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A strong economy depends on firms being strategic with how they manage and market their offerings, skillful in leveraging corporate competencies and clever when handling competitive pressures. And understanding which tactics to employ in relation to competitive factors can be a tricky matter, given that what works today may not work tomorrow. Moreover, whom one is competing against or which industry one is competing in can dramatically evolve over time. Few could have predicted that cellphones would replace digital cameras (unfortunately for Kodak) or that a cleaning product for coal residue would find immense success in the toy aisle (well done, Play-Doh).
Businesses largely operate in a realm of uncertainty because the marketplace is unpredictable, and this is why business strategy is an intriguing area for study. However, as a business professor, I’ve found that teaching tactics for establishing a competitive advantage is becoming more difficult when political, rather than competitive, pressure is influencing industry practices.
When government agencies such as the Department of Justice [ [link removed] ](DOJ [ [link removed] ]), [ [link removed] ]the Federal Trade Commission (FTC [ [link removed] ]) and currently the Consumer Financial Protection Bureau (CFPB) [ [link removed] ] play referee in business matters, market signals get distorted and investments get redirected [ [link removed] ]. Instead of competing for consumer purchases, companies must vie to appease politicians eager to entrench their power position. It is quite telling that in March 2023 [ [link removed] ], the FTC put forth the largest budget request [ [link removed] ] in the agency’s history, asserting that $590 million [ [link removed] ] was necessary for protecting consumer interests and promoting competition.
Government meddling [ [link removed] ] in competitive markets by means of antitrust policy makes little sense given that consumer interests are dynamic and sporadic, and business strategies for attaining market share tend to conflict with government concerns over monopoly power [ [link removed] ]. Any competitive advantage achieved by firms today can become a corporate liability tomorrow. Thus, not only does government interference give an unfair advantage to some companies over others, but because of the uncertainty inherent in the marketplace, that interference often doesn’t even achieve its intended goals.
Blue and Red Oceans
The 2005 publication of [ [link removed] ]“Blue Ocean Strategy [ [link removed] ]” made waves in the business community by providing new frameworks for firms wishing to keep their competition at bay. The purpose of a “blue ocean” is to create a product, service or brand so unique or distinct that it generates its own pool of profits that can’t be easily captured by competitors. A classic case study [ [link removed] ], ideal for classroom use and derived from blue ocean experts, is Apple.
Apple launched iTunes in 2001 and revolutionized [ [link removed] ] the realm of digital music, making consumption more accessible, affordable and (to the dismay of Napster) legal. Over time, iTunes morphed into [ [link removed] ] a strong all-inclusive digital media ecosystem that included TV shows, games and movies. By 2008 all app downloads on new releases of iPhone devices were done through iTunes.
In 2019, iTunes was retired [ [link removed] ] with the branching off of Apple Music, Apple Podcasts, Apple TV and the App Store. Presently, Apple is facing a DOJ lawsuit over the App Store’s ability to control what is downloadable on iPhones. All downloads must be iOS compatible, which apparently means Apple’s success has gotten out of hand and its “blue ocean [ [link removed] ]” strategy has established a “walled garden [ [link removed] ].” Apple seems to have too much control over its own products, claims the DOJ. Perhaps next time I have maintenance done on my car, I might inquire why only certain parts from certain manufacturers can be used.
Blue ocean strategies run counter to a “red ocean” approach, in which firms battle it out in established markets with high demand. A great example of this occurred throughout 2019 and 2020 as a surge in hard seltzer sales [ [link removed] ] attracted interest from both large and small adult beverage providers. Fast-forward to today, and red oceans are emerging in truly interesting ways for alcohol-based beverage firms because hard kombucha and nonalcoholic options are becoming [ [link removed] ] a favored choice for consumers. Who could have guessed?
In red oceans, firms may leverage price points as a main competitive weapon. However, if a company were to drop prices to attain market share, a strategy known as penetration pricing, it may later face (as did Amazon) accusations from the FTC [ [link removed] ] of predatory pricing with intent to monopolize the marketplace. Yet if a company were to keep its prices in line with competitors in an established sector, it could be accused of collusion. The FTC is currently looking into [ [link removed] ] such concerns for the pricing of soda, with a close eye on Coca-Cola and Pepsi. It seems rather strange, though, for the FTC to concern itself with the supposed unjust cost of an unhealthy beverage when states have imposed a soda tax [ [link removed] ] in an effort to deter consumption by means of cost increases.
Greenfields
Another business term pertaining to a corporation’s competitive landscape is a “greenfield,” which refers to an unknown or untapped market that can be developed. Although greenfields are often referenced in relation to international expansion and foreign market entry, they can also be derived from new marketing strategies, new use options for products or even new distribution models. Classic examples include Chewy’s home delivery for pet care products, Uber’s ridesharing app capabilities and Venmo’s mobile payment service options.
Unlike blue ocean strategies that seek to dominate a niche market or red ocean approaches that look to fight it out in a high-growth market, greenfields aim to attract investments for underserved, overlooked or newly discovered markets. And, just like a parcel of land that has been previously untouched, greenfields can both unearth some new gems and run into some major challenges when laying the foundation for building from the ground up.
One of the biggest challenges greenfields have had to face lately is the nagging regulations that lag behind new market and product developments. For politicians, the creation of innovative business types seems to ignite the desire for new oversight—a phenomenon the gig economy knows all too well [ [link removed] ].
Greenfields, along with red and blue oceans, are risky endeavors. There is no guarantee that consumers will be receptive to a company’s product or service, or that the company will be able to protect its profits, which is why it would be best for the government to wait and see. Netflix, a pioneer in streaming services, was once depicted [ [link removed] ] as a monopoly needing to be reined in; now it needs to continually prove [ [link removed] ] it can safeguard subscriptions. Since market circumstances are constantly changing, particularly in greenfields, rushing to regulate will only increase the likelihood of regulatory mistakes.
The Merger Minefield
A business’s continued success depends on its entrepreneurial mindset in a competitive market. But product development can be a daunting process, and it is particularly challenging [ [link removed] ] for established enterprises that benefit from the status quo. Unlike startups, which are nimble and more willing to take chances to prove their potential, incumbent firms tend to be risk averse [ [link removed] ] so they don’t upset their customer base or disrupt their market share.
What incumbent firms have and startups lack, however, is an entrenched business ecosystem with distribution channels and intermediary networks. And herein lies the beauty of mergers and acquisitions (M&As). Innovative startups and solopreneurs can join forces or be bought out by businesses that can take their creative endeavors to a whole new level, while incumbent firms can reignite their competitive edge via an M&A.
M&A deals are an important option [ [link removed] ] for firms that seek to further their offerings or develop a new consumer base. The former CEO of Cisco Systems, John Chambers, said [ [link removed] ], “If you don’t have the resources to develop a component or product within six months, you must buy what you need or miss the opportunity.” In adherence to this mantra, Cisco has acquired 218 companies [ [link removed] ] since 1993.
It is important to note, though, that M&A deals often have high transaction costs and success rates are dismal. According to Harvard Business Review [ [link removed] ], “between 70 and 90 percent of acquisitions fail.” Cisco’s acquisition of Linksys in 2003, among others [ [link removed] ], is a case in point [ [link removed] ]. Even the most successful firms have had their buys go bust: AOL’s acquisition of Time Warner in 2001, for example, was a megamerger that turned out to be a mega mistake. Indeed, there is no guarantee that an M&A will work out in a competitive and volatile marketplace.
Yet the FTC has made it more than clear that it will decide [ [link removed] ] whether or not an M&A should even be allowed. The Kroger-Albertsons merger [ [link removed] ] serves as a recent example. Perhaps business schools should refrain from teaching best practices for prospecting and negotiating deals and focus more on strategies for obtaining permission from public officials who, despite being disconnected from the business realm, claim to know what’s best [ [link removed] ] for M&A transactions.
The Costs of Antitrust Cases
Business forecasting is a difficult task, and reality rarely goes according to plan, but the government seems confident that it can predict winners and losers [ [link removed] ] in today’s marketplace. What the government seems to be forgetting, however, is that American firms compete on a global scale and their status is never guaranteed. In fact, Apple no longer has the top spot as the favored phone brand in China [ [link removed] ], and the adoption rate of Huawei’s smartphone globally will likely result in a ripple effect for downloads derived from Huawei’s AppGallery [ [link removed] ] rather than the App Store. So much for Apple’s walled garden.
Further, the rise in cases on antitrust matters is more costly than many may realize. FTC and DOJ lawsuits against American firms send a strong signal to budding entrepreneurs and current business majors to keep their aspirations in check, since successfully scaling their operations could cost them in congressional hearings in the end. Any semblance of autonomy over business strategy [ [link removed] ] that was once present in the U.S. economic system appears to be shrinking each day, and this is truly problematic for marketplace dynamism. The chilling effect of government interference in business matters warrants attention because it will harm the future competitiveness of American firms.
Concerns over big business and market dominance shouldn’t enable market control by the government or empower the expansion of federal agencies. If politicians are truly concerned about the monopolization of power and the health of our economy, perhaps a good start would be to look at their own power position and address the disastrous management [ [link removed] ] of federal spending.

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