Firms study competitive rivalry in order to be able to
predict the competitive actions and responses that each of
their competitors likely will take. Competitive actions are
either strategic or tactical in nature. The firm takes competitive
actions to defend or build its competitive advantages
or to improve its market position. Competitive responses
are taken to counter the effects of a competitor’s competitive
action. A strategic action or a strategic response
requires a significant commitment of organizational
resources, is difficult to successfully implement, and is
difficult to reverse. In contrast, a tactical action or a tactical
response requires fewer organizational resources and is
easier to implement and reverse. For an airline company,
for example, entering major new markets is an example
of a strategic action or a strategic response; changing its
prices in a particular market is an example of a tactical action
or a tactical response.