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Chapter 5 Competitive Dynamics Declining emphasis on single, domestic markets and increasing emphasis on global markets Advances in munication technology make coordination easier across multiple markets Advances in technology and innovation have increased petitiveness of small and medium sized firms National barriers are falling due to the number and scope of trade agreements (GATT/WTO, NAFTA, EEC/EU) Factors Leading to More Complex Rivalry Competitive Dynamics Results from a series of petitive actions and petitive responses among firms peting within a particular industry Competitive Rivalry Exists when two or more firms jockey with one another in the pursuit of better market position Actions and responses shape the petitive positions of each firm’s business level strategy Actions taken by one firm elicit (引起 ) responses from petitors A firm’s strategic conduct is dynamic in nature Competitive responses lead to additional actions from the firm that acted originally Competitive Dynamics Relative Size Speed Innovation Quality Ability for Action and Response Outes Drivers of Competitive Behavior Awareness Motivation Capability Competitor Analysis Market Commonality Resource Similarity Interfirm Rivalry: Attack Response Likelihood of Attack First Mover Incentives Likelihood of Response Type of Competitive Action Dependence on the Market Resource Availability Actor’s Reputation Competitive Slow, Standard or Fast Cycle Market Types Competitive Sustained Outes Competitive Advantage Temporary Advantage Evolutionary Outes Entrepreneurial or MarketPower GrowthOriented Actions Feedback Model of Interfirm Rivalry: Likelihood of Attack and Response Drivers of Competitive Behavior Motivation Capability Awareness Model of Interfirm Rivalry: Likelihood of Attack and Response Do managers understand the key characteristics of petitors? Does the firm have appropriate incentives to attack or respond? Drivers of Competitive Behavior Motivation Capability Awareness Model of Interfirm Rivalry: Likelihood of Attack and Response Does the firm have the necessary resources to attack or respond? Drivers of Competitive Behavior Motivation Capability Awareness Model of Interfirm Rivalry: Likelihood of Attack and Response Relative Size Speed Innovation Quality Ability for Action and Response Outes Drivers of Competitive Behavior Awareness Motivation Capability Competitor Analysis Market Commonality Resource Similarity Interfirm Rivalry: Attack Response Likelihood of Attack First Mover Incentives Likelihood of Response Type of Competitive Action Dependence on the Market Resource Availability Actor’s Reputation Competitive Slow, Standard or Fast Cycle Market Types Competitive Sustained Outes Competitive Advantage Temporary Advantage Evolutionary Outes Entrepreneurial or MarketPower GrowthOriented Actions Feedback Model of Interfirm Rivalry: Likelihood of Attack and Response Competitor Analysis Resource Similarity Market Commonality Model of Interfirm Rivalry: