Winning Strategies for the 21st Century
Edited by Saïd Yami, Sandro Castaldo and Giovanni Battista Dagnino
Chapter 12: Successful Strategy for Challengers: Competition or Coopetition with Dominant Firms?
12. Successful strategy for challengers: competition or coopetition with dominant firms? Frédéric Le Roy and Patrice Guillotreau INTRODUCTION When Sam Walton opened his first Wal-Mart store in 1962, his goal was to sell products at the lowest possible prices. We [Wal-Mart] decided that instead of avoiding our competitors, or waiting for them to come to us, we would meet them head-on . . . Since that time, Wal-Mart Stores, Inc., (‘Wal-Mart’) has become the world’s largest retailer with $93,627,000,000 in net sales in 1996. (Roy Beth Kelley) As shown by this statement from a Wal-Mart executive, some companies do not hesitate to challenge overtly the leading position of one of their competitors. In this aggressive setting, it is usually hard to retain a longterm leadership position. For instance, Weiss and Pascoe (1983) showed that only 30 per cent of the companies that were market leaders in the United States in 1950 were still in that position 25 years later (Weiss and Pascoe, 1983, quoted in Ferrier et al., 1999). Such companies’ rise and fall could probably be explained within the paradigm of the so-called new industrial economics. A number of related issues are also interestingly addressed within the framework of management science (Pearce, 2006; Hill and Rothaermel, 2003; Smith and Basu, 2002; Smith et al., 2001; Ferrier et al., 1999). How can a company challenge the market leader? How can a leading company maintain or lose its leadership? Adams and Brock (1998) showed that the capacity of leading...
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