Chapter 6 Competitive Rivalry and Competitive Dynamics Competitors are firms operating in the same market, offering similar

ilar products and targeting similar customers Competitive rivalry is the ongoing set of competitive actions and competitive responses occurring between competitors as they compete against each other for an advantageous market position Competitive behaviour is the set of competitive responses the firm takes to build or defend its competitive advantageous and to improve its market position Drivers of Competitive behaviour: o Awareness do managers understand key characteristics of competitors? o Motivation does the firm have appropriate incentives to attack or respond? Multimarket competition occurs when firms compete against each other in several product or geographic markets Competitive dynamics refer to all competitive behaviours, that is the total set of actions and responses taken by all affirms competing with in a market Competitor analysis the first step the firm takes to be able to be able to predict the extent and nature of its rivalry with each competitor Competitor analysis: o Market commonality do firms compete with each other in multiple markets o Resource similarity do competitors possess similar types or amount of resources Market commonality is concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each Resource similarity is the extent to which the firms tangible and intangible resources are comparable to a competitors in terms of both type and amount Competitive action is a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position Competitive response is a strategic or tactical action the firm takes to counter the effects of a competitors competitive action Strategic action or strategic response is a market based move that involves a significant commitment of organizational resources and is difficult to implement and reserve

Tactical action or tactical response is a market based move that is taken to fine tune a strategy, it involves fewer resources and is relatively easy to implement and reverse Factors affecting likelihood of attack; o First mover incentives o Size o Quality

First mover is a firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position Second mover is a firm that responds to the first movers competitive action, typically through imitation Late mover is a firm that responds to a competitive action, but only after considerable time has elapsed after the first movers action and the second movers response