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Chapter Three

Competitor Analysis
2007 John Wiley & Sons

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Questions to structure Competitor Analysis


Who are the competitors ?
Against whom do we usually compete? Who are our most intense competitors? Less intense but still serious competitors? Makers of substitute products? Can these competitors be grouped into strategic groups on the basis of their assets, competencies and/or strategies?

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Evaluating the Competitors


What are the objectives and strategies? Their level of commitment? Their exit barriers? What is their cost structure? Do they have a cost advantage or a disadvantage? What is their image & positioning strategy? Which are the most successful/unsuccessful competitors overtime? Why? What are the strengths and weaknesses of each competitor or strategic group? What leverage points (or strategic weaknesses or customer problems or unmet needs) could competitors exploit to enter the market or become more serious competitors? How strong or weak is each competitor wrt to their assets and competencies?

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Competitor Identification
Customer-Based Approaches
Customer choices What brand would you buy if your favorite was unavailable? Application associations What applications? What brands for each application? What product substitutes?

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Competitor Identification
Strategic Groups
Pursue similar competitive strategies Have similar characteristics Have similar assets and competencies

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Competitor Analysis
Potential Competitors:
Market expansion
Product expansion Backward integration
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Forward integration Export assets or competencies Retaliatory or defensive strategies


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Chapter 3 - Competitor Analysis

Understanding the Competitors


Image and Positioning

Size, Growth & Profitability

Objectives and Commitment

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Strengths and Weaknesses


Exit Barriers

Competitor Actions

Current and Past Strategies

Organization and Culture


Cost Structure

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Figure 3.2

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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?
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Relevant Assets and Competencies

2) -What are the key customer motivations? -What is needed to be preferred? -What is needed to be considered? -What is really important to the customer?
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3) What assets and competencies represent industry mobility (entry and exit) barriers?
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Chapter 3 - Competitor Analysis

Relevant Assets and Competencies 4) -What are the significant value added components in the value chain? -Do any provide the potential to generate a competitive advantage?

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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, mobility barriers, 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.

2007 John Wiley & Sons

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Ancillary Slides
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Induce your competitors not to invest in those products, markets and services where you expect to invest the most that is the fundamental role of strategy.
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- Bruce Henderson Founder of BCG

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There is nothing more exhilarating than to be shot at without result. - Winston Churchill
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The best and fastest way to learn a sport is to watch and imitate a champion. - Jean-Claude Killy, Skier
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There is one rule for industrialists and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. - Henry Ford
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We often give our enemies the means for our own destruction. - Aesop

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In business, the competition will bite you if you keep running, if you stand still, they will swallow you. - William Knudsen
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