competitivedynamics.ppt

1、,Competitive Dynamics,Professor: Xiaoming He,Definitions,Competitors Firms operating in the same market, offering similar products and targeting similar customers Competitive Behavior Set of competitive actions and competitive responses the firm takes to build or defend its competitive advantages an

2、d to improve its market position,Competitive Dynamics,Results from a series of competitive actions and competitive responses among firms competing within a particular industry,Competitive Rivalry,Exists when two or more firms jockey with one another in the pursuit of better market position,From Comp

3、etitors to Competitive Dynamics,Factors Leading to More Complex Rivalry,Declining emphasis on single, domestic markets and increasing emphasis on global markets,Advances in communication technology make coordination easier across multiple markets,Advances in technology and innovation have increased

4、competitiveness of small and medium sized firms,National barriers are falling due to the number and scope of trade agreements (GATT, NAFTA, EU),Relative Size,Speed,Innovation,Quality,Ability for Action and Response,Outcomes,Drivers of Competitive Behavior,Awareness,Motivation,Capability,Competitor A

5、nalysis,Interfirm Rivalry: Attack & Response,Likelihood of Attack,First Mover Incentives,Likelihood of Response,Type of Competitive,Action,Dependence on the,Market,Resource Availability,Actors Reputation,Competitive,Slow, Standard,or Fast Cycle,Market Types,Competitive,Sustained,Outcomes,Competitive

6、,Advantage,Temporary,Advantage,Evolutionary,Outcomes,Entrepreneurial,or Market-Power,Growth-Oriented,Actions,Feedback,Model of Interfirm Rivalry: Likelihood of Attack and Response,Competitor Analysis,Market Commonality Each industry composed of various markets which can be subdivided into (segments)

7、 E.g., Airline, pharmaceutical industries Resource Similarity Extent to which firms tangible/intangible resources are comparable to competitors in type and amount E.g., FedEx and UPS both have efficient operations and focus on cost reduction Combination of market commonality & resource similarity in

8、dicate a firms direct competitors,A Framework of Competitor Analysis,Competitor Analysis,Resource Similarity,Market Commonality,Firms are less inclined to attack a firm that is likely to retaliate,Firms with dissimilar resources are more likely to attack,Firms with similar resources are more likely

9、to be aware of each others competitive moves,Model of Interfirm Rivalry: Likelihood of Attack and Response,Drivers of Competitive Behavior,Motivation,Capability,Awareness,Model of Interfirm Rivalry: Likelihood of Attack and Response,Awareness Prerequisite to any competitive action Extent competitors

10、 recognize degree of mutual interdependence that results from market commonality and resource similarity Motivation Firms incentive to take action, or to respond to a competitors attack, as it relates to perceived gains and losses Ability Firms resources that allow competitive action and flexibility

11、 responsiveness,Interfirm Rivalry: Attack & Response,Likelihood of Attack,First Mover Incentives,Likelihood of Response,Type of Competitive,Action,Dependence on the,Market,Resource Availability,Actors Reputation,Model of Interfirm Rivalry: Likelihood of Attack and Response,Firms that take an initial

12、 competitive action,Generally possess the resources and capabilities that enable them to be pioneers in new products, new markets or new technologies,Can earn above average profits until competitors respond,Gain customer loyalty, helping to create a barrier to entry by competitors,Advantage depends

13、upon difficulty of imitation,First Mover,Second Mover,Firms that respond to a First Movers actions,Second Movers frequently imitate First Movers,Should evaluate customers response before moving,“Fast” Second Movers can capture some of initial customers and develop some brand loyalty,Avoid some of th

14、e risks associated with First Move,Speed of response often dictates success,Must possess necessary capabilities to imitate,Second Mover,Types of Competitive Actions,Tactical Actions,Relatively easy to implement,Relatively easy to reverse,Undertaken to “fine tune” strategy,Price cut,Example,Strategic

15、 Actions,Significant commitments of specific & distinctive organizational resources,Difficult to implement,Difficult to reverse,Major Acquisition,Example,Gauging the Likelihood of Response,Easier to respond to,Require fewer resources to mount a response,Actors Reputation,Market leaders are more like

16、ly to be copied,“Risk taking” firms are less likely to be copied,“Price Predators” are less likely to be copied,Type of Competitive Action -Tactical or Strategic,Market Dependence,Firms that are more dependent on a single industry are more likely to respond than are diversified firms,Industry depend

17、ent firms will likely respond to either strategic or tactical actions,Competitor Resources,Smaller firms are more likely to respond to tactical actions,Limited resources may lead to alternatives such as Strategic Alliances,Gauging the Likelihood of Response,Relative Size,Quality,Innovation,Speed,Abi

18、lity for Action and Response,Model of Interfirm Rivalry: Likelihood of Attack and Response,Organizational Size Influences the likelihood of attach as well as types and timing Small firms Act as nimble and flexible competitors Rely on speed and surprise to defend their competitive advantage Have grea

19、ter variety of competitive behavior options available Large firms Often have greater slack Have greater likelihood to initiate competitive and strategic actions over time,Relative Size,Speed,Innovation,Quality,Ability for Action and Response,Outcomes,Drivers of Competitive Behavior,Awareness,Motivat

20、ion,Capability,Competitor Analysis,Interfirm Rivalry: Attack & Response,Likelihood of Attack,First Mover Incentives,Likelihood of Response,Type of Competitive,Action,Dependence on the,Market,Resource Availability,Actors Reputation,Competitive,Slow, Standard,or Fast Cycle,Market Types,Competitive,Sus

21、tained,Outcomes,Competitive,Advantage,Temporary,Advantage,Evolutionary,Outcomes,Entrepreneurial,or Market-Power,Growth-Oriented,Actions,Feedback,Model of Interfirm Rivalry: Likelihood of Attack and Response,Outcomes,Evolutionary Actions Growth-Oriented Actions Market-Power Actions,Evolutionary Outco

22、mes,Sustained Competitive,Competitive Market Types,Slow, Standard or Fast Cycle,Competitive Outcomes,Advantage,Temporary Advantage,Model of Interfirm Rivalry: Likelihood of Attack and Response,An Action-Based Model of the Industry Life Cycle,Key Task,Exploiting Open Niches (Blind Spots) and Competit

23、ive Uncertainty,Key Task,Key Task,Entrepreneurial Actions,Growth-Oriented Actions,Market-Power Actions,Exploiting Factors of Production,Exploiting Market Position,Firm Resource & Market Strength,Emerging Stage,Growth Stage,Mature Stage,Time,Time (years),3,Launch,Exploitation,Counterattack,Returns fr

24、om a Sustained Competitive Advantage,Sustained Competitive Advantage which Eventually Erodes,Competitive Dynamics: 3 Market Cycles,1. Slow-Cycle Markets Markets in which the firms competitive advantages are shielded from imitation for long periods of time, and in which imitation is costly Build a on

25、e-of-a-kind competitive advantage which creates sustainability (I.e., proprietary and difficult for competitors to understand) Once a proprietary advantage is developed, competitive behavior should be oriented to protecting, maintaining, and extending that advantage Organizational structure should b

26、e used to effectively support strategic efforts,Gradual Erosion of a Sustained Competitive Advantage,Competitive Dynamics: 3 Market Cycles (Contd),2. Fast-Cycle Markets Markets in which the firms capabilities that contribute to competitive advantages are not shielded from imitation and where imitati

27、on is often rapid and inexpensive Focus: learning how to rapidly and continuously develop new competitive advantages that are superior to those they replace (creating innovation) Avoid loyalty to any one product, possibly cannibalizing their own current products to launch new ones before competitors

28、 learn how to do so through successful imitation Continually try to move on to another temporary competitive advantage before competitors can respond to the first one,Some Firms Maintain Competitive Advantage in Fast-Cycle Markets by Seizing the Initiative,1,Disrupting the Status Quo,Identify new opportunities to serve the customer by shifting the rules of competition through speed and variety,2,Creating Temporary Advantage,Use superior knowledge of the customer, technology and the future to enhance customer orientat