It’s like playing chess only with companies.
Gillett’s solution to compete with BIC was to completely stop making lighters. Let me repeat. In order to make more money, they would make less product.
So what happened? BIC reallocated their resources into this new, non-competitive landscape, while Gillette reallocated their resources to their disposable razor product. The disposable razor blade market was much greater the than the disposable lighter market.
Gillette: 1st move
BIC: 2nd reactionary move
This thought process is called Gamesmanship and there are 3+ orders of thinking:
0th order: You do something because you want to, without considering what your competition might do.
1st order: You do something while thinking about your competition.
2nd order: You do something to try and manipulate your competition.
3rd order: You do something to try and manipulate your competitors against one another.
There are all sorts of great ways to think about this stuff and even associate real value with a move you might make. See Alex Van Putten.