Chapter Four

Competitor Analysis
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Competitor Analysis

PPT 4-1

Competitor Analysis
Second Phase of External Analysis Goal: Insights that will influence the product-market investment decision or the effort to obtain and maintain an SCA. Focus: Threats, Opportunities, or Strategic Uncertainties created by emerging or potential competitor moves, weaknesses, or strengths.
PPT 4-2

Competitor Analysis

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Identifying Competitors
Customer-Based Approaches
Direct vs. Indirect What choices are customers making? Product-Use Associations

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Competitor Analysis

PPT 4-3

Identifying Competitors
Strategic Groups makes analysis compact, feasible, and more usable
Pursue similar competitive strategies (e.g., same distribution channel, same communication strategies, same price/quality position) Have similar characteristics (e.g., size, aggressiveness) Have similar assets and competencies
PPT 4-4

Competitor Analysis

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Competitor Analysis

Potential Competitors
Market expansion Product expansion Backward integration competitive customers
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Forward integration competitive suppliers

Export assets or competencies mergers/acquisitions

Retaliatory or defensive strategies
PPT 4-5

Competitor Analysis

Benefits of Competitor Analysis

Understanding current competitors strategic strengths and weaknesses can suggest opportunities and threats that will merit a response. Insights into future competitor strategies may help predict future opportunities and threats. Decisions about strategic alternatives might hinge on the ability to forecast likely reaction of key competitors. May help identify strategic uncertainties that will be worth monitoring over time.

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Competitor Analysis

PPT 4-6

Understanding the Competitors

Image and Positioning

Size, Growth & Profitability

Objectives and Commitment

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Strengths and Weaknesses

Exit Barrriers

Competitor Actions

Current and Past Strategies

Organization and Culture

Cost Structure

Competitor Analysis

Figure 4.3

PPT 4-7

Relevant Assets and Competencies

1) What businesses have been successful over time? What assets or competencies contributed to their success?
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What businesses have had chronically low performance? Why? What assets or competencies do they lack?
Figure 4.4
PPT 4-8

Competitor Analysis

Relevant Assets and Competencies

2) What are the key customer motivations? What is really important to the customer? What are the large value-added parts of the product or service? What are the large cost components?

3)
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Competitor Analysis

Figure 4.4

PPT 4-9

Relevant Assets and Competencies

4) Consider the components of the value chain. Do any provide the potential to generate a competitive advantage?

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Competitor Analysis

Figure 4.4

PPT 4-10

The Value Chain

Firm Infrastructure Human Resource Management Technology Development Procurement

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Support Activities

Inbound Logistics

Marketing Operations Outbound & Logistics Sales

Service

Primary Activities
Figure 4.5
Source: Reprinted with permission 1985 Michael Porter PPT 4-11

Competitor Analysis

Checklist of Strengths and Weaknesses (see p. 72)

Innovation Manufacturing Finance Access to Capital Management Marketing Customer Base

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Competitor Analysis

PPT 4-12

Competitive Strength Grid (see p. 75)

Identify relevant assets and competencies. Scale your firm and the major competitors or strategic groups of competitors on those assets and competencies An SCA is almost always based on having a position superior to that of the target competitors in one or more asset or competence area that is relevant to the industry and strategy employed. A competency that all competitors have will not be the basis for an SCA.

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Competitor Analysis

PPT 4-13

Obtaining Information on Competitors

Competitors Website
Strategic vision Values and culture Portfolio of businesses clue to priorities and strategies Assets such as plants, global access, brand symbols

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Search Engines for articles and financials Databases Directories US Government Reports Trade associations, magazines, and meetings Technical meetings and Journals Marketing Research

Competitor Analysis

PPT 4-14

Key Learnings
Competitors can be identified by customer choice (the set from which customers select) or by clustering them into strategic groups, (firms that pursue similar strategies and have similar assets, competencies, and other characteristics). In either case, competitors will vary in terms of how intensely they compete. Competitors should be analyzed along several dimensions, including their size, growth and profitability, image, objectives, business strategies, organizational culture, cost structure, exit barriers, and strengths and weaknesses. Potential strengths and weaknesses can be identified by considering the characteristics of successful and unsuccessful businesses, key customer motivations, and value-added components. The competitive strength grid, which arrays competitors or strategic groups on each of the relevant assets and competencies, provides a compact summary of key strategic information.
PPT 4-15

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Competitor Analysis