MIKHAELA

RAE ILALIM
FIRST PRESENTER
THE DYNAMICS OF
COMPETITION
6.53
RIVALRY
Chapter 5
OBJECTIVES
After this lesson, you should be able to:

• Understand the importance of competitive dynamics;

• Know the importance of the global market and its competitive

advantage;

• Develop tactical actions to competitive rivalry;

• Enumerate the factors that influence the likelihood of rivalry attack;

• Give the importance of product quality as strategy for

competiveness;

• Enumerate the different dynamics of rival's response actions.

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THE DYNAMICS OF COMPETITIVE RIVALRY

The firm's environment is devoid of competitors if they are offering similar products or services.
While competition serves the purpose of the customers, it also makes the firm aware of their
position in the industry that makes them strive to create better products and develop new ones
through innovations. The dynamics of competition is an ongoing set of competitive actions and
response that occurs as they compete in satisfying customer needs and wants.

Competitive behavior is developed when the firm responds positively to competition. It is the
tendency to outclass the other firm by improving their production system, materials quality and
distribution to customers at the lowest cost possible.
Competitive behavior is developed when the firm overcomes the forces of competition and uses
their current advantage in building greater return on investments.

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 COMPETITIVE DYNAMICS
Competitive dynamics is the firm's total set of actions and responses to all
competitors within the market niche. Competitive dynamics makes the firm
alert in the developing scenario in the industrial world, that they could not just
fold their arms watching the changing environment. Multiple market
competition is the scenario. where firms are competing in several products and
geographic regions.

Competitive dynamics requires innovations and new strategic actions that will
develop the firm's competitive advantage. The firm's success in the initial
delivery of effective product and service and its competitive advantage must
be sustained as competitors will always look for new opportunity and new
strategy to gain on their side the competitive advantage. Business laurels are
gained through sustained efforts and consistent strategy innovation and
development.

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 THE DYNAMICS OF GLOBAL COMPETITION
Globalization is the target of most firms as the market expansion is in the direction of the populated countries of the world The price war is on, and
companies will tend to compete in lower priced products with acceptable quality. Acceptable quality means that the product standards will last until the next
new product will surface in the market, as innovation will replace the existing ones. This reliance is greatly noticed in firms using differentiation level
strategy relying on strong brand that gives them greater competitive advantage.

The global competitive scope in geographic competition is increasing in intensity as the super powers in the world economy is pressing pressures on the third
world countries or developing nations to reduce tariff barriers for the entrance of their products. The dynamics of competition will be on the developed
economies of the world as they have the necessary technology and infrastructure to the disadvantage of the new developing economy.

For developing countries to be globally competitive, the terms of investments for the development of industry must be put in place. Investments in terms of
capital will also come from countries with surplus capital or money that is not fully utilized in their home country. This will also involve putting the
developing nation's infrastructure in terms of better road networks, port facilities and other handling facilities to facilitate the fast movement of products and
services. 'The climate of investment must be transparent and above the board of corruptions.

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 THE MODEL OF COMPETITIVE STRATEGY
To stay in the competitive market, firms must develop strategies and actions that should outperform other firms in the same industry. Competitive rivalry evolves from
the patterns of actions, responses as one's pattern of action have noticeable effect on the competitors, and it elicited competitive response. Competitive response is
interdependent and firms watch each other's actions and respond immediately to the market needs.

The success in the market is a function of individual strategies and actions and the consequences of their effective use. Firms must be aware of the financial
consequences of competitive rivalry as it will involve profit minimization.

The intensity of market rivalry is affected by the following:

1. The total number of competitors
The firm must be able to conduct market analysis to predict the nature and extent of competition and rivalrv. It is an analysis of the competitors who are ottering
the same product, same market and the same marketing environment.
Firms of this nature are clearly acknowledged as direct competitors and will influence the intensity of rivalry and competition in the market.
2. The market characteristics
The market characteristics is concerned with the number of markets with which the firm and its competitors are jointly involved and the degree of its importance
to both firms. Firms competing against one another in several or many markets are engaged in multimarket competition. Example of these firms in the food
industry are Jollibee and McDonalds. The firm must be able to determine the total market potential and respond immediately to their needs.
3. The quality and extent of individual firm's strategies.
In the analysis of the competitors, strategy firms must be able to identify its tangible and intangible resources and that of the competitors. Firms with similar
resources and capabilities are more likely to have the same strength and weaknesses and therefore use similar strategies. Analysis of the firm's in similar
situations is not difficult as factual and secondary data could be available through their financial statements. Operational observations could be conducted through
marketing research.

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 JERSEY
MARIE
RITCHIE
ANN
• SECOND PRESENTER

BARTOCES

8
GLADYS
QUIAMJOT
THIRD PRESENTER
 TACTICAL
ACTIONS TO
COMPETITIVE
RIVALRY
The firm's market position must be maintained at profitable level and must
depend its competitive advantage through tactical actions towards the
attack of its rivals. Competitive response is the strategic action that the
firms take to counter the possible effects on its market position. This
response to the attack involves significant commitment in terms of the
organization's resources and capabilities. The strategic action must be easy
to implement and reverse the rivalry's counter action.
A tactical response is a market-based strategy that the firm makes a fine-
tuning of its approaches to the competitors' actions. Price changes in a
particular product is a tactical strategy such that one offered by Cebu
Pacific Airlines for reservations made earlier of about three to six month
duration.
These are the times when lean season for passengers are traveling. Those
reservations are made to fully accommodate the available number of seats
in the flight. It is tactical strategy that the revenue generated earlier could
be used as added income.
 FACTORS THAT INFLUENCE
THE LIKELIHOOD OF RIVALS'
TheATTACK
attack in the market is present in all firms, and competitors
will always find ways to penetrate the market with their
products and services. These market wars are brought about by
the commonality in resources, the drivers of awareness, the
presence of motivation, the ability to penetrate the market,
and the likelihood of strategies of the rivals in the industry. The
likelihood of attack can be grouped into the following
strategies:
 P IO N E E RIN G
IN C E N TIV E
Pioneer or First Mover Strategy STRATEGY

These firms initiate competitive action in order to build competitive advantage in order
to improve market position. Firms of this nature believe that innovation will improve its
strategic actions and gain the needed market share. They make additional investment
and resources for new innovative products through research and development and
intensive advertising campaign to be noticed by the consumer. The benefit of being
successful as initiator or first mover can be substantial especially in products that cater
in fast-cycle markets. This could be felt in the electronic industries like cellular phones,
new television sets and other electronic gadgets where innovations takes place
overtime.
New features are developed and products life cycles become shorter.
Nokia was the first mover in the cellular phone until other brands in the market came.
The substantial revenue of Nokia has been more than ten times before the other brands
came into the market.
The First Movers have the following advantages:
Consumer's loyalty to the product is
developed.
The firm that introduces the new innovative product develops customer loyalty.
The next firm could not easily penetrate the market unless they introduce a
more superior product at a lower price than the initiator.

Satisfied customer became committed to the product.

Satisfied customers could not easily be persuaded to try new products when
they have committed themselves for the product quality of the first mover.
When new and innovative products of the first mover c am e into the market the
customer tends to try the new innovative product introduced by the initiator.
Imitators or Second Mover Strategy
The next firm that introduces the kind of product by the initiator
is likel to produce products that are imitations of the first mover.
The clever second mover studies the success and failure of the
first mover and develops processes and technologies that may
be superior in creating customer value.

Since the imitators or second movers have the time to study the
pioneer's strategy, it allows them to avoid spending on substantial
investments in research and development. They can imitate and
modify the first mover's product without violating patent rights as
modified an improved products may be different in features and
design.
@reallygreatsite
 The Imitators or Second Movers' advantages
are:
• Avoid the problems and mistakes of the pioneers or first
mover. The pioneers usually encountered problems and
marketing strategies that second movers or imitators
could have studied before launching their products. This
could be in terms of new investments and advertising
which the imitators could just counter when they
introduced their products in the market.

@reallygreatsite
Develop technologies and efficiency
that are more superior
New technologies are what customers would like to find in new products.
The imitators could penetrate the suppliers of materials of the pioneer
and copy the same at lower cost. They can develop more efficient
production system that will lower the cost of the product and be more
competitive in the market.

Create products that create

customer value.
Imitators can respond to pioneer's products with superior value as often time's
imitation products feature more values added for customer satisfaction. Imitators
@reallygreatsite
can
basisrespond
for more rapidly and meaningfully interpret market feedback, which could
action.
be their strategic
@reallygreatsite
HEX MARIE
NUÑEZ
FOURTH PRESENTER
FACTORS THAT INFLUENCE THE
LIKELIHOOD OF RIVALS'ATTACK

2. O RGANIZATIO NAL S
IZE STRATEGIES
Big companies used to set on their laurels confident that the competitors could
not easily overtake their size. Smaller organizations that are aggressive
enough to increase their market niche are more likely to launch competitive
actions.
Smaller firms tend to be quicker, nimbler and flexible competitors as they rely on
speed and surprises as they can easily penetrate the technology advantage of
the big firms. Smaller firms' flexibility and nimbleness allow them to develop
greater variety in their competitive actions as compared to large organizations,
which tend to limit the type of competitive actions. Smaller firms can easily
imitate their products through innovation, modifications and improvement without
many investments in research and development. Smaller firms have low
overhead expenses and fixed cost as they can operate with their manpower
base and resources at hand.
The competitive strategies of smaller firms against its
big rivals are:

a.Lower investment cost in research and development

b. Lower fixed and overhead expenses
c. Technology and resource base through imitation
d. Quicker and flexibility in action and response
e. Lower product price with new features
 3 . P R O D U C TQ U A L I T Y S T R A T E G I E S

Quality is the byword in competitive strategy. It is the production of goods or

services with no defects involving a never-ending cycle of continuous
improvement. In strategic objectives, quality refers to how the firm produces
products that exceed customer an outcome of how the firm complete the
cycle of the primary and support activities that develops customer satisfaction
that gives the firm the desired return on investments.
In the eyes of the customer quality means doing the right things relative to
performance measure that are important to them. The production of quality
products is possible only through the support of top management, the workers
and the entire organization. It involves the process of institutionalization in the
core values of competencies and competitiveness to service the requirements
of their valued customers. It further involves vigilance in continuously finding
ways to improve quality.
expectations. For the corporate perspective quality is
Quality is the primary reason to stay in the market. It is now the universal theme
in the global industry and the basic condition for sustained competitive success.
Quality is the vehicle for sustained credibility among its customers as it is the
possible options in the development of customer patronage and loyalty.
Customers will consider buying the products when they believe that the
product quality can satisfy their base level of expectations.

Customer's Perception of Quality Products

a. Performance-it refers to its operating characteristics
b. Product Features - It refers to important special characteristics
c.Flexibility it refers to meeting operating specifications over some period in time
d. Conformance-it refers to matching the pre-established standards
e.Durability-it refers to the amount of use before it ware out or deteriorate f.
Aesthetics-it refers to how the products looks and feel in the use of the user.
DARYL TAPIC
FIFTH PRESENTER
 T OTAL
UALITY
MANAGEM
ENT
By: Daryl Tapic
 INTRODUCTION

Total Quality Management became the focus of most

competing firms in order to sustain the development
of quality products to its customers. TQM is a
managerial strategy of innovations that
emphasizes the organization's total commitment
to customer satisfaction. It is the process of
continuous improvement in production
processes through the use of data- driven
strategies in problem solving. It also involves
group and teams empowerment through
employee's commitment to quality products.
TOTAL UALITY MANAGEMENT

Firms that implemented TQM strategies resulted in the

following advantages

a.increase in customer satisfaction

b.Cut down cost by 20 percent

c.Reduce down time cost in product innovation and

processing

d. Increase productivity of work force

e. Greater incentives for work teams

TOTAL UALITY MANAGEMENT

The quality strategy affects the competitive rivalry and its competitive
advantage. The following factors will result due to poor quality
products;

a.Poor quality products cause decline in sales volume.

b.Credibility in the market could not be easily corrected

c.Loss of customer patronage and loyalty

d.Image building would take time to correct

e.Greater loss in profit margin

T HE DY N A M I C S
OF RIVAL'S
RESPONSES
By: Daryl
Tapic
 INTRODUCTION

Competitive dynamics concerns the ongoing

competitive behavior occurring among all firms
competing in a market for advantageous
positions. Competitive dynamics concerns the
ongoing actions and responses taking place
among all firms competing within a market for
advantageous positions. Market characteristics
affect the set of actions and responses firms take
while competing in a given market as well as the
sustainability of firms' competitive advantage.
THE DYNAMICS O F RIVAL'S O NSE S
RES
Three (3) Important Factors that Affect Competitors Rivalry

1.Factors that determines the degree to

which firms are competitors
2.The drivers of competitive behavior for
individual firms
3.The likelihood that the competitor will
attack or respond

Building and sustaining competitive advantage

is the core of competitive rivalry and the
advantages are greatly link to the firm's
position in the market.
THE DYNAMICS O F RIVAL'S O NSE S
RES

The rivals in the market are further affected by

the speed in product positioning. Competitive
behavior as well as reasons or the logic for their
actions and response are similar within each
market types but they only differ on their
approach and strategies to penetrate their
valued customers. The degre of
sustainability is affected by how quickly
competitive advantage can be imitated and
the cost involve sustain it.
THANK Y O U