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Competition

In: Hidden Champions of the Twenty-First Century

Author

Listed:
  • Hermann Simon

    (Simon - Kucher & Partners)

Abstract

How do the hidden champions compete? Which competitive strategies do they apply? What competitive advantages do they have? We will address these and similar questions in this chapter. The hidden champions operate predominantly in oligopolistic markets, and even on a global scale, they face only a limited number of competitors. However, competition is fierce. Their strategy is oriented to superior performance, not low prices. Their long-standing competitive advantage of product quality continues to form the core of their market leadership. They also offer excellent service. More recently, they have developed superior positions in softer parameters such as advice and systems integration. As these parameters are based on internal competencies, they are difficult to imitate and therefore sustainable. Today, barriers to entry for a new competitor are likely to be higher than they were ten years ago. In spite of these advantages, the hidden champions must keep tight control of costs as the balance between superior performance and price premium is a delicate one. When it comes to new markets with previously unknown segments (e.g., extremely low-priced products), unconventional strategies directed towards radically simplified products and radically lower costs must be adopted. In spite of globalization, competitors in geographical proximity continue to be crucial sparring partners for remaining competitively fit. However, excessive orientation towards competition should be avoided.

Suggested Citation

  • Hermann Simon, 2009. "Competition," Springer Books, in: Hidden Champions of the Twenty-First Century, chapter 7, pages 191-222, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-98147-5_7
    DOI: 10.1007/978-0-387-98147-5_7
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