Threatening Moves Framework
Predicting and influencing retaliation
The Threatening Moves Framework involves predicting and influencing retaliation when making moves that threaten competitors. This requires analyzing the competitors' goals and assumptions, as well as the industry structure and the firm's own strengths and weaknesses.
- Firms should predict the likelihood and timing of retaliation when making threatening moves
- Firms should analyze their competitors' goals and assumptions to understand how they will react to different moves
- Firms should consider the industry structure and their own strengths and weaknesses when making moves
- Analyze competitors' goals and assumptionsFirms should analyze their competitors' goals and assumptions to understand how they will react to different moves. This involves identifying the competitors' strengths and weaknesses, as well as their perceptions of the market and the firm's position in it.Pro tipFirms should use a variety of sources to gather information about their competitors, including public statements, industry reports, and market research.WarningFirms should be careful not to misinterpret their competitors' goals and assumptions, as this can lead to incorrect conclusions about how they will react to different moves.
- Predict the likelihood and timing of retaliationFirms should predict the likelihood and timing of retaliation when making threatening moves. This involves analyzing the competitors' goals and assumptions, as well as the industry structure and the firm's own strengths and weaknesses.Pro tipFirms should consider a variety of factors, including the competitors' past behavior, their current market position, and the potential consequences of retaliation.WarningFirms should be careful not to underestimate the likelihood or timing of retaliation, as this can lead to incorrect conclusions about the potential consequences of different moves.
- Influence retaliationFirms should influence retaliation when making threatening moves. This involves using a variety of mechanisms, such as commitment, to affect the competitors' behavior.Pro tipFirms should consider a variety of mechanisms, including active market signaling, reliance on traditional industry leaders, and the use of focal points.WarningFirms should be careful not to overestimate their ability to influence retaliation, as this can lead to incorrect conclusions about the potential consequences of different moves.
Timex's entry into the watch industry in the early 1950s is an example of a threatening move. Timex produced a low-price watch that was sold through non-conventional channels, and the Swiss watch industry eventually retaliated.
The Threatening Moves Framework was developed by Michael E. Porter as part of his work on competitive strategy. Porter recognized that firms in oligopolistic markets often have to make moves that affect their competitors, and that these moves can be either threatening or non-threatening. He developed the framework as a way for firms to predict and influence retaliation when making threatening moves.