1. What is competition?
In the world of business
Business 283 Class
For Prof. Anuradha Basu
LUCAS SCHOOL OF BUSINESS, SAN JOSE STATE UNIVERSITY
By Vasudev Bhandarkar
CEO, Caralta Corporation
October 2, 2013

2. Vasudev Bhandarkar
October 2, 2013
A Definition
Competition in business is “the effort of two or
more parties acting independently to secure the
business of a third party by offering the most
favorable terms“ , Adam Smith 1776 [The Wealth
of Nations]
The Goal is to win business within the framework of
law, by competing fairly, and without destroying
the ecosystem
While keeping in mind that we are a Capitalist
Society (Market Economy) not an Authoritarian
regime

3. Vasudev Bhandarkar
October 2, 2013
Criteria for Success
Key Valuation Drivers for Business
• A great team
• Building a great product or product lines
• Attacking a large market
– Disrupting aging industries
• Acquiring a large share of the market
• With a great growth rate
• Establish winning internal and external processes
• Building a great brand
• And after you’ve helped yourself
• Serve the greater good (corporate social work)!

4. Vasudev Bhandarkar
October 2, 2013
“It’s a zero sum game”
• In business, there’s only one Universe, and big or
small, a market that’s fixed in size
• Somebody’s gain is somebody else’s loss
• If you’re not in the top 5% you don’t matter, it’s a
winner-take-all universe
• That said, how do you “go-to-market”
– Be clever about A/B testing
– Pick a niche (feature set, geography, demographic,
etc)
– Establish early successes, don’t boil the ocean

5. Vasudev Bhandarkar
October 2, 2013
Competitive Analysis
• Study the landscape
– Analyze customer needs
– Analyze existing products and features and needs served
– Look for inefficiencies, and monopolies to disrupt
• Study the value chain
• Study the money invested in each competitor
• Estimate a time line for market penetration
• Hypothesize the life-cycle of the business
– How much money will you need for offense and defense?
• Be mindful of where you are in the life-cycle

6. Vasudev Bhandarkar
October 2, 2013
Strategy and Competitiveness
• What is strategy [Michael Porter, 1996]
– Operational Effectiveness is not strategy
• Establish a difference that you can preserve
– A set of unique activities that are hard to replicate
• Essence is to differentiate
– A sustainable position that requires trade-offs
• Judicious use of resources, elimination of activities
• Be ready to walk away from sales deals
– Fit drives differentiation and sustainability
• Establish the product Market Fit, Lock out imitators
Most importantly always think long term – but “long-term” is relative

7. Vasudev Bhandarkar
October 2, 2013
Offensive Strategies
• Acquire the competition
– Shutter their business after acquisition
• Aggressive pricing
– Drive them out of business
• Aggressive marketing
– Drown out their noise
• Build your network, build trust in the system
– Who you know is as important as what you know

8. Vasudev Bhandarkar
October 2, 2013
Defensive Strategies
• Build the best product (or service)
• Acquire the best teams
• Pivot if necessary
• Build robust internal operating processes
– Doing things differently than others do
• Raise lots of money
– But leave money on the table for your VC team
– Often there will be down-rounds

9. Vasudev Bhandarkar
October 2, 2013
What is Co-opetition
• Partnering with Competitors
• Study the value chain
• Study the product landscape
• You can be complementary and complimentary
• Partnering with competitors can often improve
the defensibility of your business model

10. Vasudev Bhandarkar
October 2, 2013
Competition and Anti-Trust Law
• What is legal and what is illegal
– Goal: Protection of consumers
• In a market economy, the law mandates that
– One should have freedom of commerce
– Customers should be free from abuse
– Competitors cannot collude against customers
• Don’t “rub out” the competition
– But you can drive them out of business legally

11. Vasudev Bhandarkar
October 2, 2013
Types of competition
• Direct competition
– Category competition, Brand competition
• Substitute competition, Indirect competition
– Substituting one product with another
• Budget or “Share of Wallet” competition
– Forcing the customer to change the Spending Mix
• Internal competition
– Competition within a company, Cannibalization

12. Vasudev Bhandarkar
October 2, 2013
Vas’ Take On Competing…
• You can play on the edge, but play by the rules
• Different strokes for different folks
– You can declare victory ANY time
– You don’t HAVE to build a monopoly
– Pragmatism says you may not have the runway
• If you choose a big enough market
– There’s enough for everybody to go around
– There will be room to make mistakes and recover

13. Vasudev Bhandarkar
October 2, 2013
Summary
What’s your take – class discussion!
Feedback?
Please email me at vas@caralta.com