Final answer:
Changing tactics as a response to competitive action can draw on existing resources within the firm, and does not always involve price cuts. Tactics can include differentiating products, improving quality, enhancing customer service, or initiating a merger or acquisition.
Step-by-step explanation:
Changing tactics as a response to competitive action can draw on resources already in the firm. This means that a company can leverage its existing capabilities, knowledge, and expertise to adapt its tactics and compete effectively. For example, if a competitor launches a new marketing campaign, a company can respond by leveraging its own marketing resources to launch a counter-campaign.
Changes in tactics are more likely for firms who have high market commonality. Market commonality refers to the extent to which two firms compete in the same markets or have products that serve similar customer needs. When firms have high market commonality, they are more likely to closely monitor and respond to each other's competitive actions.
Changing tactics does not necessarily involve cutting prices, as there are various strategies a company can employ to respond to competitive actions. For instance, a company can differentiate its products, improve product quality, enhance customer service, or introduce new features or promotions. Additionally, changing tactics can include initiating a merger or acquisition. Companies may seek to merge with or acquire other firms as a strategic move to strengthen their competitive position, expand their customer base, or gain access to new capabilities or markets.