Chapter 4 Flashcards
What is Hypercompetition?
Hypercompetition refers to intense and rapid competitive moves, where competitors must move quickly to build new advantages and erode the advantages of their rivals. This concept was introduced by Rich D’Aveni.
What is considered the “6th force” ?
Complements: are products or services that increase the value of an industry’s product. The Porter framework considers the suppliers of substitutes as one of the forces of competition, but not complements.
What is A business ecosystem?
A business ecosystem is a community of organizations, institutions, and individuals that impact the enterprise. The viability of any business ecosystem depends on its ability to create value for its members.
What is a Business model?
A business model is a simplified description of a business that specifies the core logic for creating value. It is a widely used but poorly understood concept.
The Business Model Canvas is a widely used framework that views the firm as an infrastructure (comprising resources, activities, and partners) that is applied to customers (comprising segments, channels, and relationships) through a value proposition that generates revenue at a cost that permits a profit.
What is Game theory?
Game theory is a branch of mathematics that studies strategic decision making. It allows us to model competitive interaction among firms and predict the outcome of competitive situations.
What are the five types of strategic behavior for influencing competitive outcomes within Game Theory?
Cooperation: Working together to achieve a common goal.
Deterrence: Imposing costs on other players for actions deemed to be undesirable.
Commitment: Making a binding commitment to a particular course of action.
Changing the Structure of the Game: Altering the rules or payoffs of the game.
Signaling: Sending a signal to other players about one’s intentions or capabilities.
What is Deterrence in Competitive Strategy?
Deterrence is a competitive strategy that aims to discourage competitors from taking certain actions. However, deterrence only works when the adversaries can be deterred.
“Deterrence is the art of creating in the mind of the enemy the fear to attack.”
What are the types of commitment?
Hard Commitment: A commitment that is difficult to reverse, such as investing in a new project.
Soft Commitment: A commitment that is easier to reverse, such as announcing a target profit level.
What is signaling?
“Signaling is the act of communicating information to influence the behavior of others.”
What is in a competitor analysis?
Competitor’s current strategy:
Understand how the competitor is competing at present.
Competitor’s objectives:
Identify the competitor’s objectives and assess their current performance.
Competitor’s assumptions about the industry:
Understand the competitor’s perceptions of the industry and its success factors.
Competitor’s resources and capabilities:
Evaluate the competitor’s strengths and weaknesses.
What is segmentation analysis?
Segmentation analysis is a process used to identify attractive segments, select strategies for each segment, and determine how many segments to serve. The analysis proceeds in five stages.
“Segmentation is the process of dividing a market into distinct groups of customers with similar needs or characteristics.”
- Identify Key Segmentation Variables
Segmentation decisions are essentially choices about which customers to serve and what to offer them. Segmentation variables are defined by customer and product characteristics.
Customer Characteristics: demographics, lifestyle, purchase occasion, distribution channel
Product Characteristics: product features, technology, design, inputs used, performance characteristics
- Construct a Segmentation Matrix
Once the segmentation variables have been selected and discrete categories determined for each, the individual segments may be identified using a two- or three-dimensional matrix.
- Analyze Segment Attractiveness
Profitability within an industry segment is determined by the same structural forces that determine profitability within an industry as a whole. Porter’s Five Forces of Competition framework is applicable to a segment as it is to an entire industry.
“Porter’s Five Forces of Competition is a framework used to analyze the competitive structure of an industry. The five forces are: threat of new entrants, threat of substitute products, bargaining power of suppliers, bargaining power of buyers, and rivalry among existing competitors.”
- Identify Key Success Factors (KSFs)
By analyzing how buyers’ purchasing criteria and the basis of competition varies between segments, we can identify KSFs for individual segments.
