Session 10: Competitive rivalry

Question 1

Define competitors

Answer 1

Firms operating in the same market, with similar products, targeting similar customers.

Question 2

What is competitive behavior?

Answer 2

Set of competitive actions and responses a firm takes to build or defend its competitive advantages and to improve its market position

Question 3

Define competitive rivalry

Answer 3

ongoing set of competitive actions
and competitive responses that occur among firms as they
maneuver for an advantageous market position

Question 4

Define competitive rivalry

Answer 4

ongoing set of competitive actions
and competitive responses that occur among firms as they
maneuver for an advantageous market position

Question 5

What do the outcomes of competitive rivalry influence?

Answer 5

A firm’s
- ability to develop and sustain competitive advantage
- Level of financial returns

Question 6

Define competitive dynamics

Answer 6

total set of competitive actions and responses taken by all firms competing within a market

Question 7

Competitors engage in (blank1), why? (blank2), How? (blank3), What results? (blank 4)

Answer 7

Blank 1: competitive rivalry
Blank2: to gain advantageous market position
Blank 3: Through competitive behavior, competitive actions, competitive responses
Blank4: competitive dynamics, competitive actions and responses taken by all firms competing in a market

Question 8

A strategy’s succes is a function of:

Answer 8

1. The firm’s initial competitive actions
2. How well the firm anticipates competitor’s response to them
3. How well the firm anticipates and responds to its competitors’ initial actions

Question 9

3 assumptions/facts of competitive rivalry

Answer 9

• firms are mutually interdependent
• Competitors’ actions and responses affect them
• Marketplace success is a function of both: individual strategies, the consequences of their use

Question 10

Differentiate strategic from tactical actions

Answer 10

both are market based, but strategic implies a significant organizational commitment, is hard to reverse, difficult to implement and even harder to reverse, while a tactical action or response is aimed to fine tune a strategy, thus easy to implement and reverse

Question 11

Write in order the steps of competitive rivalry according to the model

Answer 11

1. competitor analysis
2. Drivers of competitive behavior
3. competitive rivalry
4. outcomes
   Then there is feedback, leading back to the first step for it to start again

Question 12

What’s a competitor analysis?

Answer 12

its the first step the firm takes to be able to predict its competitors’ actions and responses

Question 13

What do firms study about their competition through competitor analysis?

Answer 13

• future objectives
• current strategies
• assumptions
• capabilities

Question 14

To complete competitor analysis, firms also study…

Answer 14

Market commonality
Resource similarity

Question 15

What does awareness refer to and when is it greater or smaller?

Answer 15

Awareness refers to the extent to which competitors recognize
the degree of their mutual interdependence.
➢ Awareness tends to be greatest when firms have highly similar
resources (in terms of types and amounts) to use when competing
against each other in multiple markets.

Question 16

What motivation and what drives it?

Answer 16

Motivation concerns the firm’s incentive to take action or to
respond to a competitor’s attack.
➢ A firm may not be motivated to engage in competitive rivalry if it
perceives that its market position will neither improve nor suffer if
it does not respond.

Question 17

What is ability?

Answer 17

Ability refers to the quality of the resources available to the firm
to attack and respond.
➢ Without available resources (such as financial capital and people),
the firm is not able to attack a competitor or respond to its action

Question 18

List the 3 factors affecting the likelihood a competitor will take competitive action

Answer 18

• first mover benefits
• organizational size
• quality

Question 19

Develop on first movers goals and focuses

Answer 19

• A first mover is a firm that takes an initial competitive action to build or
  defend its competitive advantages or to improve its market position.
• First movers emphasize research and development (R & D) as a path
  to developing innovative products that customers will value.

Question 20

What industries are the most focal for first mover advantage?

Answer 20

• industries experiencing rapid technological developments
• with relatively short product life cycle

Question 21

What else can first movers gain?

Answer 21

• customer loyalty
• market share
• setting industry standards

Question 22

When is a firm likely to respond to competitors’ action?

Answer 22

➢ The action leads to better use of the competitor’s capabilities to
develop a stronger competitive advantage or an improvement in its
market position.
➢ The action damages the firm’s ability to use its core competencies to
create or maintain an advantage.
➢ The firm’s market position becomes harder to defend

Question 23

3 factors to predict how likely it is a competitor will respond

Answer 23

• type of competitive action
• actor’s reputation
• Market dependence

Question 24

Name the 3 steps of competitive dynamics’ slow cycle of around 10 years

Answer 24

Launch
exploitation
counterattack