Competition and competitive strategies Flashcards
(19 cards)
What are retaliatory moves in competitive strategy?
Responses by rivals to a firm’s actions, often forcing counter moves and creating competitive dynamics.
What risk do firms face when ignoring retaliatory moves?
They may fall into a cycle of escalating commitment and become victims of competitive disequilibrium.
What does the “dollar auction” metaphor illustrate in competition?
The blurry line between rational and irrational decisions, where sometimes quitting (despite a loss) is the smartest move.
What are the four components of competition analysis?
Scanning, monitoring, forecasting, and assessing.
What is the purpose of competition analysis?
To identify opportunities for strategic competitiveness and threats that may hinder it.
Name three complementary frameworks used in competitive analysis.
PEST analysis, Porter’s Five Forces, and SWOT analysis.
What do IFE and EFE matrices stand for?
Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE) matrices.
What is the purpose of IFE and EFE matrices?
To evaluate the business environment and assess key factors for strategy formulation and implementation.
What are the steps in creating IFE and EFE matrices?
Identify key factors, assign weights, rate the company’s strength, and calculate the total score.
Why is thinking strategically valuable in competitive situations?
Because the best choice isn’t always obvious, and it helps firms navigate uncertainty effectively.
What does the Bass diffusion curve explain?
The adoption of new products in a market.
Why are the insights from the Bass diffusion curve often limited today?
Because modern market complexities transcend its predictions.
What is the theory of competitive rationality?
The idea that firms must constantly evolve in response to competitors’ changes to survive.
What market conditions drive competitive rationality?
Oversupply, customer choice, customer sophistication, innovation, and limitations.
What are first-mover advantages?
The benefits gained by being the first or fastest to enter a market.
What is multimarket competition?
Firms competing against each other in multiple markets simultaneously.
What is the mutual forbearance hypothesis?
Tacit collusion where firms avoid aggressive competition due to interdependence across markets.
What does familiarity refer to in competitive strategy?
How clearly a firm understands its competitors’ moves.
What is deterrence in competitive dynamics?
The extent to which a firm avoids direct competition with rivals.
