Term
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Definition
| Competitors are firms operating in the same market, offering similar products and targeting similar customers |
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Term
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| 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 |
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| Multimarket competition occurs when firms compete against each other in several product or geographic markets |
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| Competitive dynamics refer to all competitive behaviors - that is, the total set of actions and responses taken by all firms competing within a market |
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Term
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Definition
| 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. |
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Term
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Definition
| Resource similarity is the extent to which the firm's intangible resources are comparable to a competitor's in terms of both type and amount. |
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Definition
| Awareness is the extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity |
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Definition
| Motivation is the firm's incentive to take action or to respond to a competitor's actions, in relation to perceived gains and losses |
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Definition
| Ability relates to each firm's resources and the flexibility they provide |
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Term
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Definition
| Dissimilarity influences competitive actions and responses between firms, int that the greater the resource imbalance between the acting firm and competitors or potential responders, the greater will be in the delay in response by the firm with a resource disadvantage |
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Term
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Definition
| Competitive action is a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position |
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Definition
| A competitive response is a strategic or tactical action the firm takes to counter the effects of a competitor's competitive action |
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Term
| Strategic Action / Strategic Response |
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Definition
| A strategic action or a strategic response is a market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse |
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Term
| Tactical Action / Tactical Response |
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Definition
| A tactical action or tactical response is a market-based move that is taken to fine-tune a strategy; it involved fewer resources and is relatively easy to implement and reverse |
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Definition
- Market commonality
- Resource similarity
- Drivers of awareness
- Motivation, and
- Abiltiy
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Term
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Definition
A 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
First movers allocate funds for product innovation and development, aggressive advertising, and advanced R&D |
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Definition
- can gain the loyalty of customers who may become committed to the goods that first made them available, and
- can gain market share that can be difficult for competitors to take during future competitive rivalry
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Term
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Definition
| Slack makes it possible for firms to have the ability to be first movers. Slack is the buffer provided by actual or obtainable resources that aren't currently in use and are in excess of the minimum resources needed to produce a given level of organizational output |
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Term
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Definition
A second mover is a firm that responds to the first mover's competitive action, typically through imitation
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Term
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Definition
| Second movers study customer's reactions and tries to avoid problems made by first movers. They have the time to develop processes and technologies that are more efficient resulting in lower costs. The profit tends to be lower, but so is the risk |
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Term
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Definition
| A late mover is a firm that responds to a competitive action, but only after considerable time has elapsed after the first mover's action and the second mover's response |
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Definition
This tends to reduce the variety of competitive actions that large firms launch while it increases the variety of actions undertaken by smaller competitors.
Ideally the firm would like to initiate a large number of diverse actions when engaged in competitive rivalry. |
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Term
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Definition
| Quality exists when the firm's goods or services meet or exceed customers' expectations |
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Term
| Product Quality Dimensions |
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Definition
Performance, features, flexibility, durability, conformance, serviceability, aesthetics, and perceived quality
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Term
| Service Quality Dimensions |
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Definition
| Timeliness, courtesy, consistency, convenience, completeness, and accuracy |
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Term
Likelihood of Response
A firm is likely to respond to a competitor's action when: |
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Definition
- the action leads to better use of the competitor's capabilities to gain or produce stronger competitive advantages or an improvement in its market position
- the action damages the firm's ability to use its capabilities to create or maintain an advantage, or
- the firm's market position becomes less defensible
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Term
| Type of Competitive Action |
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Definition
| Strategic actions elicit fewer total competitive responses as they involve a significant commitment of resources and are difficult to implement and reverse. Also the time needed for a strategic action to be implemented and to assess its effectiveness delays the competitor's response. They are more likely to respond to a tactical action - such as match price decrease |
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Definition
| An actor is the firm taking an action or a response while reputation is the positive or negative attribute ascribed by one rival to another based on past competitive behaviour. |
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Definition
An actor that frequently reduces prices to gain or maintain market share.
They generate few responses to its pricing tactical actions as they typically increase prices once their market share objective is reached, and they lack credibility with their competitors |
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Term
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Definition
Market dependence is the extent to which a firm's revenues or profits are derived from a particular market.
They will respond strongly to attacks threatening their market position |
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Term
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Definition
| Competitive dynamics concerns the ongoing actions and responses taking place among all firms competing with a market for an advantageous position |
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Term
Competitive Rivalry
3 Factors
(1) |
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Definition
- factors that determine the degree to which firms are competitors (market commonality and resource similarity)
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Term
Competitive Rivalry
3 Factors
(2) |
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Definition
2. Drivers of competitive behaviour for individual firms (awareness, motivation, and ability)
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Term
Competitive Rivalry
3 Factors
(3) |
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Definition
3. Factors affecting the likelihood that a competitor will act or attack (first-mover incentives, organizational size, and quality) and respond (type of competitive action, reputation, and market dependence) Building and sustaining competitive advantages are at the core of competitive rivalry, in that advantages are at key to creating value for the shareholders |
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Term
| To explain Competive Dynamics |
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Definition
| the effects of varying rates of competitive speed in different markets (slow, fast and standard cycle markets) on the behaviour (actions and responses) of all competitors within a given market. |
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Term
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Definition
| Slow-cycle markets are markets in which the firm's competitive advantages are shielded from imitation for what are commonly long periods of time and where imitation is costly. Thus competitive advantages are sustainable in slow-cycle markets |
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Term
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Definition
Fast-cycle markets are markets in which the firm's competitive advantages aren't shielded from imitation and where imitation happens quickly and perhaps somewhat inexpensively.
Competitive advantages aren't sustainable.
Reverse technology is used by competitor to gain the knowledge required to imitate or improve the firm's products. |
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Term
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Definition
Standard-cycle markets are markets in which the firm's competitive advantages are moderately shielded from imitation and where imitation is moderately costly.
Competitive advantages are partially sustainable but only when firm is continuously upgrading the quality of its capabilities, making the competitive advantages dynamic. |
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