Competitive Dynamics In the Marketplace EMBA Class of 2017

B Chooses DeferB Chooses Attack A Chooses Attack A attacks (gets $5) B defers (gets $0) A attacks (gets 1) B attacks (gets 1) A Chooses DeferA defers (gets $3) B defers (gets $3) A defers (gets $0) B attacks (gets $5) Prisoner’s Dilemma

Prisoners Dilemma

What is Competitive Dynamics? COMPETITIVE DYNAMICS - Total set of actions and responses of all firms competing within a market. COMPETITIVE RIVALRY - Ongoing set of actions and responses occurring between two dominant competitors as they contend with each other. Who are your “competitors”? Market Commonality Resource Similarity

Sun Tzu Now the general who wins a battle makes many calculations in his headquarters before he fights a battle. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory and few calculations to defeat. What need be said of no calculation at all?

Types of Competitive Action Strategic Tactical Competitive Complexity

Sun Tzu Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

Competitive Attacks - First Mover What are some advantages and disadvantages of being the first mover in new a product or geographic segment?

Sun Tzu Those who arrive first at the battleground will have sufficient time to rest and prepare against the enemy. Those who arrive late at the battleground will have to rush into battle when they are already exhausted.

Footholds A small position that a firm intentionally establishes within a market in which it does not yet compete. How do companies use footholds?

Sun Tzu Keep your friends close and your enemies closer.

Competitive Response

Awareness Motivation Capability

Competitive Response Speed of response. Jack Welch: “Success in competitive rivalries is less a function of grandiose predictions than it is a result of being able to respond rapidly to real changes as they occur.” Multimarket Response Mutual Forbearance

Sun Tzu If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

Blue Ocean Strategies Executives try to create and exploit vast untapped markets rather than competing directly with rivals.

Sun Tzu The greatest victory is that which requires no battle.