Kernochan, 2005 Where We’ve Been Strategic Gestalts Business-level Strategies Internal (Firm) Analysis Environmental Analysis Corporate-level Strategies International Strategies NOW: Competitive Dynamics, Cooperative Strategies

Kernochan, 2005 Competitive Dynamics So far: strategy & strategic gestalt have been treated as static elements Competitive dynamics treats strategy as competitive rivalry that unfolds over time –Game theory: focuses on tit-for-tat aspects of competitive rivalry Competitive dynamics = means of creating more or less sustainable advantages for the firm Part of the environmental context of the strategic gestalt Only one part of picture: need for quality, vision

Kernochan, 2005 Competitive Dynamics: Action & Response Strategic Seeing: –actions of firms in the industry –Effects on industry –Need (or not) of response Strategic thinking: response –What reaction creates the largest and most desirable effects at the least cost and correct timing –Responses can be staged over time and escalate or diminish

Kernochan, 2005 Competitive Dynamics Two levels: Corporate- & Business-level Corporate-Level = diversification = action –Across businesses Multipoint competition: core business(es) –Across borders: international strategies Multipoint competition: home/domestic markets Business-level –Actions in product-markets to create advantage, defense

Kernochan, 2005 The Result of Competitive Dynamics: Industry/Market Outcomes Rivalry characterizes markets, industries, hence firm’s environment (5 Forces) –Note: firm’s actions help to define arena Market Types: slow, standard, fast cycle Types of competitive outcomes –Sustained vs. temporary advantages Market stages (Life cycle) –introduction, growth, maturity, decline

Kernochan, 2005 Competitive Dynamics The sequence of competitive actions over time Two principal concerns –When (Timing Strategies) –Type: Offensive or Defensive

Kernochan, 2005 Timing Strategies First Mover Second Mover or Follower Late Mover or Laggard

Kernochan, 2005 Type of Competitive Action: Offensive Frontal Assault Flanking Maneuver Bypass Attack Encirclement Guerilla Warfare

Kernochan, 2005 Type of Competitive Action: Defensive May be reactive or anticipatory Raise Structural Barriers to entry/attack Increase Expectation of Retaliation Lower the Inducement for Attack –Keep industry unattractive

Kernochan, 2005 Cooperative Strategies Network or Environmental level strategy Various forms of alliances –Joint-venture, etc. Varying degrees of formality –Tacit collusion  merger Cooperative or complementary alliances –Cooperative: common interest(s) –Complementary: different strengths