Tuesday, 6 December 2016

Preventing competitors from imitating your products

Hello readers, today I will be writing about ways you can prevent competitors from imitating your products. “Imitation is the most direct form of competition; thus, for a competitive advantage to be sustained over time, barriers to imitation must exist”. (Robert M. Grant). Isolating mechanisms is used to describe the barriers that limit the threats of imitation. 

Obscuring superior performance:
“A simple barrier to imitation is to obscure the firm’s superior profitability“. (Robert M. Grant). That is you should hide your firm’s profitability from the public. However, public limited companies are not able to do that

Deterrence and Preemption:
“A firm may avoid competition by undermining the incentives for imitation”. (Robert M. Grant). Making variety of products could leave new entrants and smaller competitors with few opportunities. Market opportunities for rivals can also be preempted if you invest largely in production capacity that is greater than the growth of the market demand.

Diagnosing Competitive advantage:
“If a firm is to imitate the competitive advantage of another, it must understand the basis of its rival’s success”. (Robert M. Grant). Thus, the way you achieve your competitive advantage should not be known to the public.

Acquiring Resources and Capabilities
"An imitator can mount a competitive challenge only by assembling resources and capabilities necessary for imitation”. (Robert M. Grant). The period it takes competitors to acquire and mobilize resources and capabilities is the period of time your competitive advantage can be sustained for. Thus, complex firm specific resources should be used

Thank you for reading this article. Keep checking out my blog regularly. Cheers!


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