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.
Competing firms are mutually interdependent

Firms study competitive rivalry in order to predict the competitive actions and responses each of their
competitors are likely to take

A Model of Competitive Rivalry

- presents the sequence of activities commonly involved in competition between a firm and its
competitors
- use to understand how tot predict a competitor’s behavior and reduce the uncertainty
associated with it

Competitor analysis – is the first step the firm takes to be able to predict its competitors’ actions and
responses.

Two building blocks of competitor analysis:

 Market Commonality
- is concerned with the number of markets with which the firm and a competitor are jointly
involved and degree of importance of the individual markets to each competitor.
 Firms competing against one another in several or many markets engage in multimarket
competition. A firm with greater multimarket contact is less likely to initiate an attack, but likely
to more respond aggressively when attacked.

 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.
Assessing resource similarity can be difficult if critical resources are intangible rather than
tangible.

Market Commonality and Resource Similarity – So what? Who cares?

Rivals with market commonality and resource similarity are highly likely to respond to the
competitive actions of each other