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competitive battles exemplify intense rivalries between pairs of relatively equivalent
competitors.
Slow Industry Growth
When a market is growing, firms try to use resources effectively to serve an

expanding customer base. Growing markets reduce the pressure to take customers
from competitors. However, rivalry in nongrowth or slow-growth markets becomes
more intense as firms battle to increase their market shares by attracting their
competitors’ customers.
Typically, battles to protect market shares are fierce. Certainly, this has been
the case with Fuji and Kodak. The instability in the market that results from these
competitive engagements reduce profitability for firms throughout the industry, as is
demonstrated by the commercial aircraft industry. The market for large aircraft is
expected to decline or grow only slightly over the next few years. To expand market
share, Boeing and Airbus will compete aggressively in terms of the introduction of
new products and product and service differentiation. Both firms are likely to win
some and lose other battles. Currently, however, Boeing is the leader.
High Fixed Costs or High Storage Costs
When fixed costs account for a large part of total costs, companies try to
maximize the use of their productive capacity. Doing so allows the firm to spread
costs across a larger volume of output. However, when many firms attempt to
maximize their productive capacity, excess capacity is created on an industry-wide
basis. To then reduce inventories, individual companies typically cut the price of their
product and offer rebates and other special discounts to customers. These practices,
however, often intensify competition. The pattern of excess capacity at the industry
level followed by intense rivalry at the firm level is observed frequently in industries
with high storage costs. Perishable products, for example, lose their value rapidly
with the passage of time. As their inventories grow, producers of perishable goods
often use pricing strategies to sell products quickly.
Lack of Differentiation or Low Switching Costs
When buyers find a differentiated product that satisfies their needs, they
frequently purchase the product loyally over time. Industries with many companies
that have successfully differentiated their products have less rivalry, resulting in
lower competition for individual firms. [10] However, when buyers view products as
commodities (as products with few differentiated features or capabilities), rivalry
intensifies. In these instances, buyers’ purchasing decisions are based primarily on
price and, to a lesser degree, service. Film for cameras is an example of a commodity.
Thus, the competition between Fuji and Kodak is expected to be strong.
The effect of switching costs is identical to that described for differentiated
products. The lower the buyers’ switching costs, the easier it is for competitors to
attract buyers through pricing and service offerings. High switching costs, however,
at least partially insulate the firm from rivals’ efforts to attract customers.
Interestingly, the switching costs—such as pilot and mechanic training—are high in
aircraft purchases, yet, the rivalry between Boeing and Airbus remains intense
because the stakes for both are extremely high.

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