KNOWLEDGE OBJECTIVES
      NOWLEDGE BJECTIVES
    K                O
     Studying this chapter should provide you with the strategic 
     management knowledge needed to:
      1.  Define competitors, competitive rivalry, competitive behavior, and 
      1.  Define competitors, competitive rivalry, competitive behavior, and 
          competitive dynamics.
          competitive dynamics.
      2.  Describe market commonality and resource similarity as the building 
      2.  Describe market commonality and resource similarity as the building 
          blocks of a competitor analysis.
          blocks of a competitor analysis.
      3.  Explain awareness, motivation, and ability as drivers of competitive 
      3.  Explain awareness, motivation, and ability as drivers of competitive 
          behavior.
          behavior.
      4.  Discuss factors affecting the likelihood a competitor will take 
      4.  Discuss factors affecting the likelihood a competitor will take 
          competitive actions.
          competitive actions.
      5.  Discuss factors affecting the likelihood a competitor will respond to 
      5.  Discuss factors affecting the likelihood a competitor will respond to 
          actions taken against it.
          actions taken against it.
      6.  Explain competitive dynamics in slow-cycle, fast-cycle, and standard-
      6.  Explain competitive dynamics in slow-cycle, fast-cycle, and standard-
          cycle markets.
          cycle markets.
      © 2007 Thomson/South-Western. All rights reserved.                           5–2
    Definitions
     Definitions
     • Competitors
        Competitors
         Firms operating in the same market, offering similar 
            Firms operating in the same market, offering similar 
            products and targeting similar customers.
            products and targeting similar customers.
     • Competitive Rivalry
        Competitive Rivalry
         The ongoing set of competitive actions and responses 
            The ongoing set of competitive actions and responses 
            occurring between competitors.
            occurring between competitors.
         Competitive rivalry influences an individual firm’s 
            Competitive rivalry influences an individual firm’s 
            ability to gain and sustain competitive advantages.
            ability to gain and sustain competitive advantages.
     © 2007 Thomson/South-Western. All rights reserved.                   5–3
    Definitions
     Definitions
     • Competitive Behavior
        Competitive Behavior
         The set of competitive actions and competitive 
            The set of competitive actions and competitive 
            responses the firm takes to build or defend its 
            responses the firm takes to build or defend its 
            competitive advantages and to improve its market 
            competitive advantages and to improve its market 
            position.
            position.
     • Multimarket Competition
        Multimarket Competition
         Firms competing against each other in several 
            Firms competing against each other in several 
            product or geographic markets.
            product or geographic markets.
     • Competitive Dynamics
        Competitive Dynamics
         The total set of actions and responses taken by all 
            The total set of actions and responses taken by all 
            firms competing within a market.
            firms competing within a market.
     © 2007 Thomson/South-Western. All rights reserved.                   5–4
     From Competitors to Competitive 
     From Competitors to Competitive 
     Dynamics
     Dynamics
        Competitors             Why?
        Competitors                          • To gain an advantageous 
                                                To gain an advantageous 
                                               market position
                                                market position
      Engage
                      Competitive 
         in           Competitive 
                        Rivalry
                        Rivalry              • Competitive Behavior
                                               Competitive Behavior
                                                  •Competitive actions
                                                   Competitive actions
                                                  •Competitive responses
                                How?               Competitive responses
        What 
        Results?                            What Results?
                                Competitive Dynamics
                                Competitive Dynamics
                       Competitive actions and responses taken 
                       Competitive actions and responses taken 
                           by all firms competing in a market
                            by all firms competing in a market
     © 2007 Thomson/South-Western. All rights reserved.                        5–5
        Figure 5.1        From Competitors to Competitive Dynamics
        Figure 5.1        From Competitors to Competitive Dynamics
     Source: Adapted from M.-J. Chen, 1996, Competitor analysis and interfirm rivalry: Toward 
     a theoretical integration, Academy of Management Review, 21: 100–134.
     © 2007 Thomson/South-Western. All rights reserved.                   5–6