analyzing competition

8/7/2019 ANALYZING COMPETITION

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ANALYZING COMPETITION


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WHY???


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COMPETITORS ANALYSIS

Its considers the companies or brands that

compete in the product-market of interest.


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THE GOALS OF DOING COMPETITION

ANALYSIS

So that we can get inputs/insights that will

influence our decisions on our investmentand strategies.

We can develop or obtain Sustainable

Competitive Advantage (SCA).

We can maintain ourSCA.

We can execute our strategies before they

do and thus we can get pioneer advantages

such as customer recognition, strategiclocation and etc.


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WHO ARE COMPETITORS

It can be divided into 3 groups:

1) Direct Competitors.

2) Indirect Competitors.

3) Potential Competitors.


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DIRECT COMPETITOR

Any other firms who use the same business

concept , operate in the same market orlocation and offer similar benefits to the

same target markets/customers that our

company serves.

Example : Coca-Cola vs. Pepsi

: McDonald vs. Burger King

: Giant vs. TESCO


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INDIRECT COMPETITORS

This is any other company/firms who serve the sametarget market that our firm/company serves and

operate in the same location or market area. But theyuse different business concept, offer different strategiesbut still satisfy the same needs and wants.

Example: :North South Highway vs. MAS.

:MAS vs. Air Asia.

:Colgate vs. Listerene.: Meat vs. Fish.

: Nasi Kandar Restaurant vs. Tom YamRestaurant.


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POTENTIAL COMPETITORS

Any other firms who can enter our market and servethe same target market that our firm/company serves.

These firms can come from:- Our suppliers (Forward integration).

Example: INTELL might introduce its owncomputer and thus become a competitor toDELL, IBM, and HP.

- Our distributors/customers (Backwardintegration).Example: EON who distributes PROTON car mightbuild its own automobile plant and thus become acompetitor to PROTON.


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Continue.

- Foreign Firms (Market Expansion)

Example: Foreign banks such as SUMITOMO

Bank, BANK of AMERICA, LYOD BANK mightestablish their branches in Malaysia and thusbecome a competitor to Maybank, CIMB, BankIslam and Bank Rakyat.

- Other firms who implement a product expansionstrategy.

Example: Honda Motor Corporation expand itsproduct line by introducing jet engine and thusbecome a competitor to other jet enginemanufacturers such as GM and ROLL ROYCE.


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- Other firms which have resources fordiversification.

Example: SIME DARBY or GENTING Corporationwhich have strong financial resources might setup its own university and thus become acompetitor to public and private universities inMalaysia.


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HOW DO WE PERFORM COMPETITON

ANALYSIS?

Craven & Piercy(2009) suggest 5 step

appraoch:1) Define the competitive arena whether it is

generic or specific.

2) Identify key competitors.

3) Evaluate key competitors.

4) Anticipate actions by competitors.

5) Identify and evaluate potential

competitors.


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Continue.

Aaker(2001) suggests two steps approach:

1) Identify current and potential competitors.2) Evaluate their strengths and weaknesses

by looking at their assets and skills.


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Continue..

Guiltinan & Paul(1994) suggests 4 steps

approach:1) Define the target market.

2) Identify the direct competitors.

3) Examine the competitive market forces.

4) Assesses competitive advantage.


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Continue.

Thus from those suggestions we can

summarize that important aspects ofcompetition analysis must include:

1) Define our business and target market.

2) Identify current (direct or indirect) and

potential competitors which we think it isimportant.

3) Analyze their strengths and weaknesses.


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ANALYZING COMPETITORS

STRENGTHS AND WEAKNESSES

Craven & Piercy (2009) suggest that in order

to analyze strengths and weaknesses of thecompetitors, we should analyze several

information regarding our competitors such

as:

- Business scope and objectives.

- Management experience, capabilities and

weaknesses.


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- Market position and trends.

- Target markets and customer base.- Positioning strategy.

- Distinctive capabilities.

- Financial performance such as sale,profit, market share, return on

investment, cash flow and also debt.


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Continue.

Aaker (2001) meanwhile suggests that

information that are needed in order toanalyze competitors strengths and

weaknesses can be based on the assets and

skills of the firm.


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ASSETS AND SKILLS OF THE FIRM

Aaker (2001) claims that assets and skills of the firm can be

broken down into several aspects such as:

- Innovation.

- Manufacturing.

- Finance.

- Management.

- Marketing.- Customer base.

Thus if the competitors have these assets then we can say they

are strong. If they do not then they are weak.


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INNOVATION

Among criteria/aspects that we can analyze

are such as:- Technical product/service superiority.

- New product capability.

- R&D.

- Technology.

- Patents.


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MANUFACTURING

Among criteria/aspects that we can analyze are suchas:

- Cost structure.

- Flexible production operations.

- Equipment.

- Access to raw materials.

- Vertical integration.

- Workforce attitude and motivations.

- Capacity.


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FINANCE


are such as:- Cash flow.

- Net Profit.

- Debt.

- Ability to use debt and equity financing.- Parents willingness to finance the

operations.


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MANAGEMENT

Among criteria/aspects that we can analyze are suchas:

- Quality of top and middle management.- Knowledge of business.

- Culture.

- Strategic goals and plans.

- Entrepreneurial thrust.- Planning/operation system.

- Employee loyalty.

- Quality of strategic decision making.


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MARKETING

Among criteria/aspects that we can analyze are such as:

- Product reputation.

- Product uniqueness and differentiation.

- Brand name recognition.

- Breadth of product line.

- Customer orientation.

- Distribution and its relationship.

- Advertising and promotion skills.

- Sales force.

- Customer service/product support.

- Market segmentation.


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CUTOMER BASE


are such as:- Size and loyalty.

- Market share.

- Growth of segments served.


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HOW DO WE PERFORM OUR

ANALYSIS

Once we identified those information we can

assign the scale or ranking to those aspectssuch as by giving poor, good, medium, very

good, and etc.

We call this as competitors profile or

competitors strengths and weaknesses grid.


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COMPETITORS PROFILE OR GRID

Assets and

Skills

Our

Company

Competitor

A

Competitor

B

Top

Management

Poor Excellent Good

Sales volume Low Medium High

Product

Quality

Poor Poor High

Brand Name Low

awareness

High

Awareness

High

Awareness


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WHERE DOWE LOOK FOR THE

INFORMATION

Published materials and documents.

Competitors suppliers, customers andemployees.

Direct observation (from our sales force).


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END OF CHAPTER

analyzing competition

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