Rivalry Among

Competitiors

Porters 5 forces

To gain
market
Competitors

an advantageous
position

Competitive Rivalry

Through Competitive behavior

Competitive actions
Competitive responses

Competitive Dynamics
Competitive actions and responses taken by all firms competing
in a market.

Model of Competitive Rivalry

Over time firms take competitive
actions/reactions
Pattern shows firms are mutually interdependent
Firm level rivalry is usually dynamic and complex
Foundation for successfully building and using
capabilities and core competencies to gain an
advantageous market position.

Drivers of Competitive
Behavior
Awareness
Motivation
Ability
Competitive Analysis
Market
Commonality
Resource Similarity
Feedback
Outcomes
Market position
Financial Performance

Inter-firm Rivalry
Likelihood of attack
First-mover incentives
Organizational size
Quality
Likelihood of Response
Type of competitive action
Reputation
Market Dependence

Competitor Analysis
Market Commonality: Each industry composed of various
markets which can be subdivided into (segments)
Resource Similarity: Extent to which firms tangible/intangible
resources are comparable to competitors in type and amount
Market commonality & resource similarity influence three drivers
of competitive behavior
- Awareness
- Motivation
- Ability
Other influences include resource dissimilarity
The greater the resource imbalance between acting firm and
competitors or potential responders, the greater will be the delay
in response

Competitive Rivalry
Important to understand competitors awareness,
motivation and ability in order to predict the likelihood
of an attack study likelihood of attack factors
What are the strategic and tactical actions?
Strategic actions/responses: market-based moves
that signify a significant commitment of organizational
resources to pursue a specific strategy
Difficult to implement and reverse
Tactical actions/responses: market-based moves
that involve fewer resources to fine-tune a strategy

Interfirm Rivalry: Likelihood of Attack

Three possible likelihood of response actions
1. First Mover Incentives
2. Organizational Size
3. Quality
Additional factors affect the likelihood a firm will
competitively respond to a competitors actions:
1. Types and effectiveness of the competitive action
2. Actors Reputation
3. Dependence on the Market
Finally, if the action significantly strengthens or
weakens the firm's competitive position

Competitive dynamics vs. Competitive rivalry

Competitive Dyanmics

Competitive Rivalry

Ongoing actions and

responses taking place
between all firms
competing within a market
for advantageous positions.
Market Speed(slow cycle,
fast cycle and standard
cycle).
Effects of market speed
and actions and responses
of all competitors in the
market.

Ongoing actions and

responses taking place
between and individual
firm and its competitors
for an advantageous
market position.
Market Commonality
and resource similarity
Awareness, motivation
and ability
First mover incentives,
size and quality