm identies key competitor strategy issues associated with each end state
new marketplace opportunities, threats to traditional ways of competing or to the
rm's planned strategies it establishes a more rened understanding of the
competitive context within each end-state. As a result its managers can better
understand the strategy challenges that would confront the competitor in each endstate. For example, a preview of the intensive nature of the vehement rivalry unleashed

Exhibit 5 Four competitive end-state worlds

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Modest regulatory change

Extensive regulatory change

Low level of
technology change

Status quo
In this end-state, rivals continue
to slowly adapt their customer
solutions in the historic
customer segments. Rivalry is
moving toward an emphasis
upon service elements. Rivals
are still prohibited from entering
signicant market segments

Customer skirmish
In this end-state, rivals compete
with slowly changing products.
But they now compete ercely
in the pursuit of new customer
segments. Rivalry is now
intense as the number of rivals
has increased in all customer
segments

High level of
technology change

Product fragmentation
In this end-state, product
modications unfold at a rapid
rate. Some new products
challenge the dominance of old
solutions in some customer
segments. Customers can
choose from clearly
differentiated solutions. Rivalry
has shifted to product or
solution superiority

Unbridled battle
In this end-state, both product
change and market change
persist. Continuous product
change keeps shifting the range
of available customer solutions.
And, rivals can aggressively
pursue most customer
segments

VOL. 31 NO. 1 2003

Exhibit 6 Examples of constrained what-if competitive conditions

J What if our competitive context in four years time is dominated by e-business
connections between all players in the industry, resulting in solution segmentation,
consolidation in traditional channels, and competitor fragmentation?
J What if over the next three years, technology propels the emergence of new products,
including functional substitutes that are signicantly more sophisticated than current
products?
J What if rivalry intensies but it is solely among the current dominant players in this
specic product space and all rms commit extensive new resources to the battle?
J What if the economy continues in stagnation and technology increases in importance
as the platform for both new products and new ways of competing in the marketplace?

in the unbridled battle end-state claries the what-if set of conditions in which the
competitor will have to identify and choose its preferred strategy:

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J A blizzard of new products.

J The relentless search for new opportunities to enter into any channel.
J Offering an entirely new range of enticements to customers and channels.
In order to develop a scenario plot (and sometimes perhaps more than one) for each
end-state represented in Exhibit 5, the core competitor scenario question must now
come to the fore: What would the competitor do (that is, what strategy would it
pursue) were it confronted with the competitive context in each end-state? It is
important to note that the strategy options may vary dramatically from one end-state
to another. For example, the competitor staring into the unbridled battle world might
consider:
J Divesting entirely out of this product range (due to the intensity of the rivalry and the
absence of the necessary resources to stay the course).
J Concentrate on one product segment (perhaps as a way to avoid the head-on
clashes guaranteed with other rms if it develops a full product portfolio).
J Develop a full line of products (perhaps by developing alliances with a number of
other rms).
J Move to become more of a research and development rm and less of a
manufacturer and distributor (perhaps by leveraging its current and potentially
accessible technology skills and capabilities).
Execution

Once a scenario plot has been outlined, managers can then detail what it would take
to execute the projected strategy. In other words, choosing a strategy option does
not identify or explain how it could be executed. Indeed, understanding how the
competitor might execute a particular strategy often represents the core learning that
emanates from these constrained competitor scenarios. Scenario developers gain
insight not only into how the strategy might win in the marketplace but also into what
the competitor would have to do both in the marketplace and within the rm in order to
realize the opportunity at the heart of the strategy.
The logics in these competitor scenarios address one fundamental question: Why
would the competitor pursue this strategy? What forces within and external to the
competitor would support or drive the competitor to adopt this strategy becomes the

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STRATEGY & LEADERSHIP

PAGE 43

central question. The relevant external forces and how they affect a projected strategy
may be specic to individual end-states (see Exhibit 5). In the unbridled competitive
end-state, specic regulatory developments (not evident at all in the status quo world)
might lead the competitor to seriously consider reducing its presence in, or even
withdrawing entirely from the product-market sector.
As a last step, it is essential to ask: What business issues emerge from each scenario
that pose opportunities and threats that the organization must explore? Again, the
issues can vary signicantly across the end-states.
The reward: insight and alternatives

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Competitor scenarios provide a methodology to enable managers and others to

construct and assess a variety of potential strategies that rivals might adopt. They
require both imagination and creativity on one hand, and considerable knowledge and
understanding of what strategies might be available to rivals, and how and why they
might pursue them. In almost all cases, competitor scenarios lead to rich insight into
the rm's own strategy alternatives and sometimes to alternatives that were
previously not on the rm's radar screen.

Notes
1. For a more elaborate and detailed discussion of the generic analysis process involved in both
constructing and assessing competitor scenarios, see Liam Fahey, ``Competitor scenarios:
projecting a rival's marketplace strategy'', in Liam Fahey and Robert M. Randall (1998),
Learning from the Future: Competitive Foresight Scenarios (John Wiley & Sons), pp. 223-45.
2. Readers interested in constructing industry or competitive scenarios, see Liam Fahey,
``Industry scenarios'', in Liam Fahey and Robert M. Randall (1998), Learning from the Future:
Competitive Foresight Scenarios (John Wiley & Sons), pp. 189-222.
3. For a discussion of the invented competitors, see Liam Fahey, ``Invented competitors: a new
competitor analysis methodology'', Strategy and Leadership, Vol. 30 No. 6, November/
December.
4. Invented competitors, of course, can be used to identify potential new forms of competitors.

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This article has been cited by:

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1. W. Timothy FewPenn State University, Monaca, Pennsylvania, USA Molly FewCore Strategies LLC, Canonsburg,
Pennsylvania, USA. 2013. Using the repertory grid technique to surface strategic planning assumptions. Competitiveness Review
23:2, 114-130. [Abstract] [Full Text] [PDF]
2. George E. Cressman Incorporating Competitive Strategy in Pricing Strategy 81-101. [Abstract] [Full Text] [PDF] [PDF]
3. Franz Liebl, Jan Oliver Schwarz. 2010. Normality of the future: Trend diagnosis for strategic foresight. Futures 42:4, 313-327.
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