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