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Competitive Actions and Market Strategies

The document discusses competitive rivalry between firms. It defines competitive action as moves taken by firms to build or defend competitive advantages, and competitive response as moves taken to counter a competitor's actions. Strategic actions require significant resources and are difficult to reverse, while tactical actions involve fewer resources and are easier to reverse. The likelihood of a firm initiating competitive attacks depends on factors like first-mover benefits, organizational size, and perceived quality - with first movers, smaller and higher quality firms more likely to attack.

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Lyn Legazpi
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33 views2 pages

Competitive Actions and Market Strategies

The document discusses competitive rivalry between firms. It defines competitive action as moves taken by firms to build or defend competitive advantages, and competitive response as moves taken to counter a competitor's actions. Strategic actions require significant resources and are difficult to reverse, while tactical actions involve fewer resources and are easier to reverse. The likelihood of a firm initiating competitive attacks depends on factors like first-mover benefits, organizational size, and perceived quality - with first movers, smaller and higher quality firms more likely to attack.

Uploaded by

Lyn Legazpi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

COMPETITIVE RIVALRY

Competitive Action

 a strategic or tactical action the firm takes to build or defend its competitive advantages or
improve its market position.

Competitive Response

 a strategic or tactical action the firm takes to counter the effects of a competitor’s competitive
action.

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 that is already in place.
 Easy to implement and reverse

LIKELIHOOD OF ATTACK

Likelihood of Attack Factors:

1. First-mover benefits
 Firm that takes an initial competitive action to build or to defend its competitive
advantages or to improve its market position.
 Must have readily available resources
 Can result in:

1) customer loyalty and

2) above-average market share

 Responses to:
o Second Mover
 Responds to first mover, typically through imitation
 Is more cautious than first movers
 Tends to study customer reactions to product innovations
 Tends to learn from the mistakes of first movers, reducing its risks
 Takes advantage of time to develop processes and technologies that are
more efficient than first movers, reducing its costs
 Will not benefit from first mover advantages, lowering potential returns
o Late Mover
 Responds to market opportunities only after considerable time has
elapsed since first and second movers have taken action.
 Has substantially reduced risks and returns

2. Organizational Size
 Small firms
o are nimble/flexible and can more quickly act with a variety of actions;
o rely on speed and surprise to defend their competitive advantage.
 Large firms
o often have greater slack.
o have greater likelihood to initiate competitive and strategic actions
overtime.
o actions are more numerous.
3. Quality
 Customer perception that the firm’s goods or services perform in ways that are
important to customers, meeting or exceeding their expectations.

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