Describe the strategic thinking of existing firms


Problem: If a new product enters a market segment, according to Porter this would increase rivalry in the segment. What effect would this have (ceterus peribus, i.e. you don't have any other information) on strategic thinking of existing firms?

A. Existing firms must attack to increase expectancy

B. Valence would be higher as rivalry has increased

C. Valence would be lower, and t/f ceterus peribus an attack is less warranted

D. Existing firms must improve organizational strength and therefore 'attack'

E. Existing firms should 'avoid' the new rival.

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