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Essential readings 1. Chen, M.-J. ‘Competitor analysis and interfirm rivalry: towards a theoretical integration’, Academy of Management Review 21(1) 1996, pp.100–34. – homework 2. Ferrier, W.J., K.G. Smith and C.M. Grimm ‘The role of competitive action in market share erosion and industry dynamics: a study of industry leaders and challengers’, Academy of Management Journal 42(4) 1999, pp.372–88. – homework 3. Smith, K.G., W.J. Ferrier and H. Ndofor ‘Competitive dynamics research: critique and future directions’ in M.A. Hitt, R.E. Freeman and J.S. Harrison (eds), The Blackwell Handbook of Strategic Management. (Oxford: Blackwell Publishing, 2001) pp.314–61. Introductory case • Hitt, M., Ireland, R., & Hoskisson, R. (2010). Strategic Management: Concepts and Cases. Boston, MA: Cengage Learning. • Google books • p.150 The role ov rivals? • At the heart of many a firm’s strategy is competing against its rivals • Because firms compete for limited customers and resources, one firm outperforming the other often comes at the cost of the failure of its rival • Firms seek to gain a competitive advantage in order to consistently outperform other players in the industry • Actions taken to become the market leader or to avoid becoming dethroned as the market leader • But what are those actions? • Cutting prices, agressive marketing campaigns, R&D, new products, new services Competitive dynamics • Studying which actions specific firms take when they compete with specific rivals • The process of interfirm rivalry in which firms fight for competitive advantage by exchanging competitive actions • Competitive dynamics vs traditional industry analysis (Porter) 1. Instead of studying competition and strategic decisions from a macro industry level, competitive dynamics looks at an individual firm (or pair of firms) and studies specific action 2. Competitive dynamics integrates internal (e.g. resources and capabilities) and external (e.g. rivals) concerns instead of just focusing on the external ones 3. Contrary to the rather static perspective competitive dynamics takes a dynamic perspective on competitive behavioural patterns 4. Focus is on the process by which a market moves away towards the equilibrium but not on the equilibrium per se
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