Explain the "Action-Response" Processes That Create Competitive Dynamics Within an Industry

Question

Examlex · Accepted Answer

The Answer is New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is partly True because except in very new markets, nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response. As a result, a competitive dynamic-action and response-begins among the firms competing for the same customers in a given marketplace.

Explain the "Action-Response" Processes That Create Competitive Dynamics Within an Industry

Definitions: