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RIVALRY AND
COmPETITIVE
DYNAMICS
CHAPTER 5
KNOWLEDGE
OBJECTIVES:
1 Define competitors, competitive rivalry,
competitive behavior, and competitive
dynamics.
1? Competitive
actions ?Competitive
Rivalry
2 Competitive
responses
the ongoing set of competitive actions
and competitive responses that occur
IMPORTAN
T TERMS
How Competitive
1? Competitive Behavior
actions
the set of competitive actions and
responses the firm takes to build or
2 Competitive
responses
defend its competitive
advantages and to improve its
market position
IMPORTAN
T TERMS
Multimarket
occurs when firms compete against
Competition
each other in several product or
geographic markets
Competitive
thatDynamics
Refer to all competitive behaviors –
is, the total set of actions and
responses taken by all firms
competing within a market
A MODEL OF
COMPETITIVE RIVALRY
Firms are mutually interdependent
• A firm’s competitive actions have noticeable
effects on competitors
• A firm’s competitive actions elicit
competitive responses from competitors
• Firms are affected by each other’s actions
and responses
• Over time firms take competitive actions and
reactions
A MODEL OF
COMPETITIVE RIVALRY
• Firm level rivalry is usually dynamic and
complex
• The competitive actions and responses of
firmd are foundation for successfully building
and using capabilities and core
competencies to gain an advantageous
market position
A MODEL OF
COMPETITIVE RIVALRY
COMPETITOR
•
ANALYSIS
Competitor analysis is used to help a firm
understand its competitors.
• The firm studies competitors’ future objectives,
current strategies, assumptions, and capabilities.
• With the analysis, a firm is better able to predict
competitors’ behaviors when forming its
competitive actions and responses.
COMPETITOR
•
ANALYSIS
Competitor analysis is the first step the firm takes
to be able to predict the extent and nature of its
rivalry with each competitor.
• The number of markets in which forms compete
against each other (market commonality) and
the similarity in their resources (resource similarity)
determine the extent to which the firms are
competitors.
COMPETITOR
ANALYSIS
• Firms with high market commonality and highly
similar resources are “cleraly direct and mutually
acknowledged competitors.”