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Strat. Chapters 5 & 6 > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

Competitors

A

Firms operating in the same market, offering similar products and targeting similar customers

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2
Q

What can be said about the relationship between competitors and its influence on success?

A

Evidence shows that the decisions firms make about their interactions with competitors significantly affect their ability to earn above average returns

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3
Q

Competitive rivalry

A

The ongoing set of competitive actions and competitive responses a firm takes to build or defend its competitive advantages and to improve its market position

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4
Q

Multimarket competition

A

Occurs when firms compete against each other in several products or geographic markets

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5
Q

Competitive behaviour

A

The set of competitive actions and responses a firm takes to build or defend its competitive advantages and to improve its market position

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6
Q

Competitive dynamics

A

Refers to all competitive behaviours, that is, the total set of actions and responses taken by all firms competing within a market

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7
Q

Why do competitors engage in competitive rivalry?

A

To gain an advantageous market positions

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8
Q

How do competitors engage in competitive rivalry?

A

Through competitive behaviour:

  • competitive actions
  • competitive responses
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9
Q

What are the results of competitive behaviour and competitive rivalry?

A

Competitive dynamics

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10
Q

Although competitive rivalry affects all types of strategies, its dominant influence is on…

A

… the firm’s business-level strategy

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11
Q

What does competitive rivalry evolves from?

A

From the pattern of actions and responses as one firm’s competitive actions have noticeable affects on competitors, eliciting competitive responses from them

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12
Q

Competitor analysis is used to help a firm understand its competitors by studying competitor’s:

A
  • future objectives
  • current strategies
  • assumptions
  • capabilities
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13
Q

What does competitor analysis allow firms to do?

A

Firms are better able to predict competitors’ behaviours when forming its competitive actions and responses

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14
Q

Market commonality

A

The number of markets in which firms compete against each other

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15
Q

Resource similarity

A

The similarity in firms’ resources

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16
Q

What do market commonality and resource similarity determine?

A

To what extent to which two firms are competitors.

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17
Q

Competitive blind spots

A

When there is lack of information about competitors’ objectives, strategies, assumptions and capabilities

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18
Q

What can be implied about a firm’s SWOT analysis and the one of its competitors?

A

Firms with similar types and amounts of resources are likely to have similar strengths and weaknesses and use similar strategies on the basis of their strengths to pursue what may be similar opportunities in the external environment.

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19
Q

Awareness

A

Refers to the extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity

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20
Q

Motivation

A

Concerns the firm’s incentive to take action or to respond to a competitor’s attack, relates to perceived gains and losses.

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21
Q

A firm is generally more likely to attack the rival with whom it has low market commonality or the one with whom it competes in multiple markets?

A

The one with low market commonality

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22
Q

Ability

A

Relates to each firm’s resources and the flexibility they provide

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23
Q

Without (…), a firm is not able to attack a competitor or respond to its actions

A

available resources

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24
Q

Resource dissimilarity

A

The greater the resource imbalance between the acting firm and competitors or potential responders, the greater will be a delay in response by the firm with a resource disadvantage.

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25
Q

When facing competitors with greater resources or more attractive market positions, (…)

A

(…) firms should eventually respond, no matter how challenging the response.

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26
Q

Firms use both (…) when forming their competitive actions and competitive responses in the course of engaging in competitive rivalry

A

strategic and tactical actions

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27
Q

Competitive action

A

A strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position

28
Q

Competitive response

A

A strategic or tactical action the firm takes to counter the effects of a competitor’s competitive action.

29
Q

Strategic action or strategic response

A

​A market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse.

30
Q

Tactical action or tactical response

A

A market-based move that is taken to fine-tune a strategy. It involves fewer resources and is relatively easy to implement and reverse

31
Q

What are the three factors that affect the likelihood a competitor will use strategic actions and tactical actions to attack its competitors? (other than market commonality, resource similarity, the drivers of awareness/motivation/ability)

A
  • First-mover benefits
  • Organization size
  • Quality
32
Q

First mover

A

Firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position.

33
Q

First movers allocate funds for:

A
  • product innovation and development
  • aggressive advertisement
  • advanced research and development
34
Q

First movers can gain:

A
  • the loyalty of customers who may become committed to the firm’s goods and services
  • market share that can be difficult for competitors to take during future competitive rivalry
  • above-average returns until its competitors respond to its successful competitive action
35
Q

Slack

A

The buffer or cushion provided by actual or obtainable resources that aren’t currently in use and are in excess of the minimum resources needed to produce a given level of organizational output

36
Q

What makes it possible for firms to have the ability to be first movers?

A

Organizational slack

37
Q

What are the risk of being first mover?

A
  • It is difficult to accurately estimate the returns that will be earned from introducing product innovations to the marketplace
  • The first mover’s cost to develop a product innovation can be substantial, reducing the slack available to support further innovation
38
Q

How do second movers respond to first movers actions?

A
  • study customers’ reactions to product innovations
  • try to find any mistakes the first mover made, and avoid them
  • can avoid both the mistakes and the huge spending of the first movers
  • may develop more efficient processes and technologies
39
Q

Second mover

A

Firm that responds to the first mover’s competitive action, typically through imitation

40
Q

Late mover

A

Firm responds to a competitive action a significant amount of time after the first mover’s action and the second mover’s response

41
Q

Small firms are more likely to:

A
  • launch competitive actions

- be quicker in doing so

42
Q

Small firms are perceived as:

A
  • agile and flexible competitors
  • relying on speed and surprise to defend competitive advantages or develop new ones while engaging in competitive rivalry
  • having the flexibility needed to launch a greater variety of competitive actions
43
Q

Large firms are likely to (…)

A

(…) initiate more competitive actions along with more strategic actions during a given period of time

44
Q

Quality

A

Exists when the firm’s goods or services meet or exceed customers’ expectations

45
Q

When is quality possible?

A

When top-level managers support it and when its importance is institutionalized throughout the entire organization and its value chain

46
Q

What is the success of a firm’s competitive actions affected by?

A

By the likelihood that a competitor will respond to it as well as by the type (strategic or tactical) and effectiveness of that response

47
Q

In general, a firm is likely to respond to a competitor’s action when either:

A
  • the action leads to better use of the competitor’s capabilities to develop a stronger competitive advantage or an improvement in its market position,
  • the action damages the firm’s ability to use its core competencies to create or
    maintain an advantage or
  • the firm’s market position becomes harder to defend
48
Q

What differences allow the firm to predict a competitor’s likely to response to a competitive action that has been launched against it?

A

Competitive responses to strategic actions differ from responses to tactical actions

49
Q

Strategic actions commonly receive (…) and tactical actions receive (…).

A
  1. strategic responses

2. tactical responses

50
Q

In general, strategic actions elicit fewer total competitive responses because:

A
  • strategic responses, such as market-based moves, involve a significant commitment of resources and are difficult to implement and reverse
  • the time needed to implement a strategic action and to assess its effectiveness can delay the competitor’s response to that action
51
Q

Actor

A

Firm taking an action or a response

52
Q

Reputation

A

The positive or negative attribute ascribed by one rival to another based on past competitive behaviour

53
Q

A positive reputation may be a source of (…).

A

above average returns

54
Q

Competitors are more likely to respond to strategic or tactical actions when they are taken by a (…).

A

market leader

55
Q

In contrast to a firm with a strong reputation, competitors are less likely to respond to actions taken by a company with a reputation for (…).

A

risky, complex, and unpredictable competitive behavior

56
Q

Market dependence

A

Denotes the extent to which a firm’s revenues or profits are derived from a particular market.
Generally, competitors with high market dependence are likely to respond strongly to attacks threatening their market position.

57
Q

Are firms with high market dependence likely to respond to attacks threatening their market position?

A

Yes

58
Q

Slow-cycle markets characteristics (3)

A
  • Competitive advantages are shielded from imitation for long periods of time and imitation is costly
  • Competitive advantages are sustainable in slow-cycle markets
  • All firms concentrate on competitive actions and responses to protect, maintain and extend proprietary competitive advantage
59
Q

Slow-cycle markets

A

Market in which the firm’s competitive advantages are shielded from imitation, commonly for long periods of time, and imitation is costly

60
Q

What can of advantage is difficult for competitors to understand in a slow-cycle market, and will likely lead to a competitive advantage/success?

A

Building a unique and proprietary capability

61
Q

Fast market cycle

A

Markets in which the firm’s capabilities that contribute to competitive advantages are not shielded from imitation and where imitation is often rapid and inexpensive

62
Q

Fast-cycle market characteristics (4)

A
  • the firm’s competitive advantages aren’t shielded from imitation
  • imitation happens quickly and somewhat inexpensive
  • competitive advantages are not sustainable
  • non-proprietary technology is diffused rapidly
63
Q

What should companies in fast-cycle markets focus on?

A

Learning how to rapidly and continuously develop new competitive advantages that are superior to those they replace

64
Q

What do the competitive dynamics look like in a fast-cycle market?

A

Rapid and continuous product introductions and the development of a stream of ever-changing competitive advantages
-> often results in rapid product upgrades as well as quick product innovation

65
Q

Standard-cycle markets characteristics (2)

A
  • moderate cost of imitation may shield competitive advantages
  • competitive advantages are partially sustainable if their quality is continuously upgraded
66
Q

What do firms seek in standard-cycle markets?

A
  • large market share
  • gain customer loyalty through brand names
  • carefully control operations
67
Q

Standard-cycle markets

A

Markets in which the firm’s competitive advantages are partially shielded from imitation and imitation is moderately costly

Strat. Chapters 5 & 6 (2 decks)

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