Ch. 6

1. Awareness 2. Motivation 3. Capability

3 things indicate what factors determine the likelihood that a firm will respond to a competitive move. They determine the level of competition tension that exists between rivals. What are those three factors?

Co-opetition

A blending of competition and cooperation between two firms

Bricolage

A concept that is borrowed from the arts and that like blue ocean strategy stresses moves that create new markets

Cooperate, competition

Firms tend to (cooperate/compete) in activities located far in the value chain from customers while (cooperation/competition) generally occurs close to customers

Making a price cut in the US market could lead your competitor to make a price cut in the US and in the European market

Give an example of Multipoint competition

United does not compete in the same markets as southwest

Give an example of Mutual forbearance

The Atlanta airport- instead of using premier establishments they started placing high-end restaurants in airports instead

Give an example of a Blue Ocean Strategy

Ikea opens only one store when they enter a new country and use it as a showcase to establish the brand

Give an example of a foothold

-Auto malls that contain several different car dealerships are found clustered tougher in on neighborhood -Denny's and La Quinta hotel often try to pen up next to one other off of highways

Give an example of colocation

GM tired to compete with cheap Japanese cars by introducing an inexpensive car under a brand called GEO

Give an example of. a fighting brand

Multipoint competition

Situation where a firm faces the same rival in more than one market

False: Most disruptive innovations are not overnight sensations. Usually there is a small group of early adopters and then a critical mass of customers builds over time

T/F: Disruptive Innovations are disruptive because a mass of customers use the product overnight

True

T/F: If a firm is going to respond to a competitor's move, doing so quickly is important. A long delay generally provides the attacker with an edge

False: Under hyper competition it is often better to make a reasonable move quickly rather than hoping to uncover the perfect move through extensive and time-consuming analysis

T/F: In Hypercompetition it is more reasonable to move slowly so that executives can choose the perfect move

False: Success in business often depends on executives learning forma series of competitive and cooperative moves not on selecting ideal moves

T/F: Success in business often depends on executive selecting one ideal move

-joint venture -strategic alliance -colocaiton -co-opetition

What are some cooperative moves that executives could make?

allows firms to share (rather than duplicate) resources and to learn from one another's strengths

What are the advantages in cooperative moves

-Risky -cost of developing the product and educating customers -people who learn form first mover's successes/failures allows them to cheaply copy or improve the product -The first mover must be willing to commit sufficient resources to follow through on their pioneering efforts

What are the disadvantages of being a first mover?

-Speed of response -multipoint competition -Mutual forbearance -Responding to a disruptive innovation -Fighting Brands

What are the key issues surrounding whether or not and how firms respond when put on the defensive by rivals

-risk of loos of control over operations -possible transfer of valuable secrets -possibility of being taken advantage of by partners

What are the risks in cooperative moves

1. ignore the disruption 2. Engage in counterattack using different goods and/or services 3. Directly match the competitor's move

What are the three options when responding to a disruptive innovation?

How likely is this move to provide my firm with a sustainable competitive advantage?

What is the best question to ask when deciding whether to be a first mover?

Mutual forbearance

When rivals each realize that they have more to lose through aggression against each other than they can gain

First-mover advantage

When the initial move into a market allows a firm to establish a dominant position that other firms struggle to overcome

Strategic alliance

a cooperative arrangement between two or more organizations that does not involve the creation of a new entity

Joint Venture

a cooperative arrangement that involves two or more organizations each contributing to the creation of a new entity. The partners share decision-making authority, control of the operation and and profits that the arrangement earns

Hypercompetition

a situation that involves very rapid and unpredictable moves and countermoves that can undermine competitive advantages

Foothold

a small position that a firm intentionally establishes within an industry

Disruptive innovation

an improvement that conflicts with and threatens to replace, traditional approaches to competing within an industry

First-mover

initial entrant into a market

Blue Ocean Strategy

involves creating a new untapped market rather than competing with rivals in an existing market. Instead of outmaneuvering its completion a firm tries to make the competition irrelevant

Fighting Brands

lower-end brand that a firm introduces to try and protect the firm's market share without damaging the firm's existing brands

Colocation

occurs when goods and services offered under different brands are located close to one another