Strategic Managment Chapter Notes.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 4410A/B
Robert Deane

Chapter 6 Competitive Rivalry and Competitive Dynamics Competitors Firms operating in the same market, offering similar products and targeting similar customers Competitive The ongoing set of competitive actions and competitive Rivalry responses occurring between competitors as they compete against each other for an advantageous market position Competitive Set of competitive actions and competitive responses the firm Behavior takes to build or defend its competitive advantages and to improve its market position Multimarket Occurs when firms compete against each other in several Competition product or geographical markets Competitive All competitive behaviors that is, the total set of actions and Dynamics responses taken by all firms competing within a market COMPETITOR ANALYSIS Competitor Describe what firms study to be able to predict competitors Analysis behavior in the form of their competitive actions and responses Market Is concerned with the number of markets with which the firm Commonality and a competitor are jointly involved and the degree of importance of the individual markets to each Resource The extent to which the firms tangible and intangible resources Similarity are comparable to a competitors in terms of both type and amount DRIVERS OF COMPETITIVE ACTIONS AND RESPONSES Awareness A prerequisite to any competitive action or response taken by a firm, refers to the extent to which competitors recognize the degree of their mutual interdependence that results from market commonality and resource similarity Motivation Concerns the firms incentive to take action or to respond to a competitors actions, relates to perceived gains and losses Ability Relates to each firms resources and the flexibility they provide. Without available resources, the firm lacks the ability to attack a competitor or respond to its actions. However, similar resources suggest similar abilities to attack and respond COMPETITIVE RIVALRY Competitive A strategic or tactical action the firm takes to build or defend its Action competitive advantages or improve its market position Competitive A strategic or tactical action the firm takes to counter the effects Response of a competitors competitive action Strategic A market-based move that involved a significant commitment action/response of organizational resources and is difficult to implement and reverse Tactical A market-based move that is taken to fine-tune a strategy; it action/response involves fewer resources and is relatively easy to implement and reverse LIKELIHOOD OF ATTACK First-Mover A first mover is a firm that takes an initial competitive action in Incentives order to build or defend its competitive advantages or to improve its market position Organizational An organizations size affects the likelihood that it will take Size competitive actions as well as the types of actions it will take and their timing (small firms are more flexible and can take action more quickly) Quality Exists when the firms goods or services meet or exceed customers expectations LIKELIHOOD OF RESPONSE Likelihood of 1. The action leads to better use of the competitors response capabilities to gain or produce stronger competitive advantages or an improvement in its market position 2. The action damagers the firms ability to use its capabilities to create or maintain an advantage 3. The firms market position becomes less defensible Type of Generally, strategic actions receive strategic responses and Competitive tactical actions receive tactical responses Action Actors To predict the likelihood of a competitors response to a current Reputation or planned action, firms evaluate the responses that the competitor has taken previously when attacked Dependence on Market dependence denotes the extent to which a firms the Market revenues or profits are derived from a particular market. In general, firms can predict that competitors with high market dependence are likely to respond strongly to attacks threatening their market position COMPETITIVE DYNAMICS Competitive Concerns the ongoing actions and responses taking place Dynamics among all firms competing within a market for advantageous positions Slow-Cycle Markets in which the firms competitive advantages are shielded Markets from imitation for what are commonly long periods of time and where imitation is costly Fast-Cycle Markets in which the firms competitive advantages arent Markets shielded from imitation and where imitation happens quickly and perhaps somewhat inexpensively. Standard-Cycle Markets in which the firms competitive advantages are Markets moderately shielded from imitation and where imitation is moderately costly.Chapter 7 Corporate-Level Strategy Corporate-Level Specifies actions a firm takes to gain a competitive advantage Strategy by selecting and managing a group of different businesses competing in different product markets 2 Key Issues 1. In what product markets/businesses/industries should the firm compete 2. How should corporate headquarters manage those businesses Product A primary for corporate-level strategy, concerns the scope of Diversification the markets and industries in which the firm competes as well as how managers buy, create and sell different businesses to match skills and strengths with opportunities presented to the firm LEVELS OF DIVERSIFICATION Low Levels - Single-Business diversification strategy is a corporate level strategy wherein the firm generates 95% or more of its sales revenue from its core business area - Dominant Business strategy is where the firm generates 70%-95% of its total revenue within a single business area Moderate to - Related Constrained is less than 70% of revenue comes High Levels from the dominant business, and all businesses share produ
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