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Growth through Entry Outsourcing Data Entry (Members (104212014 Diane,…
Growth through Entry
Entry and rivalry
Growth through entry
Offering new product and services to existing markets where you compete
Offering existing products and services into markets new to the organization.
Entry and rivalry
( Focus on rivalry)
Why
is it important?
Selectively eliminates some competitors
Drive down margins
Conclusion
A firm that anticipates and addresses competitors' moves and counter-moves will perform better
What
is it?
The effect that competing firm' actions have on each others' competitive positions
Tool for analysis
Gaining insight into rivalry
Five forces analysis
Predict the overall intensity of rivalry as a result of structural factors
Threat of entry
Dose entrant face retaliation?
Do incumbents have a competitive disadvantage?
Dose entrance face high sunk cost?
Intensity of rivalry
The number of competitor is big or small ?
Incentives to fight are high or low?
Game-theoretic analysis
based on available options and associated future payoffs
Predict competitors’ likely actions and reactions
Prisoner's Dilemma
Using Game Theory to Understand
Rivalry
Analyzing competitive exchanges
Limited number of competitors and alternatives
Considerations
Symmetric vs. Asymmetric
Single shot vs. Repeated games
Horizon effects
Challenges
Cooperate vs. Compete
Trust and communication
Known objectives and payoffs
Mapping games
Payoff matrices
Decision trees
Types of games
Single-period simultaneous-move games
Multi-period repeated games
Multi-period sequential games
Cooperation
Signaling
Provide information to encourage coordination and restraint
Selective release of information to influence competitors
Commitment
Make large, specialized investments
Forego short-term opportunities
Post-entry Strategies
Fighting Strategy
Price Cutting
Cost advantage
Network externality
Niche position
Intensive advertising
Differentiation
Public good in the early stage
Cooperative Strategy
Impose costs in non-cooperative strategy
Prisoner's dilemma
Tit-for-Tat
Share incentives
Repeated gain
Promise avoiding aggressive competition
Restructuring Strategy
Broad strategic actions to change present competition rules
Examples
Introduce new products or services
Acquire resources and capabilities
Diversification
Enter or creat new markets
Consolidate market power
Non-market strategies
Members
104212014 Diane
104212018 Martin
104212033 Jason
104212044Pauline
104212080 Amy
105245914 Ace
Weekly vocabulary
symmetric
asymmetric
sequential
duopoly
Pre-entry Strategies
Deterrence Strategies
Strategies to reduce the incentive to enter
Raise factor costs
Limit pricing
Strategies to increase the cost and risk of entry
Reduce the quality of information on costs and demand
Make retaliation more credible
Erect structural barriers
Accommodation Strategies
Commit to a position that will soften competition after entry
Make commitment limiting your ability or incentives to compete aggressively
Accomodate entry if deterence is too costly
Organize to facilitate future coordination
Identifying Potential Rivals
Entry Strategies
Pre-Entry
Deter
Accommodate
Post-Entry
Cooperate
Fight
Restructure
Realize
two
things of “outside” firms
:warning: Economic motivations
Same vertical industry chain
Value chain overlaps
With relevant capabilities and underutilized resources
:warning: Strategic trajectories
Recent entrants to related industries
Geographic expansion in same industry
Firms that take minority ownership stakes of existing rivals
