Competitors create a basis for differentiation Enterprises with strong positions and market leadership are by the nature of things frightening as potential competitors for a newly started enterprise, but may also constitute a positive factor because the dominant position - the standard - does at the same time create a basis for diflFerentiation. The presence of a dominant supplier increases chances of developing a competitive edge for new players who know how to exploit the diflFerentiation chance: Cost exploitation Indirectly the market leader pays for the communication costs of the new enterprise: Seven Up was launched as the un-Cola. The Volkswagen as the ugliest car in the world. Avis as the diligent runner-up - the underdog - David versus Goliath. These classic examples of positioning actually have to do with exploiting the perceived position of the market leader, which is tantamount to capitalising on their massive communication eflForts over time. What would slow-food be without the massive fast-food movement?

Serving up strong sales arguments A new product with a favourable cost-benefit ratio compared to the market leader can use comparisons with this company as a forceful argument vis-a-vis customers: market leaders who try to meet customer requirements by means of one single standardised solution will always be vulnerable to new initiatives that are developed to be dedicated to certain segments, or which are better or cheaper on certain parameters attractive to parts of the market. It is hardly coincidental that discount chains locate their stores right next to the leading supermarkets and shopping centres. Channel differentiation Choosing alternative distribution channels to those of the market leader or the logic of an industry can, in certain situations, constitute the seed of effective differentiation and be an opportunity-creating factor for new entrepreneurship: mail order sale as an alternative to sales visits, sales through supermarkets rather than through specialised shops, e-commerce, net auctions, selling stockings at underground stations, theatre tickets at the post office and pizzas delivered door-to-door. Markets with high entry barriers and strong norm-setting competitors look frightening from a distance. On the other hand, this particular market type entails bigger chances of showing initiative if only the gate to innovative differentiation can be forced ajar. Competitors stimulate the overall market making it more attractive to the entrepreneur Invariably enterprises with strong image positions will be seen as guarantors of the solidity, development potential, robustness etc. of a market from the moment they seriously commit themselves. They create the market while, at the same time, throwing it open to others. Any reluctance on the part of customers when it comes to making purchases tends to dissolve when the lighthouse effect becomes apparent. The competitors of the lighthouses decide to go into the market feeling confident of the existence of an opportunity. New ventures that were already under way see the wave rolling in and position themselves to conquer sizable chunks of the new market.

CRM- Customer Relationship Management In the course of a very few years, the CRM systems industry has grown from virtually nothing to a considerable size with companies like Siebel as the leaders. It is estimated that in 2002 the CRM industry turned over more than $25 billion in software and customer solutions. The background for this almost explosive development of the CRM market was a mixture of new technical possibilities, far more finely meshed registration of customer data, intensified customer pressure, ever better and more integrated ERP systems, and the new opportunities of the Internet. But certainly also very much the fact that the important international providers of platforms and administrative software with IBM, SAP and Oracle in the lead, gambled on CRM applications for big companies. It created a primary demand for CRM software that these three players in particular introduced their solutions and as such sent a strong signal to the market. Tom Siebel, himself a breakaway from Oracle, saw the potential of the CRM market from the beginning, and initially it was Siebel who was to reap the benefits of his competitors- stimulation of the market. Competitors reduce the risk to customers If your enterprise is the only supplier of certain products, in theory, you do enjoy the benefits accruing to a sole supplier by way of high profits. Conversely, customers have no opportunity to replace one supplier with another. If a product is a component in an overall, integrated solution in the customer's product or is an element of an infrastructure, the situation may easily become problematic and will often lead to a rejection of the innovation in question. So the enthusiasm of an entrepreneur for being on his own can easily turn into the opposite. Competitors reinforce successful industry factors for entrepreneurs Many examples have been seen of how an entrepreneurs chances of success may improve in the wake of investments made by competitors - especially in new markets. IBM's global roll out of Lotus Notes on the Domino server led to the establishment of an entirely new industry consisting of application companies and consulting firms. IBM was in head-on competition with the many start-ups whose basis for existence had been created by IBM and the 120 million Notes-users.

In the years to come, the astronomical investments made by the mobile network operators in broadband licenses are expected to be the feeder for many new competitors who wish to provide services over the new networks. The telecommunication companies will be faced with the dilemma that either they will have to kick-start the market on their own or encourage competition by giving competitors access to the broadband net.

Competitors motivate entrepreneurs Undisputedly skilful enterprises, more than anything else, act as motivators and learning tools for entrepreneurs. McDonald's fantastic and obvious competence is a striking example: industrialised working processes, surefooted expectations management, market focus, logistics, quality management, communication and reproducibility. There can be no doubt about the enormous importance of McDonald's for the fast food market - including, of course, its importance to thousands of entrepreneurs. Some of them with the ambition of imitating McDonald's feat success, others with more local objectives. These entrepreneurs compete keenly with McDonald's locally and regionally; they found the path to the market inspired by McDonald's indubitable business success. A market-leading competitor holds up a cost umbrella For market leaders to demand higher prices than challengers and followers is quite normal. The high price charged by market leaders may possibly reflect a correspondingly higher cost level that constitutes a cost umbrella. Markets with high prices always attract new ventures that see an opportunity to make a sure profit. It may make sense for entrepreneurs to find new markets in which the market leader not only skims ofi^ the cream in terms of price, but also operates at a correspondingly higher cost level which is, at the same time, a requisite part of what they have to offer.

Question 1:

Please read the whole text and briefly explain its concept in few lines in your language, tell what is it about, and write the summarization of each title separately?