Chapter 5: Competitive Rivalry and Competitive Dynamics 5-1 Chapter 5: Competitive Rivalry and Competitive Dynamics KNOWLEDGE OBJECTIVES 1. Define competitors, competitive rivalry, competitive behavior, and competitive dynamics. 2. Describe market commonality and resource similarity as the building blocks of a competitor analysis. 3. Explain awareness, motivation, and ability as drivers of competitive behaviors. 4. Discuss factors affecting the likelihood a competitor will take competitive actions. 5. Discuss factors affecting the likelihood a competitor will respond to actions taken against it. 6. Explain competitive dynamics in slow-cycle, fast-cycle and standard-cycle markets. 1 Define competitors, competitive rivalry, competitive behavior and competitive dynamics. A strategy’s success is determined not only by the firm’s ini tial competitive actions, but also by how well it anticipates competitors’ responses to them and by how well the firm anticipates and responds to its competitor’s initial actions (also called attacks). Some important definitions: Firms operating in the same market with similar products targeting similar customers are competitors . Competitive rivalry is the ongoing set of competitive actions and competitive responses occurring between rivals as they compete against each other for an advantageous market position. Competitive behavior is the set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position. Firms competing against each other in several product/geographic markets are in multimarket competition. All competitive behavior — that is, the total set of actions and responses taken by all firms competing within a market — is called competitive dynamics. The focus of this chapter is on competitive dynamics , the series of competitive actions and competitive responses among firms competing within a particular industry. The implication that should be strongly stated is that the strategic management process (as described in Chapter 1 and Figure 1.1 ) is dynamic, not static. FIGURE 5.1 From Competitors to Competitive Dynamics This figure features the key concepts involved in competitive dynamics, which refers to the total set of actions and responses taken by all of the firms competing in a given market. Expanding geographic scope contributes to the increasing intensity in competitive rivalry among firms. That is, firms trying to predict competitive rivalry should anticipate that they will meet a larger number of increasingly diverse competitors in the future; thus, competitive rivalry will affect their strategies more than in the past. A MODEL OF COMPETITIVE RIVALRY Competitive rivalry exists when firms jockey with one another to pursue an advantageous market position.
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- Summer '12
- Business, competitive actions, competitive action