COMPETITOR ANALYSIS AND INTERFIRM RIVALRY
Theoretical
Background
Competitor Analysis: An Overview
A Framework for Competitor Analysis
Competitors
firms operating in the same industry, offering similar products, and targeting similar customers.
two vital firm-specific factors
market commonality
resource similarity
Market commonality
different markets would have
different sets of competitors
market interdependence
mutuality
symmetry
defined
the degree of presence that a competitor manifests in the markets it overlaps with the focal firm.
The strategic-group approach
recognize the significance of
strategic posture
where it actually interacts with others
identify competitors
"when a company chooses to enter a specific strategic group, it selects the members of that group as its competitors"
Competing brands
multiple-point competition studies
shared markets
individual market level
firm level
resource-based view
firm-specific analysis
relationships between firms are not symmetrical
predicting rivalry
limitations
the identity of a firm's
competitors is assumed to be known, or competitors are treated as undifferentiated entities.
almost all the research is normative or descriptive
the relational nature of competition and rivalry
Discussion
Implication
Two Primary Purposes
new conceptualization of competitor analysis
theoretical integration between two important subjects in strategy
❌understanding groups of firms or individual competitors in isolation
✅assessing competitive tension between firms
unique
both product- and customer-based concepts
generalizability
Interfirm Rivalry
Resource similarity
differentiating competitors
A firm's competitive position and advantage in the industry are defined by its unique resource bundle
the research recognizes a distinction
between the concept of interfirm rivalry
using the individual competitive move as the unit of analysis
Two firm-specific and theory-based constructs
Introducing
First
Second
provide
A very fundamental yet generally ignored issue
competitor analysis and interfirm rivalry
Offers measures of market commonality and resource
using airlines
The convergence of results two independent methods
preliminary support for the validity of the proposed measures
the underlying constructs
the significance of the market
the importance of compering the overall market profiles of firms
competitive battles play out
Pay limited attention to market context
Limitations
its focus only on existing competitors in an industry
To develop a conceptualization of potential competitors
limited by
drawing on a diverse set of theories
spanning different analytical levels
Illustration of Competitor Analysis
competitor mapping&future empirical studies
measures of market commonality& resource similarity
strategic importance of markets local firm share with competitor
competitor's market share in market
competitor
focal company
detailed
market-by-market analysis
"normalized"
sum of market commonality index of competitors of given firm
1
Example of airlines
view of TW
AA's commonality index
.21
view of AA
TW's commonality index
.09
AA=TW's primary competitor
view of HP
WN's commonality index
.40
view of WN
HP's commonality index
.38
each is others' top competitor
competition of maps different for each local firm
Delta's main competitior
AA
AA's main competitor
UA
competitive relationship unique & directional
what firm's competitors think of firm
what managers think of competitors
=
company
niche market
competitors
allow for differentiation among various players
resource dimension
proposed measures of market commonality
resource similarity using key industry informant
extent to 2 objective measures & underlying constructs
primary purpose
2 firm specific & theory based constructs
resource similarity
market commonality
theoretical integration between important subjects in strategy
competitor analysis
interfirm rivalry
market commonality and resource similarity
PROPOSITIONS: LINKING COMPETITOR ANALYSIS TO
INTERFIRM RIVALRY
Competitor Analysis
Driver of Competitive Behavior
Interfirm Rivalry:Action and Response
Outcome
- Market Commonality
Awareness
Motivation
-Likelihood of Attack
-Likelihood of Response
Organizational Performance
Effects of Rivalry
effected
Capability
Positions
Proposition 1a
The greater B's market commonality with A the less likely A is to initiate an attack against B, all else being equal.
Proposition 1b
The greater A's market commonality with B the more likely B is to respond to A's attack, all else being equal.
Proposition 2a
The greater B's resource similarity with A, the less likely A is to initiate an attack against B, all else being equal.
Proposition 2b
Proposition 3
The greater A's resource similarity
with B the more likely B is to respond to A's attack, all else being equal.
Market commonality is a stronger predictor of competitive attack and response than is resource similarity.
Proposition 4a
Proposition 4b
Competitive asymmetry is likely to exist within a pair of competitors. That is, any two firms are unlikely to have identical degrees of market commonality and of resource similarity with each other.
Because of competitive asymmetry in market commonality and in resource similarity, the likelihood
that A will attack B will differ from the likelihood
that B will attack A. The same will hold true for response
likelihood.
- Resource Similarity
effected
Increased
to extent organizations compete in the same markets
flying distance, number of passengers carried, and type of
engines used
GP3
Jessica
Suzan
Anna
Beining