Exam 5: Competitive Rivalry and Competitive Dynamics

Both ____ and ____ affect the awareness and motivation of a firm to undertake actions and responses.

What is market commonality? What is resource similarity? How are these concepts combined to identify the level of competition between two firms?

Firms with ______ market commonality and _____ resource similarity are direct and mutually acknowledged competitors.

Define competitors, competitive rivalry, competitive behavior, and competitive dynamics.

Awareness tends to be greatest when firms have highly similar resources and compete in multiple markets.

A firm that is LEAST likely to launch competitive actions is one that has

Competition in the global automobile producer industry is characterized by________________ (Chapter 5 Strategic Focus)

Often, successful imitation of the first mover's innovations allows the second mover to avoid the mistakes and major investments of the first mover.

Under the framework of competitive action and response, "ability" refers to an attacking or responding firm's knowledge of the competitive market characteristics.

Competition between candy makers (e.g., Hershey, Mars, Cadbury, Nestle, and Godiva) where firms package design (including package downsizing) and ease of availability is characteristic of a

Wal-Mart has recently opened a store in Alsatia, Missouri. Several local small retailers have decided that choosing not to respond to Wal-Mart's competitive actions is a viable long-term option, because although the companies have high market commonality they have little resource similarity. These small retailers are correct in their decision.

Intensified rivalry within an industry results in

Competitors are more likely to respond to competitive actions that are taken by

Firms with high market commonality and highly similar resources are direct and mutually acknowledged competitors.

Case Scenario 2: Plasco. Plasco is a $3 billion U.S.-based manufacturer of flexible plastic products like trash cans, reheatable and freezable food containers, and a broad range of other plastic storage containers designed for home and office use. Historically, Plasco has been the category killer for most of its products and has devoted tremendous resources to new product development on an ongoing basis - this research intensity has allowed the company to release, on average, a new product every day over the past five years. Despite its past strength and high brand awareness, Plasco's profitability has been eroded by dramatic increases in the cost of plastic resin, the primary input into its plastic products. Moreover, the retail channel has experienced rapid consolidation resulting in a shift in the balance of power from branded manufacturers like Plasco, to strong retailers like Wal-Mart, who in turn have been unwilling to help Plasco absorb the higher resin costs. Enhancing Wal-Mart's power is the fact that it can always turn to alternative high-volume sources of consumer plastic products like Sterlite. Further hampering Plasco's recovery is the emergence of feisty little foreign competitors like Zig Industries, a $250 million Israeli firm that has begun to take part of Plasco's market share in plastic toolboxes. Ironically, Plasco was the first company to offer plastic toolboxes some 20 years ago. This innovation changed the market dramatically and Plasco's first mover strategy rewarded it with a rapidly growing new segment and a dominant market position. Today, Plasco's toolboxes are viewed as rather boring, while Zig's products are ingeniously designed to catch the customer's eye in the aisle (better merchandising the product) and capture their interest (and pocketbook) with many new and novel features. Zig is also able to provide this new line of toolboxes at between 10% to 15% less than Plasco. -(Refer to Case Scenario 2) Is Wal-Mart a competitor or a customer of Plasco?

Firms with few competitive resources are more likely to

An organization with high profitability, such as Wal-Mart, will be able to develop high organizational slack.

Patent laws and regulatory requirements such as required FDA (Food and Drug Administration) approval to launch new products shield pharmaceutical companies' positions in this slow-cycle market.

In the Chapter 5 Strategic Focus, companies such as Amazon, Oracle, HP and Dell competing in the cloud computing market have been able to develop sustainable competitive advantages.

Quality affects the degree of rivalry in that firms lacking quality are likely to me more aggressive in their competitive actions until the quality problems are corrected.