ch 11- Competitive Interaction

A __________ provides a basis for making competitive assessments not only because it defines who a company's competitors are but also because it can help to analyze potential changes in the landscape. tit-for-tat strategy strategic group map strategy canvas competitor response profile

strategic group map

A company's __________ are the resources and capabilities that deliver unique value. weaknesses strengths opportunities threats

strengths

Develop Strategies that Cannot be Easily Copied

"To be certain to take what you attack is to attack a place the enemy does not protect." -Sun Tzu • •Avoid missing new opportunities by only copying moves by competitors -companies often fail to see how they could do something altogether different. •Competitors may occupy distinctive positions in their market so that they can profitably coexist

Competitor Response Profile

1."What drives the competitor?" -Objectives and undergirding assumptions which point to potential rival moves 2."What is the competitor doing or capable of doing?" -Competitor's strategy, resources, and capabilities 3."How will the competitor respond to specific moves?"

Which of the following is NOT a principle of competitive strategy? Protect and neutralize vulnerabilities Know your strengths and weaknesses Develop strategies that cannot be easily imitated Bring threats against weaknesses

Bring threats against weaknesses

How to Beat the Competition

Four Principles for Identifying Potential Competitive Moves: 1.Know your strengths and weaknesses 2.Bring strength against weakness 3.Protect and neutralize vulnerabilities 4.Develop strategies that cannot be easily imitated or copied (go where the competitor is not)

Which of the following is a structured approach to analysis of competitor interaction that yields predictions about which strategic actions are most likely to be chosen by rivals? Game theory Dominant strategy Tit-for-tat strategy Competitor response profile

Game theory

Which of the following is NOT a way to reinforce a monopoly? Lower entry barriers Limit competitive access to scarce resources Innovation and patenting Introduce new products frequently

Lower entry barriers

Which of the following represents the way rivals in a market interact and bargain for advantage? Nash equilibrium Game theory Market Structure Dominant strategy

Market Structure

__________ represents a set of moves in a game that simultaneously maximize each firm's payoff, given the choices of rivals and from which no player has an incentive to defect. Game theory Nash equilibrium Competitor landscape Dominant strategy

Nash equilibrium

Dynamic

Rapid product releases, new entrants, or market consolidations which affect the shape of the industry

Strategic Responses in a Dynamic Environment

Reconfigure processes and capabilities to emphasize innovation and speed

Weaknesses

Resources and capabilities subject to rapid obsolescence, easy imitation, or high costs not recouped by value

Strengths

Resources and capabilities that deliver unique value

Stable

Set of competitors faced by a firm, the supporting technologies, and the environmental factors are changing slowly

Which of the following terms represent a set of companies that compete in similar ways with similar business models pursuing similar sets of customers? Market structure Strategic group Competitor profile Game theory

Strategic group

Knowing the Competition

Understand the competitive landscape Evaluate the competition Beat the competition Understand the market structure and competitive environment

Any factor that increases the costs, lowers the profit margins, or limits the market share of entrants to a market is known as a(n) ________. barrier to mobility strategic structure barrier to entry game theory

barrier to entry

Any factors that limit the ability of a company to move between strategic groups are called ___________. barriers to mobility barriers to entry game theories strategic barriers

barriers to mobility

A(n) _________ is a profile of a competitor that identifies its objectives and assumptions, its strategy, and its resources and capabilities in order to anticipate how the competitor might respond to rival actions. strategy canvas competitor response profile strategic group map competition landscape

competitor response profile

In game theory, a _________ is a set of actions that are always played no matter what a rival chooses to do. tit-for-tat strategy strategy canvas game structure dominant strategy

dominant strategy

A company's strengths are the resources and capabilities that are subject to rapid obsolescence, easy imitation, or high cost not recouped by value.

false

An oligopoly is a market of one firm or one highly dominant firm

false

Companies find that switching strategic groups is easy once they have built a history in one

false

A company's own __________, once identified, must either be reinforced or truly neutralized so they don't become targets of competitors. strengths weaknesses threats opportunities

weaknesses

Understanding Market Structure and the Competitive Environment

•A firm's circumstances define which competitive actions are available and likely to be effective • •Understanding the market context creates the scope for competitive action

Strategy Canvas

•Assess relative strengths and weaknesses against specific customer purchase criteria -Uncover how companies attempt to offer unique value to customers relative to competitors •Identify new ways to compete with rivals

Evaluating the Competition

•Examine motives and likely behavior of individual competitors -Use analysis to identify your own competitive moves which bring most advantageous effect •Evaluate competition by developing a competitor response profile which identifies characteristics of a competitor to assess likely responses to rival actions

Strategic Group Analysis

•Identify main differences in the ways firms in the industry compete (low-cost vs. full-fare airlines with a Strategic Group Map -Determine most relevant factors for horizontal and vertical axes -Score industry players on chosen factors and plot on chart -Clusters represent strategic groups

Understanding the Competitive Landscape

•Identify strategic groups and mobility barriers -Understand structure of competitive environment -Direct and indirect competitive groups within an industry should not be ignored

Protect and Neutralize Vulnerabilities

•Strengthen or neutralize weaknesses •Starbucks protected its atmosphere by surrounding it with a large variety of great tasting coffee blends, food items, store convenience, and brand positioning

Barriers to Mobility

•Switching strategic groups is difficult because it is hard and slow to reconfigure activities or activity systems -This inability to jump between groups is known as a barrier to mobility

Know Your Strengths and Weaknesses

•Target strengths against competitors' weaknesses for greatest competitive effect • •Example: Google leveraging software engineering strength to develop the Android operating system, helping it grab smartphone market share from Microsoft

Summary and Takeaways

•Understanding the competitive landscape can help a firm identify strategic groups and potential areas for opportunities •Developing a competitive response profile allows a company to examine areas for opportunities and assess possible responses to rival actions •A company can beat the competition by identifying its strengths and weaknesses, bringing strengths against competitors' weaknesses, neutralizing its own vulnerabilities, and developing strategies that cannot be easily imitated or copied •Understanding the market structure may influence the strategies a firm might employ

A strategic group map

•can reveal important potential changes in an industry - e.g. are companies in one group beginning to appeal to the primary markets of another?