Strategic Management Competitiveness & Globalization chp 5

What are Competitors?
are firms operating in the same market, offering SIMILAR products, and targeting SIMILAR customers. (not the SAME)
Competitive Rivalry **
-is the ongoing set of competitive ACTIONS and RESPONSES occurring between competitors.
-influences an individual firm’s ability to GAIN and SUSTAIN competitive advantages.
Competitive Behavior**
The set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position.
Multimarket Competition
Firms competing against each other in several product or geographic markets.
Competitive Dynamics **
The total set of actions and responses taken by all firms competing within a market.
From competition to Competitive Dynamics
Competitors engage in Competitive Rivalry (why) to gain an advantageous market position (how) through competitive behavior (actions and responses) all resulting in competitive dynamics.
Success of a strategy is determined by..
-Firms initial competitive actions
-how well it anticipates competitors’ responses to them
-how well the firm anticipates and responds to its competitors’ initial actions
Marketplace success
____________________ is a function of both individual strategies and the consequences of their use.
2 main factors observed in competitive analysis
1. Market commonality
2. Resource similarity
A firm with greater multimarket contact is _____ likely to initiate an attack, but more likely to respond ____ aggressively when attacked
less; more
Resource similarity
how comparable the firm’s tangible and intangible resources are to a competitor’s in terms of both TYPES and AMOUNTS.
Firms with similar types and amounts of resources are likely to:
1. have similar strengths and weaknesses.
2. use similar strategies.
Explain market commonality vs resource similarity diagram
slide 14 chp 5
(Low and Low means not competing much in this space; High and High means you are competing a lot in this space)
What are the DRIVERS of competitive behavior?
Awareness, Motivation, Ability, Market Commonality, Resource Dissimilarity
the extent to which competitors recognize the degree of their mutual interdependence that results from: market commonality & resource similarity
Motivation concerns
-the firm’s incentive to take action or to respond to a competitor’s attack
-relates to perceived GAINS and LOSSES
-each firm’s resources
-the flexibility that these resources provide
Market Commonality ****
**** A firm is more likely to attack the rival with whom it has low market commonality than the one with whom it competes in multiple markets.
Resource Dissimilarity
The greater the resource imbalance between the acting firm and competitors or potential responders, the greater will be the delay in response by the firm with a resource disadvantage.
Types of Actions & Responses
Strategic Action (or response)
Tactical Action (or responses)
Strategic Action (or response)
A market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse.
Tactical Action (or responses)
A market-based move that is taken to fine-tune a strategy:
Usually involves fewer resources
Is relatively easy to implement and reverse
Factors Affecting Likelihood of Attack
First Mover incentives
Second mover incentives
Late mover incentives
Organizational Size
Product Quality
Factors affecting the likelihood of Response
1. Type of competitive action
2. Actors’s reputation
3. Market dependence
Factors of Competitive Dynamics
-Market speed (slow-cylce, fast cylce, standard cycle)
-Effects of market speed on actions and responses of all competitors in the market