Question

Market commonality among rivals may affect the likelihood of initiating and responding to competitive actions. Explain how and give one example of two firms with high market commonality and their competitive behaviour.

Answer 1

One example of high market commonality between two firms is that of Coca Cola and Pepsi Co. Both of these companies produce similar products and compete for the same customer base. As such, both the companies are involved in a competitive rivalry that can be seen in their firms' strategies as well as responses to the competitors’ initial actions. Each of these companies competes with each other across a number of products and over various geographical markets. The result is that both companies are constantly trying to gain a competitive advantage over the other through the introduction of new products and services.