Competition

Question 1

What is competitive rivalry?

Answer 1

Competitive behavior between rivals; at the firm or dyad level. Awareness, motivation, and ability are necessary. Compete aggressively yet try to minimize rivals’ responses.

Question 2

What are competitive dynamics?

Answer 2

The total competitive behavior of all firms in a product market. Involves analysis at the level of the product market or industry.

Question 3

Strategic action or strategic response

Answer 3

A move involving significant resources, perhaps altering the firm’s strategy, that is difficult to implement and reverse.

Question 4

Tactical action or tactical response

Answer 4

A move involving few resources, perhaps to fine tune existing strategy, that is relatively easy to implement and reverse.

Question 5

List ways to identify rivals

Answer 5

1. Market commonality
2. Resource similarity
3. Asymmetric competition
4. Multimarket competition (often leads to mutual forbearance)

Question 6

What are the 3 orders of entry

Answer 6

1. First Movers - advantages in being first and can influence market standards, but spend heavily on R&D and commercialization
2. Second Movers - Learn about markets by observing first movers, build on the market-building expense of first movers, can imitate & improve
3. Late Movers - Enters a mature market, more competition, slower and more difficult success

Question 7

List the Factors Affecting Competitive Attacks

Answer 7

1. Order of Entry
2. Organizational Size - Sumo & Judo strategies of large and small firms
3. Product and Service Quality

Question 8

List the factors affecting competitive responses

Answer 8

1. Type of competitive action (tactical responses, strategic responses)
2. Reputation (can be a deterrent)
3. Market Dependence (reflects the extent to which certain markets contribute to firms’ revenues or profits). Firms will respond strongly to attacks on their positions in markets on which they are more dependent.

Question 9

What are slow cycle markets?

Answer 9

Technology changes slowly, competitive advantages are sustainable and protected from imitation, firms concentrate their efforts on protecting, maintaining, and extending their advantages.

Question 10

What are fast-cycle markets?

Answer 10

Technology changes quickly, and imitation is inexpensive. Competitive advantages are easily imitated and therefore short-lived. Firms focus on developing new advantages.