The paper presents a review of the book known as “Wharton on Dynamic Competitive Strategy." The book is divided into four parts and 17 chapters. Part one addresses understanding the advantage in changing competitive environment, part two addresses anticipating competitor’s actions, part 3 addresses formulating dynamic competitive strategy and the last part addresses choosing among alternative competitive strategies. This paper reviews part one of the book that covers chapters one to nine. The review involves a critical evaluation of the chapters and presentation of personal views on over the content of each chapter.
The book brings together an exceptional evaluation of competitive strategies important for international manager to read. Moreover, the book is inspiring and provocative reading since it provides an excellent framework for forming a competitive strategy. Chapter one begins by tackling the competitors and contains detailed information on ways of identifying the competitors as the first step or the beginning of the competition. Ideally, a company cannot be able to understand the kind of market it is operating if it does not clearly know the number of its competitors (Day, Reibstein, & Gunther, 2004). Moreover, it would be impossible for the company to analyze the market and decide on the type of competitive strategy they can employ to counter the competitors. The author presents compelling information noteworthy for an organization that operates in a competitive business environment. A company must include competitors a head when formulating a strategy because competitors influence the performance of a firm in an industry or market. Chapter two proceeded to examine dynamic competitive environments and how they influence business performance. It is true that market environments keep on changing as the world keeps evolving. Therefore, firms must continually study the dynamic environment and adapt its strategies appropriately. Understanding dynamic environments have critical advantages for the company the information provided in this chapter is crucial for managers who need to know how to develop strategies that would allow an organization to survive and thrive in competitive dynamic environments.
Chapter 3 of the book talks about some of the available integrated policy trends in a dynamic environment. The author tries to bring out the importance of forecasting policies just like economists forecast demand. Policies change very often in a dynamic market environment, and they may or may not follow some trends. For example, the policy of worker's pay per day may change often based on the market environment. Thus, linking policy changes to the market trends could help an organization achieve competitive advantage. Although the chapter addresses the issue of policy trends in a dynamic environment basically, the information is crucial in today’s volatile and dynamic business environments. Chapter four explores the importance of understanding a technologically driven dynamic business environment that can compete out the competitiveness of the previous leading companies. The chapter brings out the idea that innovation is important in enhancing the competitiveness of a company. In situations an organization is not able to produce the innovations; it can resort to purchasing or importing the technology to enhance its competitiveness. The strategy can be beneficial for the organization in developing countries that have limited opportunities for producing innovation due to poor technology. The issue of purchasing technology is new and should be investigated further to understand its implications for a company operating in a competitive environment.
The book demonstrates that competitive challenges facing organization are more complicated and move fast. Therefore, such environments require dynamic competitive strategies that adjust to the reactions of competitors. Chapter five of the book on game theory and competitive advantage comprise the first chapter of part two of the book. The chapter presents critical information concerning the link between game theory and competitive strategy. The author describes the four principles of using game theory on competitive strategy. Game theory is considered an effective way of assessing competition in the marketplace. The principles include use strategic foresight, know yourself as well as others differentiate between one-time and repeated interactions, and finally managers must unify minds to promote cooperation. The principles are well elaborated making it clear that game theory is an important aspect of making decisions in a dynamic competitive business environment. Chapters six and seven discuss important theories that influence competitiveness in a dynamic environment. Behavioral theory is clearly linked with competition and how it helps managers make a decision involving strategic reasoning. Furthermore, the author describes how coevolution in the dynamic world enhances competitive decision making and what managers need to do in situations of stiff competition due to the dynamism of the market environment (Day, Reibstein, & Gunther, 2004).
Chapter eight addresses an important aspect of the business which is anticipating reasons that shape competitor responses. Credible research is presented on credible factors that attract competitors into the market and their reactions. It is worth noting that factors such as pricing strategy, the size of the actor and responders, and the performance of actor and responders are significant in informing the competitor reactions in dynamic business environments. The chapter highlights that one action by one competitor may affect several rival companies and invite various reactions. The information the chapter presents is crucial for firms that compete in the same market. Firms must be careful when launching a competitive strategy so as to leverage benefits from competitor reactions rather than losing. Firms are expected to understand competitive relationships to be able to relate well with its rivals. Chapter nine addresses how organizations are forming competitive relationships for their benefit. The book reveals that there are three main types of competitor relationships which include independent, leader-follower and collusive. The authors argue that different relationships among competitors trigger firms to come up with various competitive strategies. Ideally, competitor relationships are crucial in any dynamic markets and firms should understand how to determine the kind of relationships they have with their rivals. The authors did a good job by stating three main methods of determining the type of a relationship which includes Granger causality, conjectural variations, and non-nested model comparisons. Listing of the methods is important because it gives the firms an understating of the kind of reaction they need to exhibit when one firm reacts in a certain manner to enhance their competitiveness. Relationships may change over time because of the change in the market environment. More research needs to be cone on the nature of relationships competitors have in the market and if economists can use the quantitative technique to investigate why their relationships change with time.
In summary, part one of the book is very interesting as it provides important information needed for firms to be competitive in a dynamic business environment. The book gives a new perspective in competitive on competitive strategy from distinguished scholars and it presents the best insights into a competitive strategy that researchers have investigated over time. The key areas that the book explores include game theory, scenario planning, public policy, and market-driven strategy among others. The book provides true insights into the dynamics of competition for a thinking manager. The book provides an insightful perspective that can help one better understand competition dynamics and the underlying competitive interactions in the industry to help managers in making proper strategic decisions in a volatile and rapidly changing unpredictable business world.
Reference
Day, G. S., Reibstein, D. J., & Gunther, R. E. (2004). Wharton on dynamic competitive strategy. John Wiley & Sons.
