Industry Structure and Competitive Dynamics

Introduction

Corporate strategy is shaped not only by what a firm wants to do, but also by the structure of the industry in which it competes. An industry may offer attractive growth and profitability while simultaneously exposing firms to powerful customers, disruptive technologies, regulation, or intense rivalry. Strategic analysis therefore requires managers to examine the external competitive environment and connect it with the organisation’s capabilities.

This chapter develops three complementary perspectives. First, Porter’s Five Forces model evaluates the structural pressures that influence industry profitability. Second, strategic-group analysis explains why firms within the same industry may pursue different strategies and experience different levels of performance. Third, industry-evolution models show how competition changes as technologies, demand, regulation, and business models develop. The chapter then examines globalisation, capabilities and competencies, core competencies, and the role of low-cost positions in competitive advantage.

Learning Objectives

By the end of this chapter, readers should be able to:

1. Explain the relationship between industry structure and competitive advantage.
2. Apply Porter’s Five Forces model to assess industry attractiveness.
3. Use strategic-group maps to analyse rivalry and mobility barriers.
4. Evaluate competitive change during industry evolution and technological disruption.
5. Assess how globalisation changes industry structure and competitive dynamics.
6. Distinguish resources, capabilities, competencies, and core competencies.
7. Evaluate whether a firm’s capabilities can support sustainable advantage, including low-cost strategies.

1. Industry Structure and Competitive Advantage

Industry structure refers to the relatively stable features of an industry that influence how value is created, distributed, and captured. These features include the number and size of competitors, customer concentration, supplier power, entry barriers, substitute products, regulation, technology, and the configuration of the value chain.

Competitive advantage exists when a firm creates greater economic value than its competitors. Economic value is the difference between the value customers perceive and the cost incurred to produce and deliver the offering. A firm may create advantage through differentiation, lower cost, superior speed, innovation, customer intimacy, or a combination of these approaches.

Industry structure does not determine performance mechanically. Two firms in the same industry can achieve different results because they possess different resources and capabilities. Conversely, a strong firm may struggle in an unattractive industry where customers and suppliers capture most of the value. Corporate strategy therefore requires both external analysis and internal analysis.

A useful distinction is between industry attractiveness and competitive position. Industry attractiveness concerns the average profit potential available to firms in the industry. Competitive position concerns a particular firm’s ability to outperform competitors. A structurally attractive industry may contain weakly positioned firms, while a structurally difficult industry may contain firms with exceptional capabilities.

Industry value capture

Value is distributed among several participants: customers, suppliers, employees, complementors, governments, distributors, and shareholders. Competitive strategy seeks to influence this distribution. For example, a powerful retailer may force manufacturers to reduce prices, while a patented technology supplier may capture a large share of industry value. Managers should therefore ask not only “How large is the market?” but also “Who captures the value, and why?”

Industry analysis is most useful when it is dynamic. Managers should examine current conditions, likely changes, and the firm’s ability to shape those changes. A force that is weak today may become powerful after a regulatory change or technological innovation.

2. Industry Analysis: Porter’s Five Forces Model

Porter’s model explains industry profitability through five competitive forces: rivalry among existing competitors, threat of new entrants, bargaining power of buyers, bargaining power of suppliers, and threat of substitutes. The model is not a numerical forecasting device. It is a structured framework for diagnosing the sources of competitive pressure.

2.1 Rivalry among existing competitors

Rivalry concerns the intensity with which established firms compete for customers and resources. Rivalry tends to be strong when:

• many competitors of similar size are present;
• industry growth is slow, causing firms to fight for market share;
• fixed costs are high, encouraging firms to operate at high capacity;
• products are weakly differentiated;
• switching costs are low;
• excess capacity exists;
• exit barriers are high; or
• competitors have substantially different objectives.

Rivalry may take the form of price reductions, advertising battles, product innovation, service improvements, capacity expansion, or exclusive distribution agreements. Price rivalry is particularly damaging because it can reduce industry profitability for all firms. Differentiation, customer loyalty, switching costs, and disciplined capacity management can reduce direct price competition.

2.2 Threat of new entrants

New entrants increase industry capacity and may reduce prices or raise marketing and innovation costs. The threat depends on barriers to entry and the expected reaction of incumbents.

Important entry barriers include:

• Economies of scale: unit costs fall as output increases.
• Capital requirements: substantial financial investment is required.
• Switching costs: customers face costs when changing suppliers.
• Access to distribution: established firms control important channels.
• Brand identity: incumbents have strong customer recognition.
• Learning and experience effects: established firms have accumulated knowledge.
• Network effects: the value of a product increases as more users adopt it.
• Regulation and licensing: legal requirements restrict entry.
• Proprietary technology or data: incumbents possess difficult-to-replicate assets.
• Expected retaliation: entrants anticipate aggressive responses from incumbents.

Entry barriers are not always beneficial to incumbent firms. For example, a regulatory licence may protect current firms, but it can also reduce innovation if entry is restricted excessively. Digital platforms illustrate a more complex case: software may be inexpensive to reproduce, yet network effects and data advantages can create powerful barriers after a platform reaches scale.

2.3 Bargaining power of buyers

Buyers exert power when they can force prices down, demand higher quality, or shift costs and risks to suppliers. Buyer power is high when:

• buyers are concentrated or purchase in large volumes;
• products are standardised;
• switching costs are low;
• buyers have credible alternatives;
• buyers are well informed about prices and costs;
• the purchased input is a significant part of the buyer’s total cost; or
• buyers can integrate backward and produce the input themselves.

Buyer power does not necessarily mean that customers are large organisations. In consumer markets, digital comparison tools and online reviews can increase the power of individual customers by reducing information asymmetry and switching costs.

Firms can reduce buyer power through differentiation, superior service, loyalty programmes, proprietary interfaces, customer analytics, and solutions that become embedded in customers’ operations. However, data collection and personalisation must comply with privacy and consumer-protection requirements.

2.4 Bargaining power of suppliers

Suppliers are powerful when they can raise prices, reduce quality, limit availability, or impose unfavourable contractual conditions. Supplier power is likely to be high when:

• there are few suppliers;
• suppliers offer differentiated or essential inputs;
• switching suppliers is costly;
• no credible substitute input exists;
• suppliers can integrate forward into the buyer’s market; or
• the buying industry is not important to the supplier.

Dependence on a single geographic region, specialised technology provider, or scarce raw material can increase supplier power. Firms may respond through multiple sourcing, long-term contracts, supplier development, standardisation, vertical integration, inventory buffers, or redesign of the product to use alternative inputs.

2.5 Threat of substitutes

A substitute performs a similar customer function through a different product, technology, or business model. Substitution is not restricted to products that look alike. Rail travel may substitute for air travel on some routes; streaming may substitute for cinema attendance; videoconferencing may substitute for business travel.

The threat of substitutes is high when substitutes offer a favourable price-performance relationship, switching costs are low, and customers are willing to change behaviour. Substitutes place a ceiling on prices. A firm that ignores substitutes may define its market too narrowly and miss the source of disruption.

Interpreting the five forces together

The five forces should be analysed as an interacting system. For example, powerful buyers may encourage rivalry by demanding price reductions, while a powerful supplier may make entry more difficult by controlling a critical input. Complementors—organisations whose products increase the value of a firm’s offering—are not one of Porter’s original five forces, but they are strategically important in platform and ecosystem industries.

A qualitative assessment can be organised as follows:

The model has limitations. It can appear static, may understate cooperation and ecosystems, and does not fully explain firm-specific capabilities. It should therefore be supplemented by competitor analysis, scenario planning, stakeholder analysis, and internal resource analysis.

3. Strategic-Group Analysis

A strategic group is a set of firms within an industry that follow similar strategies along important dimensions. Relevant dimensions may include price and quality, geographic scope, degree of vertical integration, product range, distribution channel, technology, service level, or customer segment.

Strategic-group analysis is useful because industry averages conceal meaningful differences. In commercial aviation, for example, full-service global airlines, low-cost carriers, regional airlines, and premium niche operators compete in the same broad industry but face different customers, cost structures, and competitive pressures.

Constructing a strategic-group map

A strategic-group map generally involves four steps:

1. Identify strategic dimensions that meaningfully distinguish competitors.
2. Plot firms on two dimensions, such as price-service level and geographic scope.
3. Represent each firm by a circle whose size indicates a relevant measure, such as revenue or market share.
4. Interpret group boundaries, empty spaces, mobility barriers, and likely competitive moves.

The map is a visual aid, not a substitute for analysis. The selected dimensions must be strategically important and sufficiently independent. A map using two highly correlated variables may provide little insight.

Mobility barriers

Mobility barriers make it difficult for a firm to move from one strategic group to another. Examples include brand reputation, specialised assets, distribution relationships, technology, regulatory approval, organisational routines, and a cost structure designed for a particular segment. Mobility barriers explain why firms with similar access to the same market may not be equally able to imitate one another.

Strategic groups can differ in profitability because they face different levels of rivalry and possess different resources. However, group membership does not guarantee superior performance. A premium group may earn high margins but face smaller demand and high service costs; a low-cost group may gain volume but operate on thin margins.

Managers should use strategic-group analysis to identify direct rivals, underserved positions, potential moves, and the risks of strategic imitation. Moving into an attractive space may trigger retaliation or require capabilities the firm does not possess.

4. Competitive Changes during Industry Evolution

Industries evolve through changes in technology, customer preferences, regulation, demographics, infrastructure, and business models. A common industry life-cycle model identifies introduction, growth, maturity, and decline. The model is useful but should not be treated as a universal sequence: industries can be rejuvenated, fragmented, consolidated, or disrupted before reaching conventional maturity.

Introduction

Demand is uncertain, costs are often high, and standards may not yet be established. Firms compete to educate customers, develop technology, secure distribution, and influence regulation. First-mover advantages may arise from learning, reputation, patents, or network effects, but first movers also bear high development costs and risk choosing the wrong technology.

Growth

Demand expands rapidly and more competitors enter. Firms seek scale, distribution, brand recognition, and process efficiency. Standards often emerge, and weaker firms may exit. Managers must balance growth investment with operational discipline and avoid assuming that rapid market growth automatically produces profitability.

Maturity

Growth slows, market shares stabilise, and competition often becomes more intense. Firms focus on efficiency, segmentation, product extensions, service quality, consolidation, and customer retention. Excess capacity and powerful buyers may intensify price competition.

Decline or transformation

Demand may shrink because of substitutes, demographic change, regulation, or technological obsolescence. Firms can harvest cash, exit, consolidate, specialise in profitable niches, or transform the business. Declining industries may remain profitable when exit is rapid and remaining firms possess strong customer relationships or cost advantages.

Disruption and dominant design

Disruption occurs when a new technology or business model changes the basis of competition. A disruptive entrant may initially serve overlooked customers with a simpler, cheaper, or more accessible offering, then improve and move toward mainstream customers. Incumbents often struggle because their existing assets, processes, incentives, and customer commitments are aligned with the current business model.

A dominant design is a configuration or architecture that becomes widely accepted as the standard. After a dominant design emerges, competition often shifts from experimentation toward scale, process efficiency, reliability, and complementary assets. Managers should distinguish genuine technological disruption from ordinary product improvement and from attractive but commercially unviable innovation.

Useful indicators of competitive change include declining customer switching costs, rapid changes in unit economics, venture investment, new regulatory rules, platform adoption, changing search behaviour, and the entry of firms from adjacent industries. Scenario planning helps managers prepare for multiple paths rather than extrapolating one trend.

5. Globalisation and Industry Structure

Globalisation connects national markets through trade, investment, technology, migration, information, and global value chains. It changes the geographic boundaries of competition and can alter every force in Porter’s model.

Globalisation may increase rivalry by expanding the number of competitors. It may also create economies of scale because firms can spread research, branding, and production costs over larger markets. Global sourcing can lower input costs but may increase exposure to logistics disruption, geopolitical conflict, exchange-rate volatility, and regulatory differences.

The degree of global integration varies across industries. In a multidomestic industry, customer preferences and regulation differ substantially across countries, so firms adapt products and strategies locally. In a global industry, competitive conditions are strongly interconnected across countries, and firms benefit from coordinated international strategies. Many industries are hybrid: manufacturing may be global while distribution and service remain local.

Globalisation affects the five forces in several ways:

• Entry: international capital and digital distribution may lower entry barriers, while local licences and relationships may preserve barriers.
• Rivalry: firms from different countries compete, often with different cost structures and state support.
• Buyers: global procurement increases buyer scale and price transparency.
• Suppliers: firms can access broader supplier networks, but concentration in particular regions can increase vulnerability.
• Substitutes: global diffusion of technology accelerates substitution.

Managers must assess location advantages, institutional differences, political risk, intellectual-property protection, tax rules, labour standards, and cultural expectations. International expansion should not be justified by market size alone. A country may have attractive demand but unfavourable institutions, high adaptation costs, or powerful local competitors.

Ethically, global strategy raises questions about labour conditions, environmental impact, tax avoidance, data sovereignty, and the distribution of value across countries. Responsible global strategy requires due diligence, supplier standards, transparent governance, and compliance with both home-country and host-country obligations.

6. Capabilities, Competencies, and Core Competencies

External analysis explains the pressures a firm faces; internal analysis explains how it can respond. A resource is an asset or input controlled by a firm, such as capital, patents, data, facilities, talent, or brand reputation. A capability is the firm’s ability to deploy resources through coordinated activities. Capabilities are often embedded in routines, processes, knowledge, and relationships rather than in a single physical asset.

A competency is a capability performed with a meaningful level of proficiency. Competencies may be operational, managerial, technological, marketing-related, or relational. A core competency is a capability that contributes significantly to customer value, supports access to multiple markets, and is difficult for competitors to imitate. The concept is associated with the idea that corporations should build around deep organisational skills rather than merely manage a portfolio of products.

Examples may include exceptionally reliable logistics, sophisticated semiconductor design, trusted risk assessment, rapid product development, or the ability to integrate software, hardware, and services. A core competency is not simply a department, technology, or fashionable strength. It is an organisational capability that can be leveraged across products and markets.

A capability can support sustained competitive advantage when it is valuable, relatively rare, difficult to imitate, and supported by the organisation. Difficulty of imitation may arise from causal ambiguity, social complexity, path dependence, or the time required to build experience. A capability that was valuable in the past may become a liability when technology or customer needs change.

Dynamic capabilities

Dynamic capabilities are the abilities to sense opportunities and threats, seize opportunities through investment and action, and transform the organisation’s resource base. They are especially important in turbulent industries. Sensing without seizing produces analysis without commitment; seizing without transforming can leave the organisation trapped in obsolete routines.

Capabilities should be tested against evidence. Managers can examine whether a capability improves customer outcomes, reduces cost, supports more than one market, survives personnel changes, and remains effective under competitive imitation. Benchmarking may identify performance gaps, but it cannot always reveal the tacit routines that create superior performance.

Low-cost capability and competitive advantage

A low-cost position exists when a firm can deliver an acceptable offering at lower economic cost than competitors. Low cost is not equivalent to low price. A firm may use cost advantage to charge lower prices, gain market share, or maintain industry-average prices and earn higher margins.

Low-cost advantage can arise from scale, learning, process technology, efficient procurement, high asset utilisation, simplified product design, favourable locations, superior logistics, or disciplined overhead control. It must not depend on unlawful labour exploitation, unsafe practices, environmental harm, or misleading quality claims.

Low-cost strategies have risks. Competitors may imitate processes, technology may make assets obsolete, customers may demand more features, and excessive cost cutting may damage quality or resilience. The strongest low-cost firms treat efficiency as an organisational capability rather than as a temporary budget reduction. They also monitor total cost, including warranty, environmental, compliance, disruption, and reputational costs.

7. Integrated Application: The Electric-Urban-Mobility Industry

The following is an illustrative case rather than a report of a particular company.

Background

A manufacturer of electric urban vehicles operates in a rapidly developing market involving batteries, software, charging infrastructure, mobility platforms, and public policy. Traditional vehicle manufacturers, technology firms, specialist start-ups, and energy companies are entering the sector.

Problem

The manufacturer has strong engineering knowledge but faces falling battery costs, uncertain charging standards, powerful fleet buyers, global supply risks, and substitutes such as public transport, ride-sharing, bicycles, and conventional vehicles. Management must determine whether to compete through premium differentiation, low cost, or an integrated mobility ecosystem.

Analysis

Rivalry is intense because many firms seek scale and brand recognition. Entry barriers are mixed: vehicle manufacturing requires capital and regulatory approval, but software and mobility services may be entered more easily. Battery-cell suppliers may possess substantial power because supply is geographically concentrated and technologically specialised. Fleet buyers have high bargaining power because they purchase in volume and can compare total operating costs. Substitutes are significant, particularly in dense cities with effective public transport.

A strategic-group map could use price-performance and degree of ecosystem integration as dimensions. Premium integrated firms occupy one group; low-cost manufacturers another; software-led mobility platforms a third. Mobility barriers include safety certification, manufacturing competence, charging partnerships, data capabilities, and customer trust.

The industry is in a growth and experimentation phase, but elements of a dominant design may emerge around charging standards, battery architecture, software interfaces, and service models. Globalisation expands the market and access to suppliers, while geopolitical policy may encourage regional production.

Approach and outcome

Management chooses a staged strategy. It develops a modular vehicle platform, forms multiple battery-sourcing partnerships, invests in software and fleet analytics, and targets commercial fleets before the highly competitive mass consumer market. It retains a low-cost objective in manufacturing but avoids competing solely on the lowest purchase price by emphasising total cost of ownership, reliability, and service availability.

The outcome is not guaranteed. The strategy creates options while preserving flexibility, but it requires governance of data, cybersecurity, safety, environmental claims, and supplier labour standards.

Learning points

The case demonstrates that industry attractiveness is multidimensional. A growing market can contain powerful suppliers and buyers. Strategic-group position affects the feasibility of competitive moves. Core competencies must be connected to customer value and should evolve as technology changes. Finally, global supply access creates both efficiency and resilience risks.

8. Managerial Use of Industry Analysis

Effective analysis should be evidence-based and periodically updated. Managers should:

1. Define the relevant industry by customer need, not merely by product category.
2. Analyse all five forces and identify the mechanisms behind each judgement.
3. Distinguish current conditions from expected changes.
4. Map strategic groups and identify mobility barriers.
5. Test disruption scenarios and possible substitute solutions.
6. Compare external opportunities with internal capabilities.
7. Evaluate ethical, regulatory, geopolitical, and sustainability implications.
8. Convert analysis into choices about positioning, investment, partnerships, and withdrawal.

A common analytical error is to describe an industry without identifying its consequences. The purpose of strategy is not to produce a catalogue of facts but to explain how structural conditions affect value capture and what the organisation can do about them.

Challenges and Limitations

Industry boundaries are increasingly difficult to define because digital platforms and ecosystems connect previously separate sectors. Porter’s model may also understate complementors, institutional forces, and cooperation. Strategic-group maps depend on subjective choices of dimensions. Life-cycle models can encourage deterministic thinking, while core-competence analysis may lead managers to overvalue existing strengths and miss new capabilities.

Industry analysis is therefore best treated as a disciplined conversation supported by data, competitor intelligence, customer research, scenario analysis, and managerial judgement. It should be revisited when technologies, regulations, business models, or global conditions change.

Chapter Summary

Industry structure influences the average potential for value creation and value capture, while firm-specific capabilities influence relative performance. Porter’s Five Forces model analyses rivalry, entry, buyers, suppliers, and substitutes. Strategic-group analysis reveals clusters of firms with similar strategies, mobility barriers, and competitive positions. Industry evolution changes the basis of competition through introduction, growth, maturity, decline, dominant designs, and disruption.

Globalisation can enlarge markets and enable scale, but it also intensifies rivalry and creates exposure to geopolitical, regulatory, logistical, and ethical risks. Resources are assets; capabilities are abilities to deploy resources; competencies are proficient capabilities; and core competencies are valuable, difficult-to-imitate organisational capabilities that can support several markets. Low-cost advantage is a strategic capability when it is based on durable efficiency rather than harmful cost cutting. Sound corporate strategy integrates external industry analysis with internal capability analysis and dynamic adaptation.

Key Terms

Industry structure: The competitive, economic, technological, and institutional features shaping value creation and capture.

Competitive advantage: The ability to create greater economic value than competitors.

Industry attractiveness: The profit potential available to firms in an industry.

Porter’s Five Forces: A framework analysing rivalry, entrants, buyers, suppliers, and substitutes.

Rivalry: Competitive intensity among established firms.

Entry barrier: A condition that makes entry by a new competitor difficult or costly.

Buyer power: The ability of customers to influence price, quality, or contractual terms.

Supplier power: The ability of suppliers to influence input prices, availability, or conditions.

Substitute: A different product or service that satisfies a similar customer need.

Strategic group: Firms in an industry following similar strategic approaches.

Mobility barrier: A condition that restricts movement between strategic groups.

Industry life cycle: A model describing changing industry conditions from emergence through growth, maturity, and decline.

Disruption: A change that shifts the basis of competition through a new technology or business model.

Dominant design: A configuration that becomes the widely accepted industry standard.

Resource: An asset or input controlled by an organisation.

Capability: An organisation’s ability to deploy resources through coordinated activities.

Competency: A capability performed with meaningful proficiency.

Core competency: A distinctive, difficult-to-imitate capability that supports customer value and multiple markets.

Dynamic capability: The ability to sense, seize, and transform in response to environmental change.

Low-cost position: The ability to deliver an acceptable offering at lower economic cost than competitors.

Review Questions

Short Answer Questions

1. What is the relationship between industry attractiveness and competitive position?
2. Identify the five forces in Porter’s model.
3. What is a mobility barrier?
4. How does a dominant design affect competition?
5. Distinguish a capability from a core competency.

Long Answer Questions

1. Explain Porter’s Five Forces model and evaluate its usefulness and limitations for contemporary platform industries.
2. Discuss how strategic-group analysis can support competitive positioning and investment decisions.
3. Explain how competition changes as an industry moves through its life cycle.
4. Analyse the effects of globalisation on entry barriers, rivalry, buyers, suppliers, and substitutes.
5. Discuss how capabilities and core competencies can support sustainable advantage in a low-cost strategy.

Analytical / Application Questions

1. Select an industry and assess its attractiveness using all five forces. Identify the evidence that supports each assessment.
2. Construct a strategic-group map for an industry of your choice. Explain the selected dimensions, mobility barriers, and likely strategic moves.
3. Analyse a potentially disruptive technology and recommend how an incumbent should use its capabilities to respond.

Multiple Choice Questions with Answers

Question 1

Which force is most directly strengthened when customers can switch suppliers at very low cost?

A. Bargaining power of buyers

B. Bargaining power of suppliers

C. Threat of new entrants

D. Rivalry among suppliers

Correct Answer: A. Bargaining power of buyers

Question 2

Which condition generally raises barriers to entry?

A. Standardised products and low switching costs

B. Strong network effects enjoyed by established firms

C. Many equally sized competitors

D. Low capital requirements

Correct Answer: B. Strong network effects enjoyed by established firms

Question 3

The main purpose of a strategic-group map is to:

A. Forecast national economic growth

B. Compare firms pursuing similar strategic approaches

C. Calculate a firm’s accounting profit

D. Measure employee satisfaction

Correct Answer: B. Compare firms pursuing similar strategic approaches

Question 4

A dominant design typically causes competition to shift toward:

A. Experimentation with entirely unrelated technologies

B. Scale, efficiency, reliability, and complementary assets

C. Eliminating all entry barriers

D. Reducing the importance of operations

Correct Answer: B. Scale, efficiency, reliability, and complementary assets

Question 5

Which is an example of a substitute?

A. Two brands of the same product

B. A supplier selling the same component to two buyers

C. Videoconferencing reducing the need for business travel

D. A retailer opening a second store

Correct Answer: C. Videoconferencing reducing the need for business travel

Question 6

A core competency is best defined as:

A. Any resource listed on the balance sheet

B. A capability that supports customer value and can be leveraged across markets

C. A short-term promotional campaign

D. A government regulation protecting incumbents

Correct Answer: B. A capability that supports customer value and can be leveraged across markets

Question 7

Globalisation can increase supplier risk when:

A. Inputs are sourced from a concentrated geographic region

B. Firms use multiple suppliers in different regions

C. Products become easier to substitute

D. Customers become less informed

Correct Answer: A. Inputs are sourced from a concentrated geographic region

Question 8

Which situation is most characteristic of an industry maturity phase?

A. High uncertainty about the basic product and rapidly emerging demand

B. Stable or slowing growth with stronger emphasis on efficiency and retention

C. No established competitors or distribution channels

D. Complete absence of price competition

Correct Answer: B. Stable or slowing growth with stronger emphasis on efficiency and retention

Question 9

A low-cost position means that a firm:

A. Must always charge the lowest market price

B. Can deliver an acceptable offering at lower economic cost than competitors

C. Provides the highest possible level of product variety

D. Avoids all investment in technology

Correct Answer: B. Can deliver an acceptable offering at lower economic cost than competitors

Question 10

Dynamic capabilities primarily concern an organisation’s ability to:

A. Preserve existing routines regardless of environmental change

B. Sense opportunities, seize them, and transform its resource base

C. Eliminate all competitors through regulation

D. Increase industry concentration automatically

Correct Answer: B. Sense opportunities, seize them, and transform its resource base