Competitive blind spots: Implications of inter-firm misperceptions for strategic decisions; A case study of the Oberoi hotels

Abstract

To gain a competitive advantage by formulating effective strategy, competitive analysis is mandatory for any organization. Competitive analysis help in identifying the competitors, their strategic moves, segment which they are targeting, technologies and future radical moves. Competitive analysis has to be performed by a dedicated team in organization which has the capability of creativity, new perspectives and can identify the new opportunities by evaluating industry trends. Effective competitive analysis requires adequate staff, adequate fund allocation and clear mission. Even after having all these resources, sometimes such analysis leads to flawed analysis. This flawed analysis will lead to ineffective strategies. These unidentified, undetected mistakes or flaws in competitive analysis are known as Competitive Blind Spots. This document highlights eight potential blind spots or flaws in competitive analysis and offers guidelines to executives to safeguard against them. The document identifies these blind spots and discusses how they may explain persistent, commonly observed phenomena such as industry changes and new business entry failures. We have chosen the Indian Hotel Industry to perform competitive-analysis and analyzing industry trends plus strategic actions/decisions taken by its major players over the past 20 years. This document studies the competitive blind spots by analyzing the strategic moves of the Oberoi Hotels in Indian Hotel Industry in comparison with the industry leader the Taj Hotels. The Taj has been able to expand and diversify its business over the years along with the industry growth, while the Oberoi Hotels has not been able to follow the same. Hence, we have analyzed the Oberoi Hotels’ competitive decision-making and strategic moves in past years. The document further identifies the flaws or “competitive blind spots” in the Oberoi Hotels’ competitive analysis or strategies which resulted from its mistaken or incomplete view of the industry and competition or inaccurate managerial perceptions. Out of the eight potential blind spots, six are the standard blind spots as per various literatures: (1) misjudging industry boundaries; (2) poor identification of the competition; (3) overemphasis on competitors' visible competence; (4) overemphasis on where, not how, rivals will compete; (5) faulty assumptions about the competition; and (6) paralysis by analysis. Apart from this, we have also identified two new blind spots in the context of “The Oberoi” hotels: Poor Branding Strategy and Failure to Capitalize on Firm’s Strengths. In the later part of the document, we have tried to answer that why the Oberoi Hotels failed to match the growth of the Taj & other major players of the industry. We have also come up with a new Simplified Competitive Blind Spots framework to easily understand the causes of the general flaws in the competitive analysis of a firm. In the last, we have come up with some recommendations in the form of actions to be taken by the firms’ executives to remove these blind spots in their competitive analysis and to better analyze the industry, competitors & customers.