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Chapter 5
Competitive Rivalry and
Competitive Dynamics
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as Presentation design
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. by Charlie Cook
Glossary
Competitive action : Is a strategic or tactical action the firm takes to
build or defend its competitive advantages or improve its market
position.
Competitive behavior : Is the set of competitive actions & responses a
given firm takes to build or defend its competitive advantages & to
improve its market position.
Competitive dynamics : Isthe total set of actions & responses taken by
all firms competing within a market.
Competitive response : Is a strategic or tactical action the firm takes to
counter the effects of a competitors competitive action.
Competitive rivalry : Is the ongoing set of competitive actions &
competitive responses that occur among firms as they manuver for an
advantageous market position.
Competitor : Firms operating in the same market, offering similar
products, and targeting similar customers.
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 52
Glossary
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 53
Glossary
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 55
Definitions
Competitors
Are firms operating in the same market, offering
similar products, and targeting similar customers.
Competitive Rivalry
Is the ongoing set of competitive actions and
responses occurring between competitors.
Influences an individual firms ability to gain and
sustain competitive advantages.
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 56
Definitions
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.
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Competitive Rivalrys Effect on Strategy
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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A Model of Competitive Rivalry
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Drivers of Competitive Behavior
Awareness is
Awareness
the extent to which competitors
recognize the degree of their
mutual interdependence that
results from:
Market commonality
Resource similarity
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Drivers of Competitive Behavior (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Drivers of Competitive Behavior (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 512
Drivers of Competitive Behavior (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 513
Drivers of Competitive Behavior (contd)
Awareness
The greater the resource
imbalance between the acting firm
Motivation and competitors or potential
responders, the greater will be the
delay in response by the firm with
Ability a resource disadvantage.
When facing competitors with
greater resources or more
Market attractive market positions, firms
Commonality should eventually respond, no
matter how challenging the
Resource response.
Dissimilarity
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Factors Affecting Likelihood of Attack
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Factors Affecting Likelihood of Attack (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Factors Affecting Likelihood of Attack (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Factors Affecting Likelihood of Attack (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Factors Affecting Likelihood of Attack (contd)
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Factors Affecting Likelihood of Attack (contd)
First Mover
Quality exists when the
firms goods or services
Second Mover meet or exceed customers
expectations
Late Mover Product quality dimensions
include:
Organizational Performance Conformance
Size Features Serviceability
Flexibility Aesthetics
Quality
(Product) Durability Perceived
quality
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 520
Factors Affecting Likelihood of Attack (contd)
First Mover
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Factors Affecting Likelihood
of Response
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Competitive Dynamics
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 523
Competitive Dynamics (contd)
2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Competitive Dynamics (contd)
Slow-Cycle
Moderate cost of imitation may
Markets shield competitive advantages.
Competitive advantages are
partially sustainable if their quality
Fast-Cycle
Markets is continuously upgraded.
Firms
Seek large market shares
Standard-Cycle
Markets Gain customer loyalty through brand
names
Carefully control operations
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