The competitive force of rival firms' jockeying for better market positions tends to intensify when?

The competitive force of rival firms jockeying for better market positions intensifies when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform them into strong market contenders. This scenario significantly heightens competition because the entering strong players bring in not only resources and capital but also potentially innovative strategies and operational efficiencies that can disrupt existing market dynamics.

When established firms from outside an industry recognize the growth potential of a weak competitor, their investment can revitalize that competitor, resulting in increased competition both in terms of pricing and product offerings. As these newly strengthened firms seek to establish themselves in the market, they may implement aggressive strategies to capture market share, leading to intensified rivalry among existing players who must respond to maintain their positions.

In contrast, when firms are focused solely on being low-cost producers without differentiation, they might limit their competitive strategies, reducing overall market tension. Similarly, while the threat of new entrants can be a strong force, the direct competitive actions and resource advantages that come from outside investments arguably create a more immediate and potent competitive pressure. Additionally, if industry conditions are not conducive for rivals to cut prices or employ competitive strategies, the intensity of rivalry would naturally decrease rather than increase.