Chapter 5

Competitive dynamics

Refers to all competitive behaviors that is, the total set of actions and responses taken by all firms competing within a market

Competitive Rivalry

the ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position

multimarket competition

occurs when firms compete against each other in several product or geographic markets

Market commonality

Concerned with the number of markets with which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each

resource similarity

the extent to which the firm's tangible and intangible resources are comparable to a competitor's in terms of both type and amount


The prerequisite to any competitive action or response taken by a firm
- competitors recognize the degree of their mutual interdependence that results from market commonality


Concerns the firms incentive to take action or to respond to a competitors attack, relates to perceived gains and losses

Competitive Action

a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position

Strategic Action

a market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse

Tactical Action

a market-based move that is taken to fine-tune a strategy; it involves fewer resources and is relatively easy to implement and reverse

First mover

a firm that takes an initial competitive action in order to build or defend its competitive advantages or to improve its market position

Second mover

a firm that responds to the first mover's competitive action, typically through imitation

Late mover

a firm that responds to a competitive action a significant amount of time after the first mover's action and the second mover's response


Exists when the firm's goods or services meet or exceed customers' expectations.