Competitor Analysis

Course Objectives• Explain What is Competitor Analysis• List the Dimensions in Competitor

Analysis• List the Objectives of Competitor Analysis• Explain Competitor Analysis in Strategic Planning• List the Benefits of Competitor Analysis• Explain the Steps of Competitor Analysis• Explain How to Identify Current & Potential Competitor• List the Sources of Potential Competitors• Explain What is Competitor Profiling

• Explain What is CSF Analysis• Explain SWOT Analysis for Competitor

Analysis• Explain How to Conduct Environmental Scanning• Explain Porter’s Five Forces Model of Competition

• Explain the Blind Spots in Competitor Analysis

• Explain What is Competitive Advantage

Introduction

Schindler Inc. is a leading manufacturer of electrical safety equipments such as Miniature Circuit Breakers (MCBs), Molded Case Circuit Breaker (MCCBs) etc. for the past six decades. It has carved a niche for itself in this area and captures the largest market share in its industry and segment.

Introduction

However, now Schindler wants to venture into the mobile and Smartphone market.

It has decided to launch a range of mobiles and Smartphone that will cater to the various segments of the society.

Introduction

What do you think Schindler should do to become successful in its venture?Yes, a careful and thorough competitor analysis will help Schindler recognize its position in the market, its competitors, and challenges etc. to help it become successful in its new venture.

Introduction

Hence, analyzing its competitors will help Schindler to discover its weaknesses, to identify opportunities for and threats to the organization from the industrial environment.

Introduction

Competitor analysis is a driver of an organization’s strategy and effects on how firms act or react in their sectors. The organization does a competitor analysis to measure/assess its standing amongst the competitors.

Introduction

Hence, you can understand that ‘Competitor Analysis’ is extremely crucial and the management should have a thorough knowledge and analysis of the general and competitive environment of the organization in order to make an organization successful.

Let us learn about ‘Competitor Analysis’ in detail.

What is Competitor Analysis?

Organizations always operate within a competitive industry environment.

They do not exist in vacuum.

Analyzing an organization’s competitors helps an organization to discover its weaknesses, to identify opportunities for and threats to the organization from the industrial environment.

Environment Influences on BusinessCompetitor Analysis should involve a thorough analysis of the macro-environment of a business. Thus, Competitor Analysis should analyze the four external influences on a competitors’ and his own business such as:

Economic

Social

Political

Technological

Role of Competitor Analysis in Strategic PlanningCompetitor Analysis helps in strategic planning in the

following manner:

It is a source of information for strategic planning.

It helps in setting of objectives for strategic planning.

Competitor Analysis provides information that helps in synchronizing the firm’s resources and capabilities with the competitive environment.

Competitor Analysis is crucial in designing effective strategies for the

business. Competitor Analysis helps:

• In the value creation opportunities of a strategy.

• To assess the market including competitors from the stand point of a

particular business.

• To make contingency plans for threats.

• To evaluate the impact of the external environment on a firm’s

objectives and strategy.

Benefits of Competitor Analysis

Steps of Competitor AnalysisThe following are the steps to be conducted for carrying out a Competitor Analysis:

Let us now look at each in detail.

1Step 1: Identify Potential Competitors

2Step 2: Carry out a thorough Competitor Profiling

3Step 3: Understand Competitors’ Strategies

4Step 4: Analysis of Strengths and Weaknesses against Competitors

5Step 5: Assess Market Attractiveness

6Step 6: Analyze Sources of Competitive Advantage

7Step 7: Design Competitive Strategies

• Market-based Analysis

Market-based Analysis

Hence, the competition faced by companies has been classified based on the degree of product substitution in the following categories:

Let us look at each in detail.

Industry Competition

Brand Competition

Product Competition

Generic Competition

Look at the given table which shows the Critical Success Factor (CSF) of a company for an ‘Automobile Industry’.

CSF Analysis

CSF for Automobile IndustryCritical Success Factor

Company Competitors

A B C D

Engine Technology 8 7 9 7 5Styling and Features 9 8 9 6 9Brand Reputation 10 8 9 5 6Strong Distribution Network

7 8 8 8 8

Efficient Manufacturing

8 8 7 7 9

Effective Marketing 9 8 10 5 4

Repetition

National Environment

Composition

Industry Environment

Macro -Environment

National Environment:

Analyzing the national environment needs an appraisal of whether the national framework helps in achieving competitive advantage in the globalized environment.

National Environment

Threat of Substitute Products/Services

Bargaining Power of Suppliers

Bargaining Power of Buyers

Rivalry among Current Competitors

Risk of Entry by Potential Competitors

Risk of Entry by Potential Competitors

Rivalry among Current Competitors

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitute Products/Services

Risk of Entry by Potential Competitors

Potential competitors mean the firms which are not currently competing in the industry but have the potential to do so, if given a choice. Entry of new players increases the industry capacity, begins a competition for market share and lowers the current costs. The threat of entry by potential competitors is partially a function of extent of barriers to entry.

• Searching Extensively for Competitors:

o It is critical for conducting an effective Competitor Analysis that you do not overlook any competitor, both current as well as future competitors.

o You should consider all competitors including the following: Product competitors Generic competitors Total budget competitors

• Searching extensively for competitors

Searching Extensively for Competitors

Mistaking Industry BoundariesOne of the greatest blind spots that strategists face in competitor analysis is that they wrongly define the industry boundaries.

Most of the times

organizations define their

industry around their

current products, customer

groups, and geographies.

This causes them to overlook their adjacent competitors who ultimately

enter their current space.

Mistaking Industry Boundaries

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