This chapter discusses competitive dynamics and provides 5 key points: 1) Lead, follow, or challenge the market. Firms can lead by having the largest market share or challenge the market through innovation. 2) Markets change over time so firms must reformulate strategies and differentiate. 3) Firms should research their market share, customers, and competitors to defend their market and find new customers. 4) Firms can find a niche in a small segment to avoid competition with larger firms. 5) Firms should continuously innovate, understand customer needs, and improve products and services to "beat the market".