What Factors Contribute to the Likelihood of a Response to a Competitive

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The Answer is In general, a firm is more likely to respond to a competitive action if: (1) the action leads to better use of the competitor's capabilities to develop a stronger competitive advantage or an improvement in its market position, (2) the action damages the firm's ability to use its competencies to create or maintain an advantage, or (3) the firm's market position becomes harder to defend.In addition, a firm is more likely to respond to a competitor's tactical action, rather than to a competitor's strategic action.Strategic actions involve a significant commitment of resources and are difficult to implement and reverse, as well as requiring time to put into place.In contrast, tactical actions can be implemented quickly, are quickly reversed, and are relatively less costly than strategic actions.A firm is also more likely to respond to a competitor's action when the competitor is the market leader-a firm that has the reputation for above-average returns.Successful actions by competitors are likely to be quickly imitated, even if not initiated by a market leader.Actions by price predators are usually not responded to, nor are actions by firms with reputations for risky, complex, and unpredictable behavior.Finally, competitors with high market dependence are likely to respond strongly to attacks threatening their market position.

What Factors Contribute to the Likelihood of a Response to a Competitive

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