STRATEGIC MANAGEMENT

KEY TERMS:
 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 a set of competitive action and responses a firm
takes to build or defend its competitive advantages and to improve its market
position.
 Competitive Dynamics – refer to all compliance behaviors – that is the total
set of actions and responses taken by all firms competing by a market.
 Competitive Action – is a strategic or tactical action the firm takes to build
or defend its competitive advantages or improves its market position.
 Competitive Response – is a strategic or tactical action the firm takes to
counter the effects of a competitor’s competitive action.
 First Mover – is a firm that takes an initial competitive action in order to
build or defends its competitive advantages or to improve its market
position.
 Fast-cycle Markets
 Late Mover – is a firm that responds to a competitive action a significant
amount of time after the mover’s action and the second mover’s response.
 Multimarket Competition – occurs when firms competes against each
other in several product or geographic markets.
 Market Commonality – is concerned with the number of markets with
which the firm and the competitor are jointly involved and the degree of
importance of the individual markets to each.
 Quality – exists when the firm goods or services meet or exceed customers
expectations.
 Resource Similarity – is the extent in which the firms tangible and
intangible resources are compatible to a competitor’s items of both type and
amount.
  Strategic Action or Strategic Response – is a market-based move that
involves a significant commitment or organizational resources and is
difficult to implement and reverse.
 Second Mover – is a firm that responds to the first mover’s competitive
action, typically through imitation.
 Slow-cycle Markets – are market in which the firm’s competitive
advantages are shielded from imitation commonly for long periods of time
and where imitation is costly.
 Standard-cycle Markets – are markets in which the firm’s competitive
advantages are partially shielded from imitation and imitation is moderately
costly.
 Tactical Action or 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.

REVIEW QUESTIONS:
1. Who are competitors? How competitive rivalry, competitive behavior
and competitive dynamics defined in the chapter?

 Competitors – firms competing in the same market, offering similar

products, and targeting similar customers. Competitive Rivalry – the
ongoing set of competitive actions and responses occurring between
competitors as they compete against each other for an advantageous
market position. Competitive Behavior – the set of competitive
actions and responses an individual firm takes while engaged in
competitive rivalry. Competitive Dynamics – the set of actions and
responses taken by all firms that are competitors within a particular
market.

2. What is market commonality? What is resource similarity? In what way

are these concepts the building blocks for a competitor analysis?

 Market commonality the number of markets with which competitors

are jointly involved and their importance to each resource similarity
 how comparable competitors' resources are in terms of type and
amount a competitor analysis is the 1st step the firm takes to be able
to predict its competitors' actions and responses. market commonality
and resource similarity are studied to complete a competitor analysis
in general, the greater the market commonality and resource
similarity, the more firms acknowledge that they are direct
competitors.

3. How do awareness, motivation and ability affect the firm’s competitive

behavior?

 Market commonality and resource similarity shape the firm's

awareness (the degree to which it and its competitors understand their
mutual interdependence), motivation (the firm's incentive to attack or
respond), and ability (the quality of the resources available to the firm
to attack and respond).

4. What factors affect the likelihood a firm will take a competitive action?

 Having knowledge of these 3 characteristics of a competitor increases

the quality of the firm's predictions about that competitor's actions and
responses:

✓ Market commonality
✓ Resource similarity
✓ Awareness
✓ Motivation
✓ Ability
✓ First-mover benefits
► often gain loyal customers
► earn above-average returns until competitors can
successfully respond to their action
► firms lacking awareness, motivation or ability cannot
engage in first-mover benefits
✓ Organizational size
► reduce the variety of competitive actions that large firms
launch
 ► increases variety of actions undertaken by smaller
competitors
✓ Quality
► base denominator for competing successfully in the
global economy
► necessary but insufficient condition for establishing an
advantage.

5. What factors affect the likelihood a firm will initiate a competitive

response to a competitor’s actions?


✓ The type of action (strategic or tactical) the firm took.
✓ The competitor's reputation for the nature of its competitor
behavior.
✓ The competitor's dependence on the market in which the action
was taken.

6. What competitive dynamics can be expected among firms competing in

slow-cycle markets? In standard-cycle markets?

 In slow-cycle markets, competitive dynamics often include actions

and responses intended to protect, maintain, and extend the firm's
proprietary advantages. In fast-cycle markets, competitive dynamics
entail actions and responses that are oriented to rapid and continuous
product introductions and the development of a stream of over-
changing competitive advantages. Competitive dynamics in fast-cycle
markets often result in rapid product upgrades as well as quick
product innovations.

CASE DISCUSSION:
1. FedEx and UPS have many similar resources and compete across many
of the same markets. How are they different? Stated differently, how do
they differentiate themselves?
  FedEx and UPS compete in many of the same product markets,
including next day delivery, cheaper ground delivery, time-guaranteed
delivery (both domestically and internationally), and freight services.
Meanwhile, UPS concentrates more on the entire value chain while
competing domestically. FedEx and UPS have some competitive
similarities. Being in the same market, has its ups and downs but there
are differences to separate the two to provide for their competitive
edge. One-way they are both different is that FedEx tends to focus
more on worldwide distribution whereas UPS focuses more on
domestic distribution. Since FedEx is more worldwide, they tend to
contribute more express services such as freight, etc. and UPS relies
more on package delivery. I tend to use UPS more with packages
because I never tend to ship further than the US and locally as well.
UPS specializes in domestic ground delivery services. FedEx
specializes in time-sensitive international air freight.

2. What are some of the major and unique strategic actions taken by each
firm? Have these action been successful?

 Actions taken by each firm include: When FedEx learned that its
contract with U.S.P.S. was selected for renewal, UPS successfully put
a bid on the contract, meaning that it lost this competitive battle to its
rival.

3. Base on the information in the case and from your research, which of
these firms do you predict will be the most successful in the future?
Please explain your reasons.

 I believe the rivalry and intense competition between FedEx and UPS
will keep the success of each firm relatively close. However, if I had
to pick which firm would be more successful, I would choose UPS
because they manage their business through a single pickup and
delivery network which has allowed them to maximize network
efficiency and asset utilization. Also, with the increase in online
shopping, UPS logistics have made them a great choice for retailers to
use for delivering goods to customers.