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Strategy Dynamics Course - Class 7 – Competition


This course is unavailable whilst it is being updated.

NOTE: The frameworks in this class can be applied on their own, as well as being used as part of a more complete business model.

Just three rivalry mechanisms cover all competitive interactions between firms. For customers these are:

  • winning new customers
  • stealing customers from rivals
  • obtaining a larger share of business from shared customers

Organizations may also compete for other resources, such as employees or providers of funds, making the mechanisms equally relevant to public services and voluntary groups. This class provides frameworks for laying out and quantifying how customers or other resources are flowing between competitors, and the implications of these processes for how performance develops over time.

Many situations involve several competing organizations, or many, so the class also offers ways to understand and simplify these complex interactions. The class also explains some consequences for the way in which industries develop, such as the way in which entry and exit of competitors interacts with growth and profitability, and the phenomenon of successive product generations.

Key issues addressed

  • Type-1 rivalry – capturing new customers, especially in growing markets
  • Type-2 rivalry – stealing customers from competitors, especially in mature markets
  • Type-3 rivalry – fighting for share of sales to non-exclusive customers
  • Rivalry for other resources, especially staff
  • How the three types of rivalry may operate together
  • How successive product generations renew the competitive process
  • Dealing with multiple competitors
  • Grouping competitors according to similarities to simplify complicated cases
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Other resources and links


Constantinos Markides and Paul Geroski (2004) Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets, Jossey Bass.   Amazon UK   Amazon Canada

Besanko, D., Dranove, D., Shanley, M. and Schaefer, S. (2007) The Economics of Strategy, 4th edn, Wiley, Chichester.   Amazon UK   Amazon Canada

Chan Kim, W. and Mauborgne, R. (2004) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, Harvard Business School Press, Boston.   Amazon UK   Amazon Canada

Dutta, P. (1999) Strategies and Games: Theory and Practice, MIT Press, Boston, MA.   Amazon UK   Amazon Canada

(eds) Faulkner, D. and Campbell, A., The Oxford Handbook of Strategy, Blackwell, Oxford,   Amazon UK   Amazon Canada