Models for Competitive Dynamics
Models for Competitive Dynamics refers to the analysis of a competition at the response and action level so as to predict how a company will act or react towards the opponents.
It is at this level of competition dynamics that a company enact its strategies, manage to test their opponents abilities and capabilities, they also defend their reputation at this stage and signal their toughness towards a competitor to establish business rivalry (Grimm, 2006).
This business approach can either be dyadic or pairwise. It is so true that since 1990s, competition has contributed to a bigger gap between laggards and industrial leaders.
Industrial sector rivals have developed a more-winner take all environment. This has led to an increased level in quantity and the quality of Information Technology `investments, there have also been competitive dynamics that are so striking especially among companies that invest most in information technology.
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Some of the competitive dynamics that have developed through this include Grow your Business (GYB), Destroy your Business (DYB) strategy , the systems of informations (IS), strategic advantage and social business (Grimm, 2006).
In grow your business strategy, the companies maximizes on the quality and the quantity of the product so to provide the best in the market but for destroy your business strategy, the company makes products to match the level of the products produced by other companies.
With DYB, profit margins realized can be either large or low depending on the number of consumers in the market but in most cases profit margins are less due to flooding of similar products or services in the market but on the other hand, in grow your business strategy, when other factors remain constant, profit margins achieved are very high which makes business for the company to be good (Markman, Phan, 2011).
Market cannibalization refers to the negative impact that is brought about by the company’s new product to the existing that affects its sells. It refers to the situation in which a company’s new product eats up the demand and sales of an already existing product.
It negatively impacts on the market share of the existing products and the volume of sales of the existing product.it occurs when a new product makes an intrusion into the existing market and totally eliminates the existing product.it is also referred to as corporate cannibalism.
In business, competition forms the part and parcel of normal day to day activity, therefore a company should employ the best strategic method that suits itself and will give it an edge over other companies producing the same product.
Grimm, C. M. (2006). Strategy as action: Competitive dynamics and competitive advantage. Oxford [u.a.: Oxford Univ. Press.
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