Competitive Moves Flashcards
When is a Competitive Environment Oligopolistic?
When the nature of a Firm’s competitive strategy depends, to a large extent, on its Rivals’ potential reactions.
The more rivalrous and unstable an Industry, the worse this becomes.
Porter, Competitive Strategy — P. 126.
In such environments, poor reactions by Rivals, even weaker ones, can make sound moves unsuccessful. Thus, Rivals must be conditioned to respond favourably.
Which Competitive Moves are the most effective in an Oligopolistic Environment?
Those whose outcome is determined quickly and most favours the Firm.
Porter, Competitive Strategy — P. 130.
One especially opportune outcome is favourably influencing the Schelling Point, i.e. the competitive equilibrium.
When may Forcefulness be the correct Tactical Approach?
When the Firm’s capabilities are:
- Clearly superior;
- Perceived as such by Rivals; and
- Can be so maintained well into the forceful move.
Porter, Competitive Strategy — P. 130.
When may Forcefulness be the incorrect Tactical Approach?
When the Firm’s Rivals are:
- Irrational or desperate;
- Pursuing greatly different objectives; or
- Capable of successfully waging a war of attrition.
Porter, Competitive Strategy — P. 130.
When may Finesse be the correct Tactical Approach?
When the Firm:
- Lacks the power to comfortably use brute force; or
- Conciliatory moves are available.
Porter, Competitive Strategy — P. 130.
What is a Conciliatory Move?
A move that improves the Firm’s position:
- And Rivals’ positions, even if they do not match it;
- And Rivals’ positions, but only if a large sum of them match it; or
- Because Rivals view it as non-threatening and thus do not match it.
Porter, Competitive Strategy — P. 131.
Proper signalling is essential for communicating conciliatory intentions.
How does a Firm estimate the probability of its Rivals matching a Conciliatory Move?
- Assess the Move’s impact on every major Rival; and
- The costs and benefits they may derive from cooperating and deviating.
Porter, Competitive Strategy — P. 131.
The risk of deviation is diminished if the Move can be cheaply rescinded or if its effects are slow and redressable.
How does a Firm evaluate the prospect of Retaliation to a Competitive Move?
By assessing its:
- Efficacy.
- Intensity.
- Timeframe.
- Probability.
- Influenceability.
Porter, Competitive Strategy — P. 134.
What is Retaliatory Lag?
The amount of time between a Move and Rivals’ effective retaliation thereto.
Porter, Competitive Strategy — P. 134.
Which Factors influence Retaliatory Lag?
- Perception: Rivals’ ability to detect the Move and perceive it as a threat.
- Counterattack Formulation: Rivals’ ability to understand the Move and how best to defeat it.
- Counterattack Execution: Rivals’ ability to rapidly nullify the Move.
Porter, Competitive Strategy — P. 134.
How can a Firm increase Retaliatory Lag by undermining Perception?
- Perserve strategic secrecy.
- Use diversionary tactics, like misinformation or Red Herrings.
- Execute the Move quietly, usually in small or foreign markets.
- Hide in plain sight by leveraging Rivals’ goals and assumptions.
Porter, Competitive Strategy — P. 134.
How can a Firm increase Retaliatory Lag by undermining Counterattack Formation?
- Exploit internal weaknesses.
- Pit essential objectives into conflict with one another.
- Force disproportionate retaliatory costs, usually by forcing imprecise solutions to precise problems.
Porter, Competitive Strategy — P. 135-136.
How can a Firm increase Retaliatory Lag by undermining Counterattack Execution?
Force solutions that require long timeframes to implement.
Porter, Competitive Strategy — P. 135.
What makes a Retaliatory Move an effective Disciplinary Mechanism?
Precision toward the Initiator; generality disperses discipline, decreasing its efficacy or collaterly damaging neutral parties.
Porter, Competitive Strategy — P. 138.
In any Competitive Move, Offensive or Defensive, what is the most important consideration?
Commitment, i.e. an unequivocal signal of the Firm’s intentions and resources, one made stronger by its degree of bindingness and irreversibility.
Porter, Competitive Strategy — P. 140.
Commitment influences how Firms perceive their position and those of their Rivals, and can help predict the likelihood, speed, and vigor of a Move and any retaliation thereto.
