CompetitiveRivalryand CompetitiveDynamics

DEFINITIONS
Competitors Firms operatinginthesamemarket,offeringsimilar productsandtargetingsimilarcustomers Theongoingsetofcompetitiveactionsandcompetitive responsesoccurringbetweencompetitorsastheycompete againsteachotherforanadvantageousmarketposition Setofcompetitiveactionsandcompetitiveresponsesthe firmtakestobuildordefenditscompetitiveadvantagesand toimproveitsmarketposition Occurswhenfirmscompeteagainsteachotherinseveral productorgeographicmarkets Allcompetitivebehavioursthatis,thetotalsetofactions andresponsestakenbyallfirmscompetingwithina market

Competitive rivalry Competitive behaviour Multimarket competition Competitive dynamics

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CompetitorAnalysis
Competitor Analysis Describewhatfirmsstudytobeabletopredict competitorsbehaviourintheformoftheircompetitive actionsandresponses.

Market Isconcernedwiththenumberofmarketswithwhichthe commonality firmandacompetitorarejointlyinvolvedandthedegree ofimportanceoftheindividualmarketstoeach. Resource similarity Theextenttowhichthefirmstangibleandintangible resourcesarecomparabletoacompetitorsintermsof bothtypeandamount.

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DriversofCompetitiveActions&Responses
Awareness Aprerequisitetoanycompetitiveactionorresponse takenbyafirm,referstotheextenttowhich competitorsrecognizethedegreeoftheirmutual interdependencethatresultsfrommarket commonalityandresourcesimilarity Concernsthefirmsincentivetotakeactionorto respondtoacompetitorsactions,relatesto perceivedgainsandlosses relatestoeachfirmsresourcesandtheflexibility theyprovide.Withoutavailableresources(suchas financialcapitalandpeople),thefirmlacksthe abilitytoattackacompetitororrespondtoits actions.However,similarresourcessuggestsimilar abilitiestoattackandrespond
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Motivation

Ability

LikelihoodofAttack
Afirmthattakes aninitial competitive actioninorderto buildordefendits competitive advantagesorto improveits marketposition

Secondmover

Firstmover

Afirmthat respondstothe firstmovers competitive action,typically throughimitation

Latemover

Afirmthat respondstoa competitive action,butonly afterconsiderable timeaselapsed afterthefirst moversaction andthesecond moversresponse

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Table6.1 QualityDimensionsofGoodsandServices

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LikelihoodofResponse
TypeofCompetitiveAction ActorsReputation DependenceontheMarket

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buildingandsustaining competitiveadvantagesare atthecoreofcompetitiverivalry

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Figure6.1FromCompetitors toCompetitiveDynamics

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CompetitiveDynamics
Slowcyclemarkets Marketsinwhichthefirmscompetitiveadvantages areshieldedfromimitationforwhatarecommonly longperiodsoftimeandwhereimitationiscostly. Marketsinwhichthefirmscompetitiveadvantages arentshieldedfromimitationandwhereimitation happensquicklyandperhapssomewhat inexpensively. Marketsinwhichthefirmscompetitiveadvantages aremoderatelyshieldedfromimitationandwhere imitationismoderatelycostly.

Fastcyclemarkets

Standardcyclemarkets

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Figure6.4:GradualErosionofaSustained CompetitiveAdvantage

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Figure6.5: DevelopingTemporaryAdvantagestoCreate SustainedAdvantage

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