This section should outline the basic characteristics of your competition. Discuss the key features of competitors' products or services such as: purchase price, peripheral costs, quality, durability, and maintenance needs. What is the perceived value of their product? Is the image or name brand a factor? Where are they located? What are their credit policies and delivery terms? How does their customer service stack up? Also consider the financial strength, marketing savvy and technological advantages of your competitors.
How solid is their access to suppliers, wholesalers, distributors and retailers? Do they have any strategic partnerships or patents, which could cause problems for your company? Do they have economies of scale in place that makes it difficult for your company and others Competitor profiling provides a way of looking at competitors, and presenting the results in an easy-to-read form, again on one A3 sheet of paper. Sometimes more pages are needed, particularly when a competitor has to be studied at different levels (product or geographic), but the principle of reducing the analysis to summary statements can be preserved.
This process increases understanding of the competitor, focuses attention on the appropriate issues, and provides a format which eases internal communication and can be stored in a database.A pro-forma competitor profile is provided in Figure. In practice this will require modification to suit the types of competitor in the industry. Each block of information is discussed below.
Choose the key figures that mean the most to you. Typically these would include sales, profits, and key ratios such as earnings per share, return on assets, return on sales and growth rates. The example shows that there may be a need to repeat this information at various levels, such as the total group, the division and the business unit. These headings will change with the objectives of the analysis and the structure of the competitor. What can be recorded is, of course, limited by the information that can be legitimately obtained, and the special knowledge of the analyst which may allow certain estimates to be made. At the broadest levels, the information will probably come from annual reports: at the lowest levels it may be necessary to estimate sales and profit figures from market research and other sources.
This is another breakdown of the information into products or product categories. Data may come from annual reports, but will invariably have to be supplemented by market research information and possibly analysis of the competitive product so that cost structures can be estimated. The ability to complete every cell will vary with the information that can be obtained, and the justification of the effort that should be put on this will vary with the importance of the competitor. Very often the analyst will have to be satisfied with a less than complete answer. This section incorporates market shares. It could also be extended if appropriate to show segment shares: again a judgement has to be made on the value of this information and whether it can be obtained.
Marketing and sales activity
This is a notepad to record key information about how the competitor influences the market. It may include information on advertising spends, the size of the sales force, direct mail activity, or whatever else is strategically important.
Importance of activity to group
This part of the form assesses the significance of the industry being analysed to the total operations of the competitor. The reason for this is to establish whether the activity is core to the competitor, in which case more resources might be made available to fight off a competitive threat. Something which is peripheral may not receive the same management time, nor have additional resources made available. One complex way of showing this is to draw a portfolio chart of all the competitor’s activities.
This is always difficult, and particularly so if the competitor operates in a number of industries on which the analyst has little real knowledge. Just how difficult will become clearer in a later chapter which deals with portfolio analysis. An alternative method is illustrated in Figure, which immediately shows the importance of an activity to a competitor as a source of turnover, profits and growth.
Sources of competitive advantage
Prahalad and Doz stress the importance of studying the core technologies and competencies of organizations as well as their particular product market attributes. They quote, as one example, Honda and argue that its competitive strength comes from engines, a core technology, as well as brand recognition.
Scope of international operations
This box provides a notepad to record information about the operations of a competitor outside of any particular country which may be being studied. The two main aspects which should not be ignored are any marketing advantage given by international operations and the way in which the competitor runs its international operations. The competitive reactions to your strategy will be very different if the competitor operates on an individual country basis, what has been termed ‘multilocal’, than if it manages globally through an integrated strategy. One Key factors This is another notepad to record any major points about the competitor which do not fit under the other headings.
This box records what the competitor’s strategy appears to be. I use the word ‘apparent’, because it can only be a deduction, based on the analysis of all the information (the factual situation drawn from the market research and hard data, and the assessments made from statements in annual reports, press announcements, interviews, and company literature). This is one of the most important pieces of information on the profile and should be discussed at some length within the company that is doing the analysis.
Strengths and weaknesses
Clearly present and compare your strengths with that of your competitors in this section. Don't forget to present your weaknesses. Every company has them. Be honest and logical about the comparisons you make. Consider product superiority, price advantages, market advantages, management strengths and weaknesses, and more.
Critical success factor ratings
The critical success factors discussed earlier can be used as one way of comparing competitors against one’s own operations. I have found it useful to score the competitor and the company on whose behalf the analysis is undertaken against each critical factor. If possible, I have this exercise undertaken by a number of informed managers individually, argue out the extreme views, and average the final answers.
This matter because how a company organizes itself will affect how it behaves in the marketplace. One dimension of philosophy was discussed when we looked at the international operations box. There are many others, including the degree of centralization/decentralization, where strategic decisions are taken, and whether organized into strategic business units or subsidiaries.
The final box records those personnel policies which impact on strategy. The next chapter provides a case history of the application of competitor analysis, using the methods described in this chapter. It includes an example of a completed profile.The process of profiling is beneficial in itself, as it forces systematic consideration of competitors.
It also offers a way in which masses of information can be sifted and reduced to something that the human mind can handle. I have used such profiles as the foundation of a database enabling electronic storage and retrieval.
Strategic Management Related Interview Questions
|Marketing Strategy Interview Questions||Marketing Management Interview Questions|
|Strategic Brand Management Interview Questions||Corporate Governance and Business Ethics Interview Questions|
|Strategic Planning for Project Management Interview Questions||Quality Management Interview Questions|
|Corporate Social Responsibility Interview Questions||Business Development Interview Questions|
|Corporate Communication Interview Questions||Business Development Manager Interview Questions|
Strategic Management Related Practice Tests
|Marketing Strategy Practice Tests||Marketing Management Practice Tests|
|Corporate Governance and Business Ethics Practice Tests||Quality Management Practice Tests|
|Corporate Social Responsibility Practice Tests||Business Development Practice Tests|
|Corporate Communication Practice Tests|
Strategic Management Tutorial
From Planning To Strategic Management And Beyond
Strategic Management: Success Or Failure?
A Look At The Total Process
The Challenge Of The Future
The Environment: Assumptions In Planning
Techniques For Assessing The Environment
Business Philosophy (ethics And Morality) And Strategic Management
The Corporate Appraisal – Assessing Strengths And Weaknesses
Analysing The Industry And Competitors
Analysing The Uk Management Development And Training Industry: A Case History
The Search For Shareholder Value
Vision And Objectives
Strategic Portfolio Analysis
Portfolio Analysis In Practice
Strategic Planning – A Second Look At The Basic Options
Multinational And Global Strategy
Technology And Manufacturing
Strategic Planning For Human Resources
Relating To The External Environment
Evaluating A Business Plan
Project Planning And Appraisal
From Plans To Actions
Management Of Change
Introducing Strategic Management
Why Planning Sometimes Fails
Strategic Management To Strategic Change?
All rights reserved © 2018 Wisdom IT Services India Pvt. Ltd
Wisdomjobs.com is one of the best job search sites in India.