Program: MBA, Trimester 1

106: Business Environment

Unit No.1
Business Environment/ Competitor Analysis

Lecture No.5
Dr. Vandana Bharti

Associate Prof.& Dean, School of Management

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Outlines
• Introduction of topic
• Concept of Competitor Analysis
• Types of analysis
• Learning outcomes
• References

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 Competitor Analysis

“What are they going to do?”

 Competitive Analysis

• Who are your competitors?

• Do you know about your close competitors’ strengths and
weaknesses?
• How detail should we analyze the competition?
– Use a systematic approach
– Analyze competition at various levels

(SELO:8) (Reference No.:R1)

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 Competitor Analysis System

1. Gather secondary data

2. Gather primary data
3. Answer key questions
– What are their product/service features?
– What are their objectives / strategy?
4. Determine who has competitive edge
5. Figure what they are going to do

(SELO:8) (Reference No.:R1)

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 Secondary data

• Internal sources
• Internet
• Sales literature
• Local newspapers
• Business press
• Consultants

(SELO:8) (Reference No.:R1)

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 Primary data

• Sales people
• Employees
• Suppliers
• Consultants
• Investment bankers
• Trade shows
• Reverse engineering / benchmarking

(SELO:8) (Reference No.:R1)

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 Comparing Product Features

Length Meals Transportation Price

Tour A 7 days all bus $3,450
Tour B 10 days breakfast bus & train $2,900
Tour C 13 days breakfast air and bus $5,500
& lunch

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 Comparative size & growth (BCG)

Growth of industry

Company B
Company C

Company D
Company A

Company E

Comparative market share

= sales
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 Determining Objectives

Objective Implication
Company A* Harvest increase price, decrease promos
Company B Hold maintain price and promos
Company C** Growth cut price, increase promos
increase distribution

*Company appears to be short of cash

**Short-term loss does not appear to be a concern

(SELO:8) (Reference No.:R1)

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 Determining Core Strategy

Target Market Core Strategy

Company A teenagers high status & high price
Company B young adults comfort, fit, service & high price
Company C teenagers high style & low price

(SELO:8) (Reference No.:R1)

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 Determining the “Marketing Mix”

Product Price Promotion Distribution

Company A hi quality hi price extensive specialty

TV, net stores

Company B hi quality medium limited specialty

hi service price TV, hi net stores

Company C lo quality lo price heavy net mass

lo service promos market

(SELO:8) (Reference No.:R1)

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 Alternative “Marketing Mix” Analysis

Company A Company B Company C

Product: quality, value chain, benefits
Target Segment: who, where when, why
Place: distribution method and coverage
Promotion: cost and method
Advertising: strategy, media, timing & cost
Price: retail, trade

(SELO:8) (Reference No.:R1)

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 Differential Advantage Analysis

Ability to… Company A, etc…..US Ability to… Company A, etc…..US

Conceive / design Finance
technical resources debt
human resources liquidity
Produce cash flow
physical resources Manage
human resources human resources
Market decision process
sales force planning
distribution system
service and sale policy
advertising

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 Critical Success Factors Comparison

Critical Success Company A Company B Company C

Factors
1. hot design
2. Internet hype
3. trained sales reps
4. liberal return policy
5. mass distribution
Overall rating
(1 = low, 10= high)

(SELO:8) (Reference No.:R1)

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 Assessing Competitors’ Will

Company A Company B Company C

How crucial is this very not very very
product to the firm?

How visible is the very none none

commitment to market?

How aggressive are very somewhat very

the managers?

(SELO:8) (Reference No.:R1)

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 What now?

What will be competitors’ strategies?

1. continue as is
2. change due to
– Changes in marketplace
– Changes in management
– Changes in financial goals
How to determine new direction?
– Management judgment
– Simulation
What will be competitors’ reaction to our strategy?

(SELO:8) (Reference No.:R1)

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Learning Outcomes

To understand that what the competitor is going to do in the market

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 References

1. Francis Cherunilam, Business Environment

2. Essentials of Business Environment, K.Aswathappa

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