1. Competitor orientation
Assessing the effects of a
competitor orientation:
Prediction case
Prepared by J. Scott Armstrong (details on him at jscottarmstrong.com).
Please inform Scott about errors and also make suggestions (armstrong@wharton.upenn.edu)
Scott has taken these slides from adprin.com, a site that he founded. That site contains interactive versions of these
slides, along with linked references, videos, and webcasts, all in PPT and PPTX format that you can download.

2. What if we ran the following study?
1. Select 20 firms in different industries
2. Assess the extent to which their goals are competitor-oriented
(market share)
3. Examine their profits over the next three decades
Assuming that the 20 firms differ greatly with respect to the
competitor-orientation, what would you predict?
Profits in firms with market share as a primary goal are:
_____ much less
_____ less
_____ the same
_____ more
_____ much more
than in firms with profit-oriented goals.
See the next slides for the actual outcomes.
2

3. Competitiveness Scale
Competitiveness Pricing Goals*
1=low Principal Goal Collateral Goal Number of Firms
11=high
1 High Profit 3
2 Profit 1
3 Stability 1
4 High Profit Maintain MS 2
5 High Profit Increase MS 0
6 Profit Maintain MS 4
7 Profit Increase MS 0
8 Maintain MS Profit 2
9 Increase MS Profit 1
10 Maintain MS 4
11 Increase MS 2
* High profit means a return of investment of at least 15% after taxes and MS is
3
Market Share

4. Competitiveness and ROI by Firm
Competitiveness Return on Investment (After Taxes)
1=low
Firm 1947-55 1956-64 1965-73 1974-82
11=high
DuPont 1 25.9 15.5 8.0 6.9
General Electric 1 21.4 9.4 6.7 7.9
Union Carbide 1 19.2 9.1 6,3 6.6
Alcoa 2 13.8 4.2 4.2 5.5
Kennecott 3 16.0 8.9 8.2 3.2
General Motors 4 26.0 13.2 12.0 6.3
Johns Manville 4 14.9 4.6 7.6 4.9
Standard Oil of N.J. (Exxon) 6 16.0 7.8 7.6 8.0
General Foods 6 12.2 11.4 8.9 7.4
US Steel (USX) 6 10.3 6.0 3.5 3.4
International Harvester 6 8.9 4.6 4.0 -3.4
Kroger 8 12.1 6.1 4.9 4.6
Standard Oil of Indiana 8 10.4 5.4 6.4 8.3
Sears 9 5.4 8.5 6.4 4.2
Goodyear 10 13.3 7.0 5.7 4.0
Gulf 10 12.6 8.9 7.12 6.3
American Can 10 11.6 5.2 4.8 3.8
Swift 10 6.9 2.4 3.3 n.a.
A& P 11 13.0 7.8 4.2 -2.9
National Steel 11 12.1 6.0 5.1 1.1
4

5. Competitor-Oriented Firms Less Likely to Survive
(1955 to 1992)
Profit Competitor
Oriented Oriented
DuPont
General Electric Goodyear
Survived
Union Carbide A&P
Alcoa
Gulf
American Can
Did Not Survive
Swift
National Steel
5

6. Effects of the Experience Curve Descriptions
Exposure to Percent Selecting Sample Size
Experience Curve Less Profitable
Decision
No 44.5 137
Yes 58.8 97
To learn more, see Adprin.com
6

7. Based on this exercise, write a small application step for yourself,
and set a deadline, preferably within one week. If you are
working with someone else, share your application plan and the
results of your application.
• For example, examine the competitor-oriented strategies of
your firm and evaluate whether the focus on the competitor is
appropriate. A political campaign would justify being
competitor-oriented.
Adapted from AdPrin.com