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Midterm

BUS 478 Study Guide - Midterm Guide: Competitor Analysis


Department
Business Administration
Course Code
BUS 478
Professor
Rui Jorge Basto da Silva
Study Guide
Midterm

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CHAPTER 5 COMPETITIVE RIVALRY & DYNAMICS
THESE NOTES ARE MADE FROM THE TESTBOOK AND TEST
BANK!!!!!!!!!
Competitors - 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
Competitive rivalry affects a firm’s BLS
COMPETITOR ANALYSIS
Competitor analysis is the first step the firm takes to be able to predict extend and
nature of its rivalry with each competitor
2 dimension of competition determine this:
1. Firms with high market commonality
2. Firms with highly resource similarity
a. Make firms direct and mutually acknowledge competitors
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
Multimarket competition - Firms competing against one another in several markets
Firm is multimarket competition are less likely to initiate an attack but more
likely to respond aggressively when attacked

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Therefore → multimarket competition reduces competitive rivalry but some firms
will still compete when the potential rewards are high
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
o Firms with similar types and amount have similar strengths and weaknesses
and use similar strategies
Competitive rivalry between these types of firms is intense
DRIVERS OF COMPETITIVE BEHAVIOR
Awareness
Refers to the extent to which competitors recognize the degree of their mutual
inter-dependence that results from market commonality and resource similarity
The extend a firm understands the consequences of its competitive actions and
responses
Awareness tends to be greatest when firms have highly similar resources (in
terms of types and amounts) to use while competing against each other in
multiple markets.
Motivation
Concerns the firm’s incentive to take action or to respond to a competitor’s
attack, relates to perceived gains and losses
A benefit of not having the motivation to engage in rivalry is that the firm can
retain resources that can be used for other purposes including competing against
a different rival
Market commonality affects the firm’s perceptions and resulting motivation – a
Firm is more likely to attack a rival with who it has low market commonality
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.
However, similar resources suggest similar abilities to attack and respond. When
a firm faces a competitor with similar resources, careful study of a possible attack
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