Competitive Dynamics

What is Competitive Dynamics?

• COMPETITIVE DYNAMICS - Total set of actions and responses of all firms competing within a market

• COMPETITIVE RIVALRY - Ongoing set of competitive actions and competitive responses occurring between two competitors as they contend with each other for an advantageous market position

Competitor Analysis

• Who are your “competitors”?

Sun Tzu

Now the general who wins a battle makes many calculations in his headquarters before he fights a battle. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory and few calculations to defeat.

What need be said of no calculation at all?

Types of Competitive Action

Strategic Tactical

Sun Tzu

Strategy without tactics is the slowest route to victory.

Tactics without strategy is the noise before defeat.

Attacks-First Mover AdvantageFirst Mover Advantages First Mover Disadvantages

Sun Tzu

Those who arrive first at the battleground will have sufficient time to rest and prepare against the enemy.

Those who arrive late at the battleground will have to rush into battle when they are already exhausted.

Footholds

A small position that a firm intentionally establishes within a market in which it does not yet compete.

How do firms use footholds?

Sun Tzu

Keep your friends close and your enemies closer.

Competitive Response

Competitive Response

• Awareness• Motivation• Capability

Competitive Response

• Speed of response.Jack Welch: “Success in competitive rivalries is less a function of grandiose predictions than it is a result of being able to respond rapidly to real changes as they occur.

• Multimarket Competition• Mutual Forbearance

Sun Tzu

If you know the enemy and know yourself, you need not fear the result of a hundred battles.

If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.

If you know neither the enemy nor yourself, you will succumb in every battle.

Blue Ocean StrategiesExecutives try to create and

exploit vast untapped markets rather than competing

directly with rivals.

Blue Ocean Strategies

Sun Tzu

The greatest victory is that which requires no battle.