Avoiding Myopia: Seeing The Competition

Abstract

Levitt(1975) argues that some firms lose market position because they define their business too narrowly. Levitt calls this narrow vision “Market Myopia.” More recently, Day and Nedungadi(1994) suggest that managers selectively focus only on parts of market phenomena, and thus focus both on the search for and interpretation of market information.

While these observations may explain the observed behavior of managers, they leave open the question of why managers behave this way. This paper argues an underlying causal factor of both narrow business definition and selective competitor views are restricted competitor boundaries. This paper suggests scoping competitor boundaries through four stages:

• • Industry to industry competition for the attention, loyalty and spending of consumers.

• • Within the industry, between industry levels, competition for a share of the revenue flowing into the industry.

• • Strategic group to strategic group competition at a specific level within an industry.

• • Within strategic groups, firm to firm competition among participants of a specific group.

This paper proposes that myopic firms see competition only as the last level, i. e., as occurring only at the within strategic groups, or firm to firm, level. A more holistic view sees competition at all levels and focuses at all four levels.

This more holistic view significantly impacts managerial thinking. At its broadest level, management must focus on winning through their industry. This implies that firms must focus on industry success in providing time, place, and functional utility for the end consumer marketplace.

The work developed in this paper proposes a framework for developing a four stage competitive view. Suggestions for managerial action to implement this view are offered.