Competitive strategy and market repositioning in the computer industry

Executive Review II

What the competition did and our response

In the early going, we were a successful organization. We started second in market share to Continental, but by the fifth quarter we were the market share leaders. To us, not only did we start fast but during that start we made the right moves and it showed. We had the highest market share, sold the most units and we did it with the lowest advertising expenses. At that point, however, we suspected that our main competition Continental was up to something big. They had made substantial investments and as it turned out those investments represented a strategic shift in the industry. This was the first big customer move that truly had an impact on our operations, and ultimately it cost us our market share in the Traveler segment. They had invested heavily in sales it looked like, and took over that market.

Our initial response was weak. It seems, upon reflection, that we underestimated the significance of our competitor's actions. We lost market share, and worse yet we had built a lot of extra capacity that we were unable to utilize. Other competitors had improved as well. Tech 1st made some big moves at this point as well. I think as a company we made some good moves -- we were well positioned when we invested in capacity but we simply underestimated our competition. As a result, we fell to 4th in the market and had to reinvent ourselves.

What the competition did and our response