Chapter 5 - Competitive Rivalry

Competitor analysis

market commonality

• they are likely to compete with each other for resources and customers

resource similarity

• the extent to which competitors have access to the same resources 

competitive dynamics

slow cycle markets

• competitive advantages last for long periods because they are hard to imitate

• expensive to imitate

fast cycle markets

• competitor’s can imitate the capabilities

• it can be imitated quickly and cheaply

drivers of competitive behavior

awareness

• how much competitors understand their shared dependence on each other due to their similar markets and resources.

motivation

• High market commonality gives firms more motivation to attack and respond to competitors actions than when market commonality is low

ability

• when resources between firms are similar, the stronger firm may rush in responding to an attack.

actions that drive competitive rivalry

first mover

•  a company that gains a competitive advantage by being the first to bring a new product or service to the market. 

• develop customer loyalty

organizational size

• small firms launch competitive actions more quickly

• large firms have more resources so can launch more at a time

quality

• poor quality will result in lower sales

• customers base quality on what they are looking for

likelihood of response

type of competitive action

• there are responses to strategic and tactical actions

• strategic actions (long term) have fewer competitive responses because they are difficult to implement

• tactical actions (short-term) have a fast response

actor’s reputation

• past reactions to an action predict future responses

• competitors take action once the market leaders do

market dependence

• firms that are not diversified are dependent on one market

• they respond quickly and strongly