Ch. 6

Mutual Forbearance

occurs when rivals do not act aggressively because each recognizes that the other can retaliate in multiple markets.

Coopetition

refers to the blending of competition and cooperation between two firms.

first mover

An initial entrant into a market.

first mover advantage

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

Capability

Firms must possess plans, as well as resources, to respond to the actions of their rivals.

How can firms win without fighting using blue ocean strategy?

Instead of trying to outmaneuver its competition, a firm using a blue ocean strategy tries to make the competition irrelevant.

benefits of taking quick and decisive action?

It is often better to make a reasonable move quickly rather than hoping to uncover the perfect move through extensive and time-consuming analysis. Hesitation can lead to disaster.

Bricolage

Using whatever materials and resources happen to be available as the inputs into a creative process.

Joint ventures

involve two or more organizations that contribute to the creation of a new entity.

Colocation

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

Multipoint competition

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

Fighting Brand

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

Foothold

A small position that a firm intentionally establishes within a market in which it does not yet compete.

A-M-C Framework

Awareness, Motivation, Capability determine the likelihood that a firm will respond to a competitive move: awareness, motivation, and capability. These three factors together determine the level of competition tension that exists between rivals

Describe the creative process of bricolage.

Executives apply the concept of bricolage when they combine ideas from existing businesses to create a new business.

Motivation

"for every action there is an equal and opposite reaction" executives will be highly motivated to retaliate when a rival makes a competitive move.

Advantages of being a first mover

-Initial move into a market allows a firm to establish a dominant position that other firms struggle to overcome. -claiming large market share

Disadvantages of being a first mover

-Risky because customers might not embrace its offering. -First movers also bear the costs of developing the product and educating customers.

Types of Competitive Moves

-first mover advantage -disruptive innovation -blue ocean strategy -footholds -bricolage

Two ways using a foothold can benefit firms

1. For an army, owning a foothold can dissuade other armies from attacking in the region 2. It gives an army a quick strike capability in a territory if the army needs to expand its reach.

Four types of cooperative moves

1.Joint Ventures 2.Strategic Alliances 3.Colocation 4.Coopetition

Two ways firms can respond to disruptive innovations?

1.executives may believe that the innovation will not replace established offerings entirely and thus may choose to focus on their traditional modes of business while ignoring the disruption 2.a firm can counter the challenge by attacking along a different dimension. 3. Match competitor's move

Blue ocean strategy

Creating a new, untapped market rather than competing with rivals in an existing market.

The importance of speed in competitive response?

If a firm is going to respond to a competitor's move, doing so quickly is important. If there is a long delay between an attack and a response, this generally provides the attacker with an edge. Slow response might lead firm to be crushed by competition

Describe how mutual forbearance can be beneficial for firms engaged in multipoint competition.

If rivals are able to establish mutual forbearance, then multipoint competition can help them be successful. Mutual forbearance occurs when rivals do not act aggressively because each recognizes that the other can retaliate in multiple markets.

Disruptive innovation

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

Strategic alliances

cooperative arrangements between two or more organizations that do not involve the creation of a new entity.

Awareness

executives must watch out for moves by competitors that can steal sales from their firm