Competitive Intelligence: Key to Informed Decision Making PhilExport Region III Gen Membership...
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Transcript of Competitive Intelligence: Key to Informed Decision Making PhilExport Region III Gen Membership...
Competitive Intelligence: Key to Informed Decision MakingPhilExport Region III Gen Membership Meeting , July 17, 2008
Senen M. PerladaDirectorBureau of Export Trade PromotionDepartment of Trade and Industry
Variables Impacting Competitive Advantage: Porter’s DiamondVariables Impacting Competitive Advantage: Porter’s Diamond
Sourced and adapted from “The Competitive Advantage of Nations” by Michael E. Porter, March-April 1990, p.77. Copyright c 1990 by the President and Fellows of Harvard College; all rights reserved.
DemandConditions
Firm Strategy,Structure, and Rivalry
Related and Supporting Industries
Factor Conditions
Influences on Domestic RivalryInfluences on Domestic Rivalry
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), p. 141. Copyright c 1990, 1998 by Michael E. Porter. Reprinted with permission of The Free Press, a division of Simon & Schuster.
Firm Strategy,Structure, and Rivalry
c
Factor Conditions
DemandConditions
Related and Supporting Industries
Early product penetration feeds
entry
Factor abundance or specialized factor-creating
mechanisms spawn new entrants
World-class users enter supplying
industries
New entrants emerge from related and supporting industries
Influences on the Development of Related and Supporting IndustriesInfluences on the Development of Related and Supporting Industries
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), p. 139. Copyright c 1990, 1998 by Michael E. Porter. Reprinted with permission of The Free Press, a division of Simon & Schuster.
Firm Strategy,Structure, and Rivalry
c
Factor Conditions
DemandConditions
Related and Supporting Industries
A group of domestic rivals encourages the
formation of more specialized
suppliers as well as related industries
Large or growing home demand
stimulates the growth and deepening of
supplier industries
Specialized factor pools are transferable
to related and supporting industries
The Complete SystemThe Complete System
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), p. 127. Copyright c 1990, 1998 by Michael E. Porter. Reprinted with permission of The Free Press, a division of Simon & Schuster.
Firm Strategy,Structure, and Rivalry
c
Factor Conditions
DemandConditions
Related and Supporting Industries
Chance
Government
The Value ChainThe Value Chain
Creation ofEconomic
Value
Managerial, legal, and administrative infrastructureManagerial, legal, and administrative infrastructure
Human resource managementHuman resource management
Technology developmentTechnology development
ProcurementProcurement
ProductDesign
Sourcingof raw
materialsand
components
Manufacturingand
assembly
Distributionand
logistics
Marketingand
sales
Post-salesservice
Support Activities
Primary Activities
Source: Adapted from M.E. Porter, Competitive Advantage (New York: Free Press, 1985).
Illustrative Business Services in the Value ChainIllustrative Business Services in the Value Chain
• Transportation Services
• Warehousing Services
• Engineering Services
• Building Maintenance
• Equipment Maintenance and Repair
• Security Services
• Industrial Laundry Services
• Fulfillment Services
• Waste Disposal
• Transportation Services
• Warehousing Services
• Credit Reporting
• Information Processing
• Advertising
• Direct Response Marketing
• Coupon Processing
• Databases
• Installation and Testing Services
• Repair and Overhaul
• Financial Services
• Accounting
• Management Consulting
• Legal Services
• Conflict Resolution Services
• Compensation Consulting
• Health Services
• Education and Training
• Temporary Help
• Employment Agencies
• Contract Research
• Calibration Services
• Design Services
• Testing Services
• Custom Software • Market Research
• Rating Services
• Telecommunications Consulting
FirmInfrastructure
HumanResourcesManagement
TechnologyDevelopment
Procurement
Industries
INBOUND LOGISTICS
OPERATIONS OUTBOUND LOGISTICS
MARKETING AND SALES
SERVICES
M A R G I N
Who is a business competitor?
Business competitors are organizations:Offering the same product or service nowOffering similar products or servicesThat could offer the same or similar products or
services in the futureThat could remove the need for a product or
service
Why monitor competitors?
By knowing our competitors we may be able to:Predict their next movesExploit their weaknessUndermine their strengths
What is involved?
There are four stages- 4 C’s- in monitoring competitors:Collecting the information (with s first stage –
deciding what to collect)Converting information into intelligence (with three
steps: CIA- Collate and catalogue it; Integrate it with other pieces of information; Analyze and interpret it
Frederick the Great once said:
“It is pardonable to be defeated, but never to be surprised”
Communicating the intelligence
Competitor intelligence needs to be evaluated and selectively communicated to all who need to make decisions on what customers, suppliers, or other companies in the market are doing or are likely to do.
That usually means everybody…
Countering Competitor Actions
Having identified what competitors are doing, battle can be entered…
What is Market Intelligence? MI is about the company having a view of a
market using existing sources of information to understand what is happening in a market place; the emerging concerns and issues what; what the likely market potential is
Can be obtained fromExternal sources Internal sources
Market Intelligence Usually relies purely on external sources of data such as
analysts’ reports, industry and market profiles/ outlook, etc. Desk research on published information World wide web Trade shows, conferences Networking meetings Trade Promotion Orgs (TPOs), Business Support Orgs (BSOs) Customers
Quite often, a great deal of untapped information is available internally company’s own website (esp. if interactive; website traffic analysis) sales reports, previous inquiries databases, prospect lists, etc. Company’s own staff (knowledge about customers, markets, and
competitor)
What is Competitive Intelligence?
It is a specific form of Market Intelligence, typically undertaken on an on-going basis
Involves ethical, though deliberate gathering of news, materials, and information about competitors from a wide variety of sources, to make better strategic business decisions
Due to on-going nature, CI is more about putting structures in place than finding “loose” or one-off pieces of data
In the name of the customer, companies compete in order to gain his favor in parting with
his money…
Western concept: “The customer is always right.” “The customer is never wrong.”
Japanese concept: “Okyakusama wa kami- sama desu.”
Translation: “The customer is God”
Sun Tzu (500 B.C.) and the Art of War
In the battle for customers, his views are still relevant today, e.g.
“If you are ignorant of both your enemy and yourself, then you are a fool and certain to be defeated in every battle.
If you know yourself, but not your enemy, for every battle won, you will suffer a loss.”
If you know your enemy and yourself, you will win every battle.”
As in war, it is necessary to understand the enemy:
How he thinks His strengths His weaknesses His vulnerabilities Where he can be attacked Where the risk of attack is not too great…
Competitive Intelligence vs. Business Intelligence
CI is more focused on qualitative information rather than quantitative market research data
CI primarily more concerned with the scanning and tracking of market and competitive news and information through open secondary sources and primary interviewing
Competitive Intelligence vs. Business Intelligence BI more focused on gathering, storing, and
analyzing customer data and in-depth analysis of business statistics, mostly a quantitative exercise
Sometimes CI is used to gain insight on ‘costly’ and/or hard-to-find data for BI initiatives
CI & BI are related disciplines and both help senior management make more informed strategic decisions
Competitive Intelligence vs. Market Research CI & MR overlap, but MR tends to focus on
gathering and analyzing consumer-centric information via large scale surveys; relys on statistical analysis in general; CI usually generates more B2B data sets with focus on strategic business topics
MR group also responsible for CI data so the two disciplines definitely go hand-in-hand
Why is CI important?
Offers a real strategic advantage for many businesses
Some of the largest corporate organizations have a dedicated CI department, while smaller businesses practice CI on an ad-hoc basis by informally collecting data from variety of internal and external sources e.g. internet, trade shows or conferences, networking meetings or even customers
“If you don’t have a competitive advantage, don’t compete.”
- Jack Welch, CEO, GE
Military Intelligence- the Genesis for CI
Intelligence networks were patterned after Military Intel, and methods were both overt (open) and covert (secret)
4th century Chinese military theorist Sun Tzu advocated the value of ‘foreknowledge’
Western Intel came about with the opening of trade routes from Europe to Africa and India and later to the New World
Political and Commercial Intel became important to European nations with governments, large trading houses and banks developing extensive intel networks
CI Allows businesses to gain Competitive Advantage
“Behind every successful strategy there has been a tireless effort to collect intelligence”
- Benjamin Gilad
CI Enables Effective Business Strategies
Every time a customer decides to buy something, a competitive assessment takes place
Every sale that is made, therefore, is up against some competitive force.
Information is key for both tactical and strategic business decisions
“Treat information as the main strategic advantage. It is not just information, but being alert to opportunities and having intuition play a large part in developing flexible and effective strategies.”
- adapted from: Robert Waterman, The Renewal factor
Transforming Information to Intelligence is the key…“Competitiveness is based on learning, which is based on the
ability to listen: to customers, to consumers, to partners such as suppliers, or to competitors, to industry experts and, most important, to one’s own employees. The essence of this is so simple it is embarrassing.
The competitive environment sends messages all the time: signals about change, trends, prospects, threats and weaknesses. Early on, these signals are weak, ambiguous and hidden. Tapping them and learning from them is an art that requires open eyes, ears, and mind.”
Using IT modalities enhances productivity
Computerization in each of the major areas of competitive intelligence: discovery, development, and delivery…
Companies are finding the availability of information on the internet especially beneficial for carrying out secondary research, for monitoring government information, and for dissemination of intelligence via intranets.
According to a survey, the top 3 reasons cited by respondents why companies use the internet
and intranets:
Improve the quality of competitive or business intelligence (70%)
Increase the cost-effectiveness of acquiring, disseminating, and using internal information (58%)
Add value to existing products and services (55%)
CI is used by Top companies
In the ’70s and ’80s, it was large corporations that adopted strategic planning as an essential management tool…but now small companies also use strategic planning methodologies; while large companies have been the leaders in the use of CI, small companies are becoming aware of its application.
According to Futures Group Survey (USA)…
82% of USA companies with revenues over US$ 10 Billion have an organized CI system.
Companies making best use of CI and BI in the order of ranking are: Microsoft Motorola IBM Procter & Gamble GE Hewlett-Packard Coca-Cola Intel
CI process- designed for Efficiency
Destination phase- readiness and capability to perform the task
Demand phase- indentifies info needs and determines approach to be taken
Discovery phase- involves seeking out and collecting the info sources by legal means
Development phase- produces a meaningful picture from pieces of data that have been discovered and analyzed
Delivery phase- communicates the resulting intelligence to the right people at the right time
Disengagement phase- involves debriefing clients and reflecting to improve process
Areas where intelligence is needed to make informed decisions, ranked in order of
importance
Competitive Activities Changing Market or Industry Structure Customer or Supplier Activities Emerging Technology Initiatives Global Economic Conditions Regulatory Climate Political Climate
From Information to IntelligenceFrom Information to Intelligence
Information on:
Competitive activities
Information on:
Customer or Supplier Activities
Information on:
Emerging Technology Initiatives
Information on:
Political Environment
Information on:
GlobalEconomicConditions
From Information to IntelligenceFrom Information to Intelligence
Information on:
Competitive activities
Information on:
Customer or Supplier Activities
Information on:
Emerging Technology Initiatives
Information on:
Political Environment
Information on:
GlobalEconomicConditions
Information on:
RegulatoryEnvironment
Information on:
ChangingMarket
orIndustryStructure
Competitive Intelligence
The Flagship ModelThe Flagship ModelSelected
Competitors
FlagshipFirm
KeySuppliers
KeyCustomers
OtherSuppliers
KeyCustomers
Network Partners GovernmentsNon-Business Infrastructure
Key:
Network
Relationships
Commercial
Relationships
The following discussion is adapted from M. Rugman and Joseph R. D'Cruz, Mulintationals as Flaship Firms (Oxford University Press, 2000).
THANK YOU!!!