Session 10: Competitive rivalry Flashcards
Define competitors
Firms operating in the same market, with similar products, targeting similar customers.
What is competitive behavior?
Set of competitive actions and responses a firm takes to build or defend its competitive advantages and to improve its market position
Define competitive rivalry
ongoing set of competitive actions
and competitive responses that occur among firms as they
maneuver for an advantageous market position
Define competitive rivalry
ongoing set of competitive actions
and competitive responses that occur among firms as they
maneuver for an advantageous market position
What do the outcomes of competitive rivalry influence?
A firm’s
- ability to develop and sustain competitive advantage
- Level of financial returns
Define competitive dynamics
total set of competitive actions and responses taken by all firms competing within a market
Competitors engage in (blank1), why? (blank2), How? (blank3), What results? (blank 4)
Blank 1: competitive rivalry
Blank2: to gain advantageous market position
Blank 3: Through competitive behavior, competitive actions, competitive responses
Blank4: competitive dynamics, competitive actions and responses taken by all firms competing in a market
A strategy’s succes is a function of:
- The firm’s initial competitive actions
- How well the firm anticipates competitor’s response to them
- How well the firm anticipates and responds to its competitors’ initial actions
3 assumptions/facts of competitive rivalry
- firms are mutually interdependent
- Competitors’ actions and responses affect them
- Marketplace success is a function of both: individual strategies, the consequences of their use
Differentiate strategic from tactical actions
both are market based, but strategic implies a significant organizational commitment, is hard to reverse, difficult to implement and even harder to reverse, while a tactical action or response is aimed to fine tune a strategy, thus easy to implement and reverse
Write in order the steps of competitive rivalry according to the model
- competitor analysis
- Drivers of competitive behavior
- competitive rivalry
- outcomes
Then there is feedback, leading back to the first step for it to start again
What’s a competitor analysis?
its the first step the firm takes to be able to predict its competitors’ actions and responses
What do firms study about their competition through competitor analysis?
- future objectives
- current strategies
- assumptions
- capabilities
To complete competitor analysis, firms also study…
Market commonality
Resource similarity
What does awareness refer to and when is it greater or smaller?
Awareness refers to the extent to which competitors recognize
the degree of their mutual interdependence.
➢ Awareness tends to be greatest when firms have highly similar
resources (in terms of types and amounts) to use when competing
against each other in multiple markets.
What motivation and what drives it?
Motivation concerns the firm’s incentive to take action or to
respond to a competitor’s attack.
➢ A firm may not be motivated to engage in competitive rivalry if it
perceives that its market position will neither improve nor suffer if
it does not respond.
What is ability?
Ability refers to the quality of the resources available to the firm
to attack and respond.
➢ Without available resources (such as financial capital and people),
the firm is not able to attack a competitor or respond to its action
List the 3 factors affecting the likelihood a competitor will take competitive action
- first mover benefits
- organizational size
- quality
Develop on first movers goals and focuses
- A first mover is a firm that takes an initial competitive action to build or
defend its competitive advantages or to improve its market position. - First movers emphasize research and development (R & D) as a path
to developing innovative products that customers will value.
What industries are the most focal for first mover advantage?
- industries experiencing rapid technological developments
- with relatively short product life cycle
What else can first movers gain?
- customer loyalty
- market share
- setting industry standards
When is a firm likely to respond to competitors’ action?
➢ 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.
➢ The firm’s market position becomes harder to defend
3 factors to predict how likely it is a competitor will respond
- type of competitive action
- actor’s reputation
- Market dependence
Name the 3 steps of competitive dynamics’ slow cycle of around 10 years
Launch
exploitation
counterattack
