Learn about your competitors and identify threats
Competitor analysis involves assessing the strengths and weaknesses of current and potential competitors. This enables the identification of opportunities and threats and supports efficient and effective strategy formulation, implementation, monitoring and adjustment.
Most firms do not conduct this type of analysis systematically enough and instead operate on informal impressions, conjectures, and intuition gained through small amounts of information about competitors. This results in competitive blind spots due to a lack of robust competitor analysis.
The benefits of competitor analysis include:
- Superior knowledge of rivals offers a legitimate source of competitive advantage.
- Can reveal strategic weaknesses in rivals that the firm may exploit.
- Allows the company to anticipate the strategic response of their rivals to the firm’s planned strategies, the strategies of other competing firms, and changes in the environment.
- Proactive knowledge allows the company to more quickly exploit opportunities and capitalise on strengths.
A common technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor’s background, finances, products, markets, market share, growth rates, facilities, personnel, and strategies.
In addition to analysing current competitors, it is necessary to estimate future competitive threats. The most common sources of new competitors are companies competing in a related product/market, companies using related technologies, and companies already targeting your prime market segment but with unrelated products.