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39 Cards in this Set
- Front
- Back
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What is driving SW Airline's success?
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Combination of
1. low costs 2. excellent customer service 3. high on-time performance |
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Define Competitors
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Firms operating in the same market, offering similar products & targeting similar customers.
Between 80 – 90% of new firms fail—it’s critical to learn how to compete |
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Define Competitve Rivarly
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The ongoing set of competitive actions and responses occurring between competitors.
Competitive rivalry influences an individual firm’s ability to gain and sustain competitive advantages. |
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Define Competitive Behavior
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The set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages and to improve its market position.
How a firm tries to position itself relative the 5 forces of competition |
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Define Multimarket Competition
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Firms competing against each other in several product or geographic markets.
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Define Competitive Dynamics
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The total set of actions and responses taken by all firms competing within a market
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Competitors engange in Comp Rivarly why? how?
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Why?
to gain an advantegous mkt position How? -through comp behvr -comp actions -comp responses |
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Success of a Competitive Rivalry's strategy is determined by:
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-The firm’s initial competitive actions.
-How well it anticipates competitors’ responses to them. -How well the firm anticipates and responds to its competitors’ initial actions. |
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Competitive Rivalry effect on Strategy
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-Affects all types of strategies.
-Has the strongest influence on the firm’s business-level strategy or strategies. (what the firm does in specific product markets) -Global scope increases intensity of competitive rivalry |
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Model of Comp Riv:
Firms are mutally interdependent when? |
-A firm’s competitive actions have noticeable effects on its competitors.
-A firm’s competitive actions elicit competitive responses from its competitors. -Intensified rivalry results in decreased average profitability for firms (Element of your industry analysis) |
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1st step in Comp Analysis?
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Competitor analysis is used to help a firm understand its competitors.
The firm studies competitors’ future objectives, current strategies, assumptions, and capabilities. (Ex. Blue Sky’s ability to compete on quality) With the analysis, a firm is better able to predict competitors’ behaviors when forming its competitive actions and responses. (Should KCI lower price after jury verdict?) |
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Market commonality is concerned with:
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The number of markets with which a firm and a competitor are jointly involved.
The degree of importance of the individual markets to each competitor. (Ex. Therapeutic Surfaces, Wound Care, Vascular Care) Market commonality between your firms? (Disney and Six Flags?) |
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Firms competing against one another in several or many markets engage in multimarket competition.
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A firm with greater multimarket contact is less likely to initiate an attack, but more likely to more respond aggressively when attacked.
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Resource Similarity
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How comparable the firm’s tangible and intangible resources are to a competitor’s in terms of both types and amounts.
(Sony and Toshiba in HD DVD format war—the winner to establish a format wins) |
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Firms with similar types and amounts of resources are likely to:
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Have similar strengths and weaknesses.
Use similar strategies. |
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when is assessing resource similarity difficult?
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Assessing resource similarity can be difficult if critical resources are intangible rather than tangible.
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When performing a competitor analysis, firm must....
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analyze each of its competitors in terms of market commonality and resource similarity
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Drivers of Competitive Behavior:
Awareness is |
Awareness is
the extent to which competitors recognize the degree of their mutual interdependence that results from: Market commonality Resource similarity |
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Drivers of Competitive Behavior:
Motivation is |
Motivation concerns the firm’s incentive to take action or to respond to a competitor’s attack and relates to perceived gains and losses
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Drivers of Competitive Behavior: Ability is
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Ability relates to each firm’s resources the flexibility these resources provide
Without available resources the firm lacks the ability to attack a competitor respond to the competitor’s actions |
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Drivers of Competitive Behavior:
Market commonality |
A firm is more likely to attack the rival with whom it has low market commonality than the one with whom it competes in multiple markets.
Given the strong competition under market commonality, it is likely that the attacked firm will respond to its competitor’s action in an effort to protect its position in one or more markets. |
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Drivers of Competitve Behavior:
Resource Dissimiliarity |
The greater the resource imbalance between the acting firm and competitors or potential responders, the greater will be the delay in response by the firm with a resource disadvantage.
When facing competitors with greater resources or more attractive market positions, firms should eventually respond, no matter how challenging the response. |
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Competitive Action
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A strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position
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Competitive Response
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A strategic or tactical action the firm takes to counter the effects of a competitor’s competitive action
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Strategtic Action (or Response)
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A market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse.
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Tatical Action (or Response)
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A market-based move that is taken to fine-tune a strategy:
Usually involves fewer resources. Is relatively easy to implement and reverse. |
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First Mover
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A firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position.
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First movers allocate funds for what?
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Product innovation and development
Aggressive advertising Advanced research and development |
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First movers can gain what?
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The loyalty of customers who may become committed to the firm’s goods or services.
Market share that can be difficult for competitors to take during future competitive rivalry. |
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Second movers responds when?
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Second mover responds to the first mover’s competitive action, typically through imitation:
Studies customers’ reactions to product innovations. Tries to find any mistakes the first mover made, and avoid them. Can avoid both the mistakes and the huge spending of the first-movers. May develop more efficient processes and technologies. |
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Late Mover
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Late mover responds to a competitive action only after considerable time has elapsed.
Any success achieved will be slow in coming and much less than that achieved by first and second movers. Late mover’s competitive action allows it to earn only average returns and delays its understanding of how to create value for customers. |
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Small firms are more likely to do what, pertaining to attacks?
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To launch competitive actions.
To be quicker in doing so. |
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Small firms are perceived as what, pertaining to attacks?
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Nimble and flexible competitors
Relying on speed and surprise to defend competitive advantages or develop new ones while engaged in competitive rivalry. Having the flexibility needed to launch a greater variety of competitive actions. |
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Large firms are more likely to do what, pertaining to attacks?
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Large firms are likely to initiate more competitive actions as well as strategic actions during a given time period
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Largefirms are perceived as what, pertaining to attacks?
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Large organizations commonly have the slack resources required to launch a larger number of total competitive actions
Think and act big and we’ll get smaller. Think and act small and we’ll get bigger. Herb Kelleher Former CEO, Southwest Airlines |
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Quality exists when the firm’s goods or services meet or exceed _?
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customers’ expectations
(Ex. Hyundai) |
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Product quality dimensions include:
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Performance
Features Flexibility Durability Conformance Serviceability Aesthetics Perceived quality |
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Responses to a competitor’s action are taken when the action:
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Leads to better use of the competitor’s capabilities to gain or produce stronger competitive advantages or an improvement in its market position.
Damages the firm’s ability to use its capabilities to create or maintain an advantage. Makes the firm’s market position becomes less defensible |
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Firms study three other factors to predict how a competitor is likely to respond to competitive actions:
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Type of competitive action (strategic or tactical) Strategic takes more resources
Reputation (Market leader actions often imitated. IB was second mover in pc market. Then came Dell, Compaq and Gateway). Market dependence (Mercedes and BMW) |
