Ch. 5 Review Questions
How do awareness, motivation, and ability affect the firm's competitive behavior?
market commonality and resource similarity shape the firm's awareness (the degree to which it and its competitors understand their mutual interdependence), motivation (the firm's incentive to attack or respond), and ability (the quality of the resources available to the firm to attack and respond) having knowledge of these 3 characteristics of a competitor increases the quality of the firm's predictions about that competitor's actions and responses
Who are competitors? How are competitive rivalry, competitive behavior, and competitive dynamics defined in the chapter?
Competitors - firms competing in the same market, offering similar products, and targeting similar customers. Competitive Rivalry - the ongoing set of competitive actions and responses occurring between competitors as they compete against each other for an advantageous market position Competitive Behavior - the set of competitive actions and responses an individual firm takes while engaged in competitive rivalry Competitive Dynamics - the set of actions and responses taken by all firms that are competitors within a particular market
What factors affect the likelihood a firm will take a competitive action?
1.) market commonality 2.) resource similarity 3.) awareness 4.) motivation 5.) ability 6.) first-mover benefits - often gain loyal customers - earn above-avg. returns until competitors can successfully respond to their action - firms lacking awareness, motivation or ability cannot engage in first-mover benefits 7.) organizational size - reduce the variety of competitive actions that large firms launch - increases variety of actions undertaken by smaller competitors 8.) quality - base denominator for competing successfully in the global economy - necessary but insufficient condition for establishing an advantage
What factors affect the likelihood a firm will initiate a competitive response to a competitor's action(s)?
1.)the type of action (strategic or tactical) the firm took 2.) the competitor's reputation for the nature of its competitor behavior 3.) the competitor's dependence on the market in which the action was taken
What competitive dynamics can be expected among firms competing in slow-cycle markets? In fast-cycle markets? In standard-cycle markets?
In slow-cycle markets, competitive dynamics often include actions and responses intended to protect, maintain, and extend the firm's proprietary advantages In fast-cycle markets, competitive dynamics entail actions and responses that are oriented to rapid and continuous product introductions and the development of a stream of over-changing competitive advantages --> competitive dynamics in fast-cycle markets often result in rapid product upgrades as well as quick product innovations In standard-cycle markets, competitive dynamics rest midway between characteristics of dynamics in slow-cycle and fast-cycle markets. Imitation comes less quickly and is more expensive when a firm is able to develop economies of scale by combining coordinated and integrated design and manufacturing processes with a large sales value for its products
What is market commonality? What is resource similarity? In what way are these concepts the building blocks for competitor analysis?
market commonality: the # of markets with which competitors are jointly involved and their importance to each resource similarity: how comparable competitors' resources are in terms of type and amount a competitor analysis is the 1st step the firm takes to be able to predict its competitors' actions and responses. market commonality and resource similarity are studied to complete a competitor analysis in general, the greater the market commonality and resource similarity, the more firms acknowledge that they are direct competitors
