Multipoint competition (samenvatting) Flashcards
Wat zijn competitive dynamics?
Results from a series of competitive actions and competitive responses among firms competing within a particular industry
Competitive rivalry
Exists when two or more firms jockey with one another in the pursuit of better market position
Wat is multipoint competition? (benoem ook kenmerken, market power, mutual forbearance)
A situation where firms compete against each other simultaneously in several markets
This situation privides firms with more strategic options and more market power, because they can choose in which businesses they will engage their rivals using resources from their different businesses.
Balance of power as an attractive alternative to hypercompetition
Mutual forbearance may reduce the business level intensity of competition between two firms when they simultaneously compete in several markets.
Wat is interfirm rivalry?
If the business portfolios of competing multibusiness firms overlap, the firms are said to engage in multipoint competition. A multipoint contact occurs when two firms compete in the same business
- More contacts means more interdependence
- Greater overlap does not necessarily translate into more intense competition
Wat is mutual forbereance? Benoem ook de kenmerken daarvan (tacit collusion)
Concurrentie kan verlaagd worden door mutual forbereance.
Mutual forbereance betekent dat bedrijven elkaar verdragen in plaats van elkaar aanvallen.
- Mutual forbearance is tacit collusion door het gevolg dat bedrijven in verschillende markten met elkaar concurreren wat leidt tot interdependence
- Tacit collusion, is in tegenstelling tot direct collusion verboden (kartelvorming). Het betreft een situatie waar twee bedrijven elkaars motieven en strategieën begrijpen en impliciet met elkaar coordineren om intense competitie te vermijden
- Extent theory suggereert dat er twee processen kunnen leiden tot mutual forbearance door een hogere mate van multimarket contanct: namelijk familiary en deterrency
Wat is familiarity?
The extent to which tacit coordination may be enhanced by a firm’s awareness of the capabilities and actions of its rivals
Familiarity between rivals influences the extent to which they engage in actions and reactions to each other
In een complexe omgeving is het onmogelijk om alle benodigde informatie over rivalen te verzamelijk. Om deze reden moeten bedrijven een imperfect version van de competitive realiteit van de concurrent construeren wat hun beslissingen meer leiden dan objective reality (objectieve realiteit)
- Bedrijven moeten zich ervan bewust zijn dat business portfolios overlappen
- Bedrijven krijgen meer familiarity omdat ze elkaar vaak tegenkomen in verschillende businesses
- Multipoint contanct helpt bij mutual learning
Wat is detterence? Benoem ook extra kenmerken die het totale beeld van detterence weergeven.
- De mate waarop een bedrijf haar rivalen kan weerhouden van het initieren van agressieve acties
- Deterrence is a consequence of the firm’s ability to cause its rivals serious financial loss
- Firms do not compete aggressively because the expected gains from their aggressive moves are less than the likely future losses due to compettitive retaliation (wraak)
- The shadow of the future. The future casts a shadow back upon the present, affecting current behavior patterns
- For deterrence to be effective, firms should believe that their rivals have not only the ability, but also the opportunity to retaliate aggressively and hurt them
For detterence to be effective firms should believe that their rivals have the ability to retaliate and the opportunity to hurt.
Wat is ability to retaliate?
Wat is opportunity to hurt?
Retaliate. Implies that future losses from multipoint warfare are more than those available in a single point context. Retaliation can arise across many different businesses.
Opportunity to hurt. Relative to single business environment, multipoint competition increases opportunities for reatliation by extending the interdependence of firs fro the time dimension (future) to both time and space dimensions (future and multiple businesses)
Contingency model
Er zijn modererende variablen die invloed kunnen hebben op the relatie tussen het aantal multipoint contacts en intensity of competition. Dit zijn spheres of influence, resource similarity, organizational structure of competing firms, opportunities for economies of scope seller concentration en CEO tenure. The effecten van de zes factoren worden hieronder toegelicht.
Wat is spheres of influence?
Extent to which different multipoint competitors take dominant positions in different businesses (market share, market dependence, resource centrality)
May enhance deterrence, because fims want to protect their key businesses from retaliatory moves by rivals and therefore may refrain from taking actions that could provoke reactions in those particular businesses
Wat is resource similarity?
Resource similarity = extent to which competing firms are comparable in their possession or resources critical for success in the market.
Wat is Organizational structure of competing firms?
Organizational structure of competing firms = extent to which a firm is able to control and coordinate it actions jointly across multiple businesses.
Wat is Opportunities for economies of scope?
Opportunities for economies of scope = unless the opportunities for resource sharing among business units are strong and easy to recognize, the coordination needed to induce forbearance will be largely absent.
When multipoint competitors benefit from economies of scope, they obtain a cost advantage over single business incumbents or potential entrants; in that they can raise prices to a level that does not allow for output expansion by single point incumbents and potential entrants.
Wat is seller concentration?
Seller concentration = number of firms in a business (which provided an important predictor of competitive behavior) Low = firms cannot deter each other because no firm has sufficient stake in the business
High = because a significant share of total market revenues is dispersed across fewer firms, these firms should be more likely to refrain from intense rivalry, because doing so puts their sizable revenues and market shares at stake.
The potential for higher losses combined with increased opportunities for retaliation provides a strong motivation for deterrence in multipoint competition.
Licht CEO tenure toe
CEO tenure =longer tenured CEOs are more sensitive to the implications of multipoint contacts and institute organizational actions consistent with firm-specific levels Newer CEOs are less sensitive to potential reduction in aggressive competitive behavior 3 reasons) unaware of benefits from mutual forbereance, 2) misperceive the firms position in its competitive network 3) hubris in action
