Exam 3 - Strat Management

First Mover Advantages

Comes from military strategy; This is the competitive edge a company gains by being the first to enter a new market segment or introduce a brand-new product

Disruptive Innovation

An innovation that changes the way we do things

Footholds

Initial position or presence that a company establishes in a new market to serve as a base for growth

Bricolage

Integrating two business that are associated with each other

First Mover Advantages

Brand recognition, economies of scale, resource control, switching costs, intellectual property

First Mover Disadvantages

High market education costs, free riders, financial burn, market shifts

Speed of Response

Responding quickly when under attack, having a slow response can lead to a a firm being left behind the competition

Multipoint Competition

A company that faces the same rival in more than one market. When threatened in one market, companies typically attack in another

Mutual Forbearance

Situation where rivals don’t act aggressively because each recognizes the other can respond in multiple markets

Responding to a Disruptive Innovation

1. Ignore it

2. Counterattack using different goods and services

3. Directly match it

Fighting Brands

Lower end brands a company introduces to help protect market share without damaging existing brands

Responding to Rivals Moves

Speed of response, multipoint competition, mutual forbearance, responding to a disruptive innovation, and fighting brands

What are the three factors to determine if a company will respond to a move?

1. Awareness

2. Motivation

3. Capability

Awareness

Must watch out for moves by competitors that can steal sales from their firm

Motivation

Executives will be highly motivated to retaliate when a rival makes a move

Capability

Firms must possess plans as well as resources to respond to actions

What are they types of cooperative moves?

1. Joint Venture

2. Strategic Alliance

3. Colocation

4. Co-opetition

Joint Venture

An arrangement that involves two or more organizations each contributing to the creation of a new entity

Strategic Alliance

An arrangement between two or more organizations that does NOT create a new entity

Colocation

Occurs when goods and services offered under different brands are very close to each other

Co-opetition

Refers to a blending of competition and cooperation between two companies

Hypercompetition

Refers to a situation that involves very rapid and unpredictable moves and counter moves that undermine competitive advantages