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petitive actions have noticeable effects on petitors – one firm’s petitive actions elicit petitive responses from petitors – petitors feel each other’s actions and responses ? Marketplace success is a function of both individual strategies and the consequences of their use 9 Competitor Analysis ? Competitor analysis – a technique firms use to understand their petitive environment. Along with the general and industry environments, the petitive environment prises the firm’s external environment – a technique used to help the firm understand its petitors – the first step to being able to predict petitors’ behavior in the form of its petitive actions and responses 10 Market Commonality ? Market Commonality is concerned with – the number of markets with which a firm and a petitor are jointly involved – the degree of importance of the individual markets to each petitor ? Most industries’ markets are somewhat related in terms of – technologies – core petencies ? Multimarket petition – Firms peting in several markets 11 Resource Similarity ? Resource similarity – the extent to which the firm’s tangible and intangible resources are parable to a petitor’s in terms of both type and amount ? Firms with similar types and amounts of resources are likely to – have similar strengths and weaknesses – use similar strategies ? Assessing resource similarity can be difficult if critical resources are intangible rather than tangible 12 A Framework of Competitor Analysis Market Commonality High Low Low High Resource Similarity The shaded area represents degree of market monality between two firms Resource endowment B Resource endowment A KEY I II III IV 13 Drivers of Competitive Actions and Responses: ? Awareness is the extent to which petitors recognize the degree of their mutual interdependence – mutual interdependence results from ? market monality ? resource similarity Awareness Awareness Drivers of petitive behavior 14 Motivation Drivers of Competitive Actions and Responses: ? Motivation concerns the firm’s incentive – to take action – or to respond to a petitor’s attack – and relates to perceived gains and losses Awareness Drivers of petitive behavior Motivation 15 Ability Drivers of Competitive Actions and Responses: ? Ability relates – to each firm’s resources – the flexibility these resources provide ? Without available resources the firm lacks the ability – to attack a petitor – to respond to the petitor’s actions Awareness Drivers of petitive behavior Motivation Ability 16 Drivers of Competitive Actions and Responses: ? A firm is more likely to attack the rival with whom it has low market monality than the one with whom it petes in multiple markets ? Because of the high stakes of petition under the condition of market monality, there is a high probability that the attacked firm will respond to its petitor’s action in an effort to protect its position in one or mor