Competitive spaces

Published on June 29, 2023   11 min
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My name is Andrew Ward. I'm a professor at Lehigh University and co-author of "Strategic Management: from Theory to Practice". This talk is about firms competing in different competitive spaces.
In strategy, when we look at how firms compete with one another, the dominant models, such as Michael Porter's five forces model, looks at the level of the industry. These models are great at understanding the dynamics of an industry, but are less useful at helping us understand the dynamics at the company level. Why companies choose to enter different arenas of competition and competing across multiple domains of competition. Especially in markets such as technology, many firms compete in multiple nascent competitive arenas or competitive spaces, which are not yet established enough to be considered true industries. So in order to better understand competitive advantage at the firm level, it is often better to look at why and how firms enter different competitive spaces in their pursuit of competitive advantage.
As we are doing throughout this series, we will illustrate this concept with the example of Alphabet, the parent company of Google. If we just think about the primary industry of Alphabet, there are in the advertising industry with Google, their primary product, being a search engine that generates its revenue through advertising. However, that really doesn't give us anything like the complete picture of the competitive spaces that Alphabet is in. Let's quickly go through some of these spaces and who they compete with in those spaces.
As a search engine, Alphabet competes with larger competitors who compete in many domains, such as Microsoft, as well as smaller specialized companies such as DuckDuckGo. We see this pattern of having a mix of large and small competitors in many of these spaces. For advertising, Alphabet competes in both the display and placement facets of advertising. It competes with consumer-facing companies like Amazon, Meta and Apple, but also non-consumer facing behind the scenes companies, like The Trade Desk. To some extent, Alphabet could also be said to be competing with other non-digital forms of advertising, such as television and print. In that, the ultimate purchase of advertising is deciding between different forms of advertising when making their purchase decision. While there are numerous, smaller, specialized cloud service providers, Alphabet primarily competes with Amazon and Microsoft as the big three cloud providers as well as others such as Oracle and IBM. For music streaming, while Alphabet competes again with Amazon and Apple, there are also significant specialist players in this competitive space, such as Spotify and Tidal amongst others. Similarly, in user-generated video streaming, Alphabet's YouTube competes with social media companies, such as Meta with Facebook and Instagram, and Tik Tok. Turning to physical products, Alphabet competes in the competitive space of tablet devices with Apple, Microsoft, Amazon, and Samsung. And in cell phones with companies like Apple, LG, Motorola, and Samsung. In digital payments, not only does Alphabet compete, once again, head to head with Apple, but also with significant specialized companies such as PayPal and it's Venmo product, and Zelle. In internet browsers, again, we see a mix of multiple competitors, such as Microsoft and Apple, as well as specialists such as Firefox. Finally, in voice artificial intelligence, Alphabet competes primarily with Apple and Amazon.