Competitor analysis can help planners to address some of the most serious challenges that their enterprise faces. These are the actions of competitors.
We should know them better than we often do. Few firms purchase their competitors’ products, or use their services. Few even bother with the simplest study of competitors. I have worked with firms that had trouble listing their rivals!
Competitor analysis is simply a methodical look at your business rivals.
Find out what they are doing.
Try to discover what they might do.
Draw out the possible strategic implications for your own organization.
I suggest that you look at each of these aspects of your rivals-
Know whom you are dealing with.
The first step is to list who your competitors are. This may seem obvious. Yet it is not always obvious who your competitors may be. Before Apple launched the iPhone, Nokia may not have listed Apple in its analysis!
The list should include the obvious direct competitors. It should also include enterprises that may come into the industry. Such entry may be through merger, diversification, or disruptive innovation.
This is where the Porter Five Forces framework can be useful. It can help you spot less likely competitors.
In the centre, we have the known direct competitors.
To complete your list of competitor look right at the top of the diagram. Ask yourself who might enter. Check out the behavior of suppliers and customers for possible competitive moves. Never neglect to look at what possible disruption may come from new technology and material providers.
Next in your analysis, look at each of your competitor’s intentions. Here are some sample questions your strategic planning team might try to address.
Continue your analysis by looking at the assumptions that the competitor themselves and others associated with the industry make about them. For example, are they widely perceived as a low-cost producer, as being very innovative, the sharpest financial engineer, and so on?
Look at your competitors in terms of their strengths and weaknesses. This is similar to your own internal assessment when you are doing your SWOT analysis, but without the insider knowledge.
When you have gathered all this evidence on each of your competitors, you can consider it in short listing the greatest issues facing your organization.
For example, if your organization is the current number one in your sector and you become aware of a possible merger between the second and third operators, and this combination would be able to out run you in key areas then you are probably looking at a strategic elephant!
None of this is likely to come clear to you if you do not commit the effort required to systematically gather this intelligence for your analysis of competitors.
There is no magic, and it is not rocket science!
Obviously, some key people will be able to provide ongoing intelligence of this sort. The marketing people come to mind, as they normally assemble quite a lot of tactical marketing information. Ask them to extend their examination to this strategic data.
Additionally you can just involve your other managers and their work teams. This might include the sales force, engineering staff, in keeping in touch with suppliers, distribution agencies, advertising agencies, staff formerly employed by competitors, conferences, scan trade journals, journalists, trade associations and stock market analysts as part of their ongoing responsibilities, and have this material put into your planning process. See also Competitive Intelligence.
A Competitor Analysis Chart like the following may highlight the key points for your strategic planning team.
Such a competitor analysis offers insight on the environment for your SWOT analysis, and may revise your own strengths and weaknesses. Know your competitors, and you may gain insights about yourself!
For more material on how to look at the competition see here.
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