HITT Chapter 06 [Compatibility Mode]

Competitive Rivalry andCompetitive Dynamics

DEFINITIONSCompetitors Firms operating in the same market, offering similar

products and targeting similar customers

Competitive rivalry

The ongoing set of competitive actions and competitive responses occurring between competitors as they compete against each other for an advantageous market position

Competitive behaviour

Set of competitive actions and competitive responses the 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

All competitive behaviours—that is, the total set of actions and responses taken by all firms competing within amarket

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Competitor AnalysisCompetitor Analysis

Describe what firms study to be able to predict competitors’ behaviour in the form of their competitive actions and responses.

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.

Resource similarity

The extent to which the firm’s tangible and intangible resources are comparable to a competitor’s in terms of both type and amount.

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Drivers of Competitive Actions & ResponsesAwareness 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 firm’s incentive to take action or to respond to a competitor’s actions, relates to perceived gains and losses

Ability relates to each firm’s resources and the flexibility they provide. Without available resources (such as financial capital and people), the firm lacks the ability to attack a competitor or respond to its actions. However, similar resources suggest similar abilities to attack and respond


Likelihood of Attack

First m

over A firm that takes an initial

competitive action in order to build or defend its competitive advantages or to improve its market position

A firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position Se

cond m

over A firm that

responds to the first mover’s competitive action, typically through imitation

A firm that responds to the first mover’s competitive action, typically through imitation

Late m

over A firm that

responds to a competitive action, but only after considerable time as elapsed after the first mover’s action and the second mover’s response


Table 6.1 Quality Dimensions of Goods and Services


Likelihood of Response

Type of Competitive Action

Actor’s Reputation

Dependence on the Market


building and sustaining competitive advantages are

at the core of competitive rivalry


Competitive DynamicsSlow‐cycle markets Markets in which the firm’s competitive advantages

are shielded from imitation for what are commonly long periods of time and where imitation is costly.

Fast‐cycle markets Markets in which the firm’s competitive advantagesaren’t shielded from imitation and where imitation happens quickly and perhaps somewhat inexpensively.

Standard‐cycle markets Markets in which the firm’s competitive advantages are moderately shielded from imitation and where imitation is moderately costly.


Figure 6.4: Gradual Erosion of a Sustained Competitive Advantage


Figure 6.5:Developing Temporary Advantages to Create Sustained Advantage


HITT Chapter 06 [Compatibility Mode]

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