1. Hypercompetitionischaracterizedbyintense competitiveactionandrapidinnovation,towhichthe
othercompetitorsmustrespondquickly.Justsotheycan create theirowncompetitiveadvantages
and eliminatethe benefitsof theirrivals.
Competitionexistsinfourarenas
Cost andquality
Timing
Strongholds
Deeppockets:- refertothe possessionof abundantfinancialresources.
Competitionalsomoves fromone arenatoother.Whencompetitionreachesadeadlockinone
arena,theytry to shiftinotherarena.
Two types of uses for the four arenas
The four arenasare analysedonthe basisof competitionand market condition. The analysishelps
us to knowwhicharenaisthe currentor will be the future battlegroundamongthe competitors.
1st
Approach:- FOURARENA ANALYSIS:-
It looksat the evolutionof competition overtime acrossthe fourarenasto identifystrategic
interactionsamongcompetitors. Ananalysisonsoftdrinkindustryshowshow competitionhas
intensifiedandhowthe arenasare interrelated.
2nd
Approach: - FOUR LENS ANALYSIS:-
It looksat the single competitivemove andanalysesitsimpactoneachof the four arenasof
competition.
In realitythe arenasare not so quite distinctandthe progressionisnotsoquite clear.The
boundariesbetweentwoarenasmayblurbecause some actionsspaninmore than one arenas.
Several actionsmayplayoutin more than one arenasat the same time for example
1. buildingqualityispossible onlyif ittargetsthree arenasi.e
Costing
Timing
Strongholds
Qualitybuildingisnotpossibleif anyone of these arenasare ignored.
2. Advertisingtoospansacrossdifferentarenasatthe same time.
The company maybe keepingitsprice low toenterintothe market.
It may b creatingentrybarriersforothercompaniesbydifferentiatingitsproducts.
The advertisingcampaignmaybusedto create an image of higherperceivedqualityamong
the customers.
2. Real competitionishowevermuchmore complex andoccursinhypercompetitive environment.
It resists beingwrappedinneatpackages.
The four arenascan also be calledasladdersinwhichthe companieshave tokeepclimbingif
theywantto sustaininthe market.Whencompaniesmove fromone arenasto otherthe
competitorsreactto these movesandif they ignore them, theywill fall behindinthe ladder.
The four escalationladders
Cost andquality
Timing
Strongholds
Deeppockets
Are waysto understandmarketprocesses.
Four arena analysis of the soft drink industry: -
Thisis a studyof progressionof a single industrybylookingatitsprogressthrougheachof its
fourarenas overa verylongperiodof time.
