Strategy and Competitive Market Behaviour

Competitive Market Behaviour

Competitive behaviour sees organisations taking an adversarial role in all exchange situations, not only with competitors in the market but also in dealings with stakeholders such as suppliers.  The primary objective is to drive the hardest bargain in all situations.  This is what is referred to as a zero sum game – an interaction in which one participant’s gains result only from another’s equivalent losses. Such competitive market behaviour ranges from fair competition (playing by the rules and “accepted behaviour”) through negative opportunism, to predatory behaviour (illegal).

Monopolistic/Oligopolistic market behaviour – where one (monopoly) or a fewcompetitors  (oligopoly) exert strong control on the market

Co-operative market behaviour

Lesser (Non-competitive) market behaviour ranges from:

Détente – A mutual deep interest and understanding, not to act competitively.   In many instances competitors believe that it is not in their interests, the interests of society, or customers to act competitively due a belief that that competitors (e.g. charities, public institutions) are doing the same job.

Collusive behaviour – Organisations who conspire and engage in anti competitive behaviour.  This is illegal in many countries.

Identifying the Competition

Competitor identification is not always as simple as it appears at first glance.  For example, an organisation that does business in essentially the way another does business, whose products are essentially the same as ours, and that therefore looks quite a bit like our firm is not necessarily in competition with us.  Conversely, an organisation that bears little resemblance to our firm and whose value propositionsare dissimilar to ours may in fact be our competitor.

Direct Vs. Indirect Competitors

A competitor whose service offers resemble ours closely is a direct competitor.  A firm that offers a service that does not closely resmble ours but is perceived as an alternative by our customers is considered to be an indirect competitor.

It is important to include both direct and indirect competitors in the competitor analysis system.  Often determining just which competitors to include in the system is quite straightforward; in other instances it may be more difficult.

Syncretic Market Behaviour

Syncretic (a combination of different beliefs) market behaviour is the attempt to achieve a dynamic balance between positives to be found in both competitive and co-operative strategies.    .

 

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