This document discusses competitive rivalry and competitive dynamics. It defines key terms like competitors, competitive rivalry, competitive behavior, and competitive dynamics. It presents a model of competitive rivalry that shows how firms are interdependent and affect each other through competitive actions and responses. It discusses competitor analysis, market commonality, resource similarity, and the drivers of competitive behavior. It also addresses the likelihood of attack and response between competitors, considering factors like first-mover benefits, organizational size, and quality.

1. COMPETITIVE RIVALRY AND COMPETITIVE DYNAMICS
PRESENTED BY
USMAN REHMAN
HAMZA AZHAR
ARSALAN NAICH
ISHA FAROOQ
HUSNAIN SAEED
UMER KHALID
ABDUL WADOOD
ZAINAB SABA
RUKSANA KANWAL
M. IRTAZA
M. ZAHID
SHER KHAN ABBASI
M. ASHRAF
M. MUBASHIR
MOHSIN ANWAR

2. COMPETITORS
• Competitors are firms operating in the same market, offering similar
products, and targeting similar customers.
• Competitive rivalry is the ongoing set of competitive actions and
competitive responses that occur among firms as they maneuver for an
advantageous market position.
• Competitive behavior is the set of competitive actions and responses a firm
takes to build or defend its competitive advantages and to improve its
market position.
• Multimarket competition occurs when firms compete against each other in
several product or geographic markets.
• Competitive dynamics refer to all competitive behaviors—that is, the total
set of actions and responses taken by all firms competing within a market.

3. FROM COMPETITION TO COMPETITIVE
DYNAMICS

4. A MODEL OF COMPETITIVE RIVALRY
• Competitive rivalry evolves from the pattern of actions and responses as one firm’s
competitive actions have noticeable effects on competitors, eliciting competitive
responses from them. This pattern suggests that firms are mutually interdependent, that
they are affected by each other’s actions and responses, and that marketplace success is
a function of both individual strategies and the consequences of their use. Increasingly,
executives recognize that competitive rivalry can have a major effect on the firm’s
financial performance and market position.
• For example, research shows that intensified rivalry within an industry results in
decreased average profitability for the competing firms. Although Apple essentially
created the smartphone market in 2007 by launching the iPhone, some believe that
Google’s Android has rapidly reshaped the market, as evidenced by the fact that nearly
half of all smartphones shipped in 2012 ran on the Android platform. The Opening Case
explains how Google is creating the smartphone of the future which, when introduced,
will likely only increase its rivalry with Apple, Samsung, and other smartphone providers.

5. A MODEL OF COMPETITIVE RIVALRY

6. COMPETITOR ANALYSIS
• A competitor analysis is the first step the firm takes to be able to predict the extent and
nature of its rivalry with each competitor. Competitor analyses are especially important
when entering a foreign market because firms doing so need to understand the local
competition and foreign competitors currently operating in that market.
• The number of markets in which firms compete against each other is called market
commonality while the similarity in their resources is called resource similarity
• Being able to accurately predict rivals’ likely competitive actions and responses helps a
firm avoid situations in which it is unaware of competitors’ objectives, strategies,
assumptions, and capabilities. Lacking the information needed to predict these conditions
for competitors creates competitive blind spots. Typically, competitive blind spots find a
firm being surprised by a competitor’s actions, potentially resulting in negative outcomes.
Increasingly, members of a firm’s board of directors are expected to use their knowledge
and expertise about other businesses and industry environments to help a firm avoid
competitive blind spots.

7. MARKET COMMONALITY
• Market commonality is concerned with the number of markets with which the
firm and a competitor are jointly involved and the degree of importance of the
individual markets to each.
• More formally, market commonality is concerned with the number of markets with
which the firm and a competitor are jointly involved and the degree of importance of
the individual markets to each.
• Firms competing against one another in several or many markets are said to be
engaging in multimarket competition.30 Coca-Cola and PepsiCo compete across a
number of product markets (e.g., soft drinks, bottled water) as well as geographic
markets (throughout North America and in many other countries throughout the
world). Airlines, chemicals, pharmaceuticals, and consumer foods are examples of
other industries with firms often competing against each other in multiple markets.

8. RESOURCE SIMILARITY
• Resource similarity is the extent to which the firm’s tangible and intangible
resources are comparable to a competitor’s in terms of both type and amount.
• Firms with similar types and amounts of resources are likely to have similar
strengths and weaknesses and use similar strategies on the basis of their strengths
to pursue what may be similar opportunities in the external environment.
• “Resource similarity” describes part of the relationship between FedEx and United
Parcel Service (UPS). These companies compete in many of the same markets, and
thus are also accurately described as having market commonality. For example,
these firms have similar types of truck and airplane fleets, similar levels of financial
capital, and rely on equally talented reservoirs of human capital along with
sophisticated information technology.

9. DRIVER OF COMPETITIVE BEHAVIOR
• Market commonality and resource similarity influence the drivers of competitive behavior
like awareness, motivation, and ability.
• Awareness which is a prerequisite to any competitive action or response taken by a firm,
refers to the extent to which competitors recognize the degree of their mutual
interdependence that results from market commonality and resource similarity responses
it takes while engaged in competitive rivalry.
• Motivation: which concerns the firm’s incentive to take action or to respond to a
competitor’s attack, relates to perceived gains and losses. Thus, a firm may be aware of
competitors but may not be motivated to engage in rivalry with them if it perceives that
its position will not improve or that its market position won’t be damaged if it doesn’t
respond.
• Ability: relates to each firm’s resources and the flexibility they provide. Without available
resources (such as financial capital and people), the firm is not able to attack a competitor
or respond to its actions.

10. COMPETITIVE RIVALRY
• A competitive action is a strategic or tactical action the firm takes to build or defend its
competitive advantages or improve its market position.
• A competitive response is a strategic or tactical action the firm takes to counter the
effects of a competitor’s competitive action.
• A strategic action or a strategic response is a market-based move that involves a
significant commitment of organizational resources and is difficult to implement and
reverse.
• A tactical action or a tactical response is a market-based move that is taken to fine-tune
a strategy; it involves fewer resources and is relatively easy to implement and reverse.
When engaging rivals in competition, firms must recognize the differences between
strategic and tactical actions and responses and develop an effective balance between the
two types of competitive actions and responses.

11. LIKELIHOOD OF ATTACK
Resource similarity; and the drivers of awareness, motivation, and ability, other factors affect
the likelihood a competitor will use strategic actions and tactical actions to attack its
competitors. Three of these factors; first-mover benefits, organizational size, and quality.
• A first mover is a firm that takes an initial competitive action in order to build or defend its
competitive advantages or to improve its market position.
The first mover can gain through:
• The loyalty of customers who may become committed to the goods or services of the firm
that first made them available.
• Market share that can be difficult for competitors to take during future competitive rivalry.

12. CONTINUED:
• A second mover is a firm that responds to the first mover’s competitive action, typically
through imitation.
• A late mover is a firm that responds to a competitive action a significant amount of time after
the first mover’s action and the second mover’s response. Typically, a late response is better
than no response at all, although any success achieved from the late competitive response
tends to be considerably less than that achieved by first and second movers.
• An organization’s size affects the likelihood it will take competitive actions as well as the types
and timing of those actions.
• Small firms are more likely than large companies to launch competitive actions and tend to do
it more quickly. Large firms, however are likely to initiate more competitive actions along with
more strategic actions during a given period.
• Quality exists when the firm’s goods or services meet or exceed customers’ expectations.
From a strategic perspective, we consider quality to be the outcome of how a firm competes
through its value chain activities and support functions.

13. LIKELIHOOD OF RESPONSE
• A competitive response is a strategic or tactical action the firm takes to counter the
effects of a competitor’s competitive action. In general, a firm is likely to respond to
a competitor’s action when either:
• The action leads to better use of the competitor’s capabilities to develop a stronger
competitive advantage or an improvement in its market position.
• The action damages the firm’s ability to use its core competencies to create or
maintain an advantage or ■ the firm’s market position becomes harder to defend.

14. TYPES OF COMPETITIVE ACTION
• The likelihood of responses to competitive actions can vary. Competitors may respond with
counter-strategies such as price adjustments, new product launches, intensified marketing
efforts, or defensive moves to protect their market share. The specific response depends on
the competitive landscape, industry dynamics, and the perceived impact of the initial
competitive action.
• In general, strategic actions elicit fewer total competitive responses because strategic
responses, such as market-based moves, involve a significant commitment of resources and
are difficult to implement and reverse.
• Actor Reputation: The reputation of the actor initiating a competitive action can influence the
likelihood of responses. A company with a strong positive reputation may face more cautious
responses from competitors, whereas a company with a history of aggressive tactics might
trigger more assertive reactions. Reputation can impact how competitors perceive and
respond to strategic moves within the market.
• Market Dependence: The market dependence of a company can influence the likelihood of
responses to competitive actions. Companies heavily dependent on a specific market may be
more responsive to competitive threats in that market, as the potential impact on their

15. COMPETITIVE DYNAMICS
■Competitive dynamics concern the ongoing actions and responses AMONG ALL FIRMS
competing within a market for advantageous positions.
■ Building and sustaining competitive advantages are at the core of competitive rivalry, in that
advantages are the key to creating value for shareholder.
Types
1. Slow cycle market
•Competitive advantages are shielded from imitation for long periods of time and imitation is
costly.
•Competitive advantages are sustainable in slow-cycle markets.
Build a unique and proprietary capability that yields competitive advantage, creating
sustainability (i. e., proprietary and difficult for competitors to imitate).
•Once a proprietary advantage is developed, competitive behavior should be oriented to
protecting, maintaining, and extending that advantage.
2. Fast cycle market
• The firm's competitive advantages are not shielded from imitation.
• Imitation happens quickly and somewhat expensively Competitive advantages aren't
sustainable.
• Competitors use reverse engineering to quickly imitate or improve on the firm's products

16. 3. STANDARD CYCLE MARKET
• Moderate cost of imitation may shield competitive advantages.
• Competitive advantages are partially sustainable if their quality is continuously
upgraded.
• Firm Seek large market shares
• Gain customer loyalty through brand names
• Carefully control operations