Page 150 - Accelerating out of the Great Recession

GO ON THE OFFENSIVE

will have to expect new rivals to come from many places—
including not only other countries but also other industries.
Companies based in the rapidly developing economies—
notably China and India—were already presenting traditional
multinational companies with serious competition prior to the
downturn. This is likely to increase in the coming years. The
rapidly developing economies have experienced milder down-
turns than those in the developed world—and are emerging
stronger than ever. This will benefit their companies.
Companies in the technology sector will also face competi-
tion from unexpected quarters as hardware and software manu-
facturers venture into each other’s traditional territories. Cisco
has been aggressively expanding beyond its core market of net-
work components, entering more than 30 “market adjacencies”
such as virtual health care, consumer electronics, and telecon-
ferencing. Cisco sees the downturn as a clear opportunity to go
on the offensive with a diversification strategy.
In such an environment, companies cannot rely solely on
defensive strategies—it is essential that they take the fight to
their competitors. To do so, some companies leverage their
existing strengths, while others reinvent themselves with game-
changing strategies, as we’ll see.

The Fight in Japan in the 1990s
During the Lost Decade, slow growth and intermittent defla-
tion exerted downward pressure on revenues for many indus-
tries in Japan. Volumes in the Japanese beer market, for exam-
ple, were virtually stagnant between 1990 and 2003. This also
was a period of significant churn within the industry. By the
end of the 1990s, Asahi had displaced the market leader (which
once held a 50 percent share).

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