STRATEGY

Competitive Rivalry and Competitive Dynamics KNOWLEDGE OBJECTIVES Define competitors, competitive rivalry, competitive behavior, and competitive dynamics. Describe market commonality and resource similarity as the building blocks of a competitor analysis. Explain awareness, motivation, and ability as drivers of competitive behavior. Discuss factors affecting the likelihood a competitor will take competitive actions. Discuss factors affecting the likelihood a competitor will respond to actions taken against it. Explain competitive dynamics in slow-cycle, fast-cycle and standard-cycle markets. CHAPTER OUTLINE Opening Case Competition Between Hewlett-Packard and Dell The Battle Rages On A MODEL OF COMPETITIVE RIVALRY COMPETITOR ANALYSIS Market Commonality Resource Similarity DRIVERS OF COMPETITIVE ACTIONS AND RESPONSES Strategic Focus Who Will Win the Competitive Battles Between Netflix and Blockbuster COMPETITIVE RIVALRY Strategic and Tactical Actions Strategic Focus Using Aggressive Pricing as a Tactical Action at Wal-Mart LIKELIHOOD OF ATTACK First-Mover Incentives Organizational Size Quality LIKELIHOOD OF RESPONSE Type of Competitive Action Actors Reputation Dependence on the Market Popped the Top COMPETITIVE DYNAMICS Slow-Cycle Markets Fast-Cycle Markets Standard-Cycle Markets SUMMARY REVIEW QUESTIONS EXPERIENTIAL EXERCISES NOTES LECTURE NOTES Chapter Introduction The competitive landscape of the twenty-first century will be characterized by increasing globalization, advanced technological development, and other factors that will lead to an environment that is more dynamic and charged with rivalry. Firms will act and react in a dance of sorts, but one involving very high stakeseven survival. This chapter introduces terms and concepts relevant to the conversation about competitive behavior in a variety of markets. Figure 5.2 is central to the discussion of most of the chapter. OPENING CASE Competition Between Hewlett-Packard and Dell The