8

Chapter 8
Global
chapter

Competitive
Dynamics

GlobalGlobal Strategy
Strategic Management
Mike W. Peng
Mike W. Peng

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 Strategy as Action

Source: C. M. Grimm & K. G. Smith, 1997, Strategy as Action: Industry

Figure 8.1
Rivalry and Coordination (p. 62), Cincinnati: Thomson South-Western.

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duplicated, or posted to a publicly accessible website, in whole or in part.
 Industry-based considerations Resource-based considerations
• Concentration • Valuable capabilities to attack,
deter and retaliate
• Industry leader
• Product homogeneity • Rarity of certain assets
• Stability of demand and supply • Imitability of competitive actions
• Entry barriers • Organizational skills for actions
• Market commonality with rivals • Resource similarity with rivals

Competitive
A Comprehensive dynamics

Model of Global Attack/Counterattack

Cooperation

Competitive Dynamics

Institution-based considerations

• Domestic competition: Primarily

competition/antitrust policy
• International competition: Primarily
trade/antidumping policy

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website, in whole or in part.
 A Prisoners’ Dilemma for Airlines and Payoff Structure
(assuming a total of 200 passengers)

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Figure 8.3
posted to a publicly accessible website, in whole or in part.
 Industry Characteristics and Possibility
of Collusion vis-à-vis Competition

COLLUSION POSSIBLE COLLUSION DIFFICULT (COMPETITION LIKELY)

 Few firms (high concentration)  Many firms (low concentration)

 Existence of an industry price leader  No industry price leader

 Homogeneous products  Heterogeneous products

 High entry barriers  Low entry barriers

 High market commonality (mutual forbearance)  Lack of market commonality (no mutual
forbearance)

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be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. Table 8.1
 A Framework for Competitor Analysis
Between a Pair of Rivals

Sources: Adapted from (1) M. Chen, 1996, Competitor analysis and interfirm rivalry: Toward a theoretical integration (p. 108), Academy of
Management Review, 21: 100–134 and (2) J. Gimeno & C. Y. Woo, 1996, Hypercompetition in a multimarket environment: The role of
strategic similarity and multimarket contact in competitive de-escalation (p. 338), Organization Science, 7: 322–341.

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or posted to a publicly accessible website, in whole or in part.
 Three Main Types of Attack

Thrust Feint

Attacks

Gambit

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accessible website, in whole or in part.
 Thrust

Source: Adapted from R. G. McGrath, M. Chen, & I. C. MacMillan, 1998, Multimarket maneuvering in uncertain
spheres of influence: Resource diversion strategies (p. 729), Academy of Management Review, 23: 724–740.
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posted to a publicly accessible website, in whole or in part.
 Feint

Source: Adapted from R. G. McGrath, M. Chen, & I. C. MacMillan, 1998, Multimarket maneuvering in uncertain
spheres of influence: Resource diversion strategies (p. 731), Academy of Management Review, 23: 724–740.

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posted to a publicly accessible website, in whole or in part.
 Gambit

Source: Adapted from R. G. McGrath, M. Chen, & I. C. MacMillan, 1998, Multimarket maneuvering in uncertain
spheres of influence: Resource diversion strategies (p. 733), from Academy of Management Review, 23: 724–740.
Copyright © 1998. Reprinted by permission of Academy of Management Review via Copyright Clearance Center.

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to a publicly accessible website, in whole or in part.
How Local Firms in
Emerging Economies
Respond to
MNE Actions

Source: Adapted from N. Dawar & T. Frost, 1999, Competing with giants: Survival strategies for
local companies in emerging markets (p. 122), Harvard Business Review, March-April: 119–129.

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posted to a publicly accessible website, in whole or in part.