Competitive Rivalry

• What does it mean by the competitive rivalry (intensity of competition) in the industry?

  The degree of competition between existing firms in the industry
• How does a high competitive rivalry in the industry impact profits of existing firms?

  Lower profits because:

  • More likely price wars
  • Increased spend on research and development for innovation
  • More advertising spend
• What are the factors increasing rivalry in an industry?

  • Many equally sized competitors
  • Low industry growth (firms fight for market share)
  • Low product differentiation
  • High fixed costs (firms must sell more to break-even)
• The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential
• What are the factors reducing rivalry in an industry?

  • Brand loyalty
  • Product innovation
  • Fast-growing market
• Why does a fast-growing market reduce rivalry in an industry?

  Theres opportunities for all firms to expand and capture new customers, rather than compete for a limtied existing market share
• What are the strategic implications of increasing rivalry in an industry?

  • Compete through differentiation rather than price
  • Use branding, innovation, and customer service to stand out
• How does increasing rivalry in an industry impact marketing?

  • Advertising campaigns
  • Positioning strategies (niche markets)
• How does increasing rivalry in an industry impact operations?

  • Focus on product quality
  • Focus on delivery
• How does increasing rivalry in an industry impact HR?

  Skilled workforce for innovation and customer service