Competitor Analysis

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Competitor Analysis
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Competitive Benchmarking

• Identifying who to benchmark against
• Identifying what aspects of business to benchmark
• Collecting relevant data to enable processes and
  operations to be compared
• Comparison with own processes

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The targets of competitor analysis
New Entrants or Substitutes Companies seeking to
diversify, or with new skills to exploit in the
industry
Industry Competition Willing, able and encouraged
to overcome entry barriers to the strategic group
Strategic Group
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The components of competitor analysis
Assess competitors current and future objectives
Assess competitors current strategy
Assess competitors resource profile
Predict competitors future strategies
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Competitor Objectives
Assess competitors current and future objectives

• What are they trying to achieve?
• Why are they trying to achieve it?
• Are they satisfied with their achievements?

Key Indicators Stated goals Market
assumptions Ownership Investment priorities
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Competitor Strategies
Assess competitors current strategies

• What market targets are they pursuing?
• What is their strategic focus?
• What marketing mix do they use?
• How do they organise their marketing?

Key Indicators Advertising media and
messages Price levels charged New product
introduction rates Distribution channels
used Recruitment advertisements
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• Value-Chain Analysis

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Value-Chain Analysis

• Views the organization as a sequential of
  value-creating activities
• Understanding the building blocks of competitive
  advantage

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Value-Chain Analysis

• Two categories of activities
• Five primary activities
• -Inbound logistics
• -Operations
• -Outbound logistics
• -Marketing and Sales
• -Service
• Support activities
• -Procurement
• -Technology development
• -Human resource management
• -Firm infrastructure

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Primary and Support Activities in the Value Chain

Firm Infrastructure
Human Resource Management
Support Activities
MARGIN
Technological Development
Procurement
Operations
Service

MARGIN
Inbound Logistics
Marketing and Sales
Outbound Logistics
Primary Activities
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Primary Activities

• Inbound Logistics
• Receiving
• Storing
• Distribution inputs to the product
• Material handing
• Warehousing
• Inventory control
• Vehicle Scheduling
• Returns to suppliers

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Some Factors to consider in Assessing a Firm
Primary Activities

• Inbound Logistics
• -Location of distribution facilities to minimize
  shipping times
• -Excellent material and inventing control systems
• -Systems to reduce time to send returns to
  suppliers
• - Warehouse layout and designs to increase
  efficiency of operations for incoming material.

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Primary Activities

• Operation
• All activities associated with transforming
  inputs into the final product form
• Machining
• Packaging
• Assembly
• Equipment
• Testing
• Printing
• Facility Operation

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Some Factors to consider in Assessing a Firm
Primary Activities

• Operation
• -Efficient plant operations to minimize costs
• -Appropriate level of automation in manufacturing
• -Quality production control systems to reduce
  costs and enhance quality
• -Efficient plant layout and workflow

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Primary Activities

• Outbound Logistics
• Associated with collecting, storing and
  distributing the product or service to buyers
• -Finished goods
• -Warehousing
• -Material handing
• -Delivery vehicle operation
• -Order processing and scheduling

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Some Factors to consider in Assessing a Firm
Primary Activities

• Outbound Logistics
• -Effective shipping processes to provide quick
  delivery and minimize damages
• -Efficient finished goods warehousing processes
• -Shipping of goods in large lot sizes to minimize
  transportation costs
• -Quality material handing equipment to increase
  order picking

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Primary Activities

• Marketing and Sales
• Associated with purchases of products and
  services by end users and the inducements used to
  get them to make purchases.
• -Advertising
• -Promotion
• -Sales force
• -Quoting
• -Channel selection
• -Channel relations
• -Pricing

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Some Factors to consider in Assessing a Firm
Primary Activities

• Marketing and Sales
• -Highly motivated and competent sales force
• -Innovative approaches to promotion and
  advertising
• -Selection of most appropriate distribution
  channels
• -Proper identification of customer segments and
  needs
• -Effective pricing strategies

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Primary Activities

• Service
• Associated with providing service to enhance or
  maintain the value of the product
• Installation
• Repair
• Training
• Parts supply
• Product adjustment

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Some Factors to consider in Assessing a Firm
Primary Activities

• Service
• -Effective use of procedures to solicit customer
  feedback and to act on information
• -Quick response to customer needs and emergencies
• -Ability to furnish replacement part as required
• -Effective management of parts and equipment
  inventory
• -Quality of service personnel and ongoing
  training
• -Appropriate warranty and guarantee policies

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Support Activities

• Procurement
• Function of purchasing inputs used in the firms
  value chain
• -Raw materials
• -Supplies
• -Other consumable (machinery, laboratory
  equipment, office equipment and building

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Some Factors to consider in Assessing a Firm
Primary Activities

• Procurement
• -Procurement of raw material inputs to optimize
  quality and speed, and to minimize the associated
  costs
• -Development of collaborative win-win
  relationships with suppliers
• -Effective procedures to purchase advertising and
  media services
• -Analysis and selection of alternate sources of
  inputs to minimize dependence on one supplier
• -Ability to make proper lease versus buy decision

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Support Activities

• Technology Development
• Every value activity embodies technology

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Some Factors to consider in Assessing a Firm
Primary Activities

• Technology Development
• -Effective research and development activities
  for process and product initiatives
• -Positive collaborative relationships between RD
  and other departments
• -Culture to enhance creativity and innovation
• -Excellent professional qualifications of
  personnel
• -Ability to meet critical deadlines

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Support Activities

• Human Resource Management
• -Recruiting
• -Hiring
• -Development
• -Compensation

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Some Factors to consider in Assessing a Firm
Primary Activities

• Human Resource Management
• -Effective recruiting, development, and retention
  mechanisms for employees
• -Quality relations with trade unions
• -Quality work environment to maximize overall
  employee performance and minimize absenteeism
• -Reward and incentive programs to motivate all
  employees

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Support Activities

• Firm infrastructure
• -General management
• -Planning
• -Finance
• -Accounting
• -Legal
• -Government affairs
• -Quality management
• -Information system

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Some Factors to consider in Assessing a Firm
Primary Activities

• General Administration
• -Effective planning systems to attain overall
  goals and objectives
• -Ability of top management to anticipate and act
  on key environment trends and events
• -Ability to obtain low-cost funds for capital
  expenditures and working capital
• -Excellent relationships with diverse stakeholder
  groups
• -Ability to coordinate and integrate activities
  across the value system
• -Highly visible to inculcate organizational
  culture, reputation and value

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Six Requirements for Successful Value Chain
Management
Coordination/Collaboration
Org. Culture and Attitudes
Value Chain Strategy
Technology Investment
Employees
Leadership
Processes
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Competitor Resources
Assess competitors resource profile

• Marketing culture?
• Marketing assets and capabilities?
• Production and operation capabilities?
• Financial resources?

Key Indicators Customer relationship
strength Product availability New product
success rates Promotional expenditure Quality of
the people
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Future Competitor Strategies
Predict competitors future strategies

• What might the competition do?
• What under-utilised resources do they have?
• How will they react to our actions?

Key Indicators Past strategies Past successes
and failures Past reactions Changes in
ownership Recent resource acquisitions
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Choosing Good competitors
Balance
Strength
Weakness
Competitive Maturity
Reconcilable Goals
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Sources of competitor information

• What they say about themselves
• Advertisements (media and message)
• Recruitment ads
• Promotional material
• Technical reports
• Press releases

• What others say about them
• Newspapers and magazines
• Trade sources
• Customers

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Learning from competitors
Analyse successful competitors
Analyse unsuccessful competitors
Look to other industries and markets
WHY ARE THEY SUCCESSFUL?
WHY ARE THEY NOT SUCCESSFUL?
WHAT CAN YOU ADAPT AND USE?
Adopt and adapt best practice from elsewhere
Copy and improve on them
Avoid and overcome these pitfalls
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Strategy-Formulation Analytical Framework
External Factor EvaluationMatrix (EFE)
The Input Stage
Internal Factor EvaluationMatrix (IFE)
Competitive Profile Matrix(CPM)
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Competitive Forces
Collection evaluation of data on competitors is
essential for successful strategy formulation
Competition on virtually all industries can be
described as intense.
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Competitive Forces
Identifying Rival Firms

• Strengths
• Weaknesses
• Capabilities
• Opportunities
• Threats
• Objectives
• Strategies

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Key Questions Concerning Competitors

Their strengths

Their weaknesses

Their objectives and strategies

Their responses to external variables

Their vulnerability to our alternative strategies
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Key Questions Concerning Competitors (contd)

Our vulnerability to strategic counterattack

Our product/service positioning

Entry and exit of firms in the industry

Key factors for our current position in industry

Sales/profit rankings of competitors over time
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Key Questions Concerning Competitors (contd)

Nature of supplier distributor relationships

The threat of substitute products/services

Should we keep our strategies secret from
employees and stakeholders?
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Steps to Determine if an Acceptable Profit Can
be Earned

• -Identify key aspects or elements of each
  competitive force
• -Evaluate how strong and important each element
  is for the firm
• -Decide whether the collective strength of the
  elements is worth the firm entering or staying in
  the industry

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Industry Analysis Competitive Profile Matrix
(CPM)
Identifies firms major competitors and their
strengths weaknesses in relation to a sample
firms strategic positions
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