MKT - 5514 - Exam 1 - Ch 5

Who are competitors? How are competitive rivalry and competitive behavior defined in the chapter?

Competitors: Firms operating in the same market by offering similar products and targeting similar customers......Competitive rivalry: The ongoing set of competitive actions and responses that occur among firms seeking an advantageous market position. The outcomes of competitive rivalry influence the firm's competitive advantages and the level of financial returns. Drivers of competitive behavior: Awareness, motivation, and ability. Market commonality and resource similarity influence these drivers.

What competitive dynamics can firms expect to experience when competing in fast-cycle markets?

Fast-cycle markets ((e.g., Forever 21 in the fast fashion industry) are markets where competitors can imitate the focal firm's capabilities, often rapidly and inexpensively, which contribute to its competitive advantages. In a fast-cycle market Competitive advantages are not sustainable, with strong competition, Technology (which often is not proprietary) diffuses rapidly, The velocity of change places considerable pressure to make quick and effective strategic decisions

What is market commonality? What is resource similarity? In what way do these concepts help a competitor analysis?

In general, the greater the market commonality and resource similarity, the more firms acknowledge that they are direct competitors. Market commonality is concerned with 1) the number of markets with which a firm and a competitor are jointly involved and 2) the degree of importance of the individual markets to each. In general, multimarket competition reduces competitive rivalry, but some firms will still compete when the potential rewards (e.g., potential market share gain) are high.........Resource similarity is the extent to which a firm's resources are similar to a competitor's, in terms of type and amount. Firms with the similar resource pool tend to use similar strategies leveraging their similar strengths (often pursuing similar opportunities in the external environment).

How do a firm's awareness, motivation, and ability in a competitive environment affect its competitive behavior?

Market commonality and resource similarity shape a firm's awareness, motivation, and ability in a competitive environment. Awareness refers to the extent to which competitors recognize the degree of their mutual interdependence (Awareness tends to be greater when firms have highly similar resources (in terms of types and amounts) and compete against each other in multiple markets.).........Motivation concerns a firm's incentive to take action or to respond to a competitor's attack (Whether a firm's action/response change its market position).......Ability refers to the quality (and quantity) of the resources available to the firm to attack/respond its competitors (Without available resources (such as financial capital and people), the firm is not able to attack/respond, and The more significant the resource imbalance between the focal firm and competitors, the longer is the delay in taking any action/response by the firm with a resource disadvantage.)

What competitive dynamics can firms expect to experience when competing in slow-cycle markets?

Slow-cycle markets ((e.g., Microsoft in the PC operation system) are markets where competitors lack the ability to (quickly) imitate the focal firm's competitive advantages (which commonly last for long periods), and where imitation would be costly.In a slow-cycle market Building a unique and proprietary capability produces a competitive advantage and success (e.g.: copyrights and patents), A firm exploits the advantage for as long as possible while the product's uniqueness shields it from competition., Firms may be able to sustain a competitive advantage over longer periods.

What competitive dynamics can firms expect to experience when competing in standard-cycle markets?

Standard-cycle markets are markets in which some competitors may be able to imitate the focal firm's competitive advantages and where that imitation is moderately costly. In a standard-cycle market: Competitive advantages are partially sustainable but only if the firm can upgrade the quality of its capabilities continuously, The capabilities and core competencies in which firms base their competitive advantages are less specialized.

What factors affect the likelihood that a firm will take a competitive response to a competitor's action(s)?

a firm is likely to respond to a competitor's action: When the action leads to better use of the competitor's capabilities to develop or improve a competitive advantage or market position, When the competitor's action damages the focal firm's ability to use its core competencies to create or maintain an advantage, or When the firm's market position becomes harder to defend.........In addition to market commonality, resource similarity, and awareness, motivation, and ability, firms evaluate three other factors to predict how a competitor is likely to respond: Type of competitive action, Actor's reputation, Market dependence