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Competitor analysis

Competitor analysis

Competitor Analysis

Competitor analysis is a critical component of the strategic planning processes. It enables an organisation to take better informed decisions about its strategy and its allocation of resources.

There are six mains steps to competitor analysis. These are:

  1. Determine the competitive set – This is usually straight forward but do remember to also consider what other substitute product or services you customers might buy and not just the close competitors. Focus on the key competitors and or key types of competitors and don’t spread the jam too thinly.
  2. Gather the information – This is the time consuming part of competitor analysis. It helps to have a clear view of the questions you need answers to in order to focus the information gathering process. There are usually 8 to 10 need to know questions of which 6 are common to every market. The other 2 to 4 are market or situation specific.  The six common need to know questions are:
    • What is their mission?
    • What is their current strategy?
    • How are they performing and why?
    • What are their most important activities? i.e. Where is the centre of gravity of their business. This could be products, services, customers, trade channels, regions, etc. Whatever is most appropriate.
    • What are their SWOT’s
    • What is their likely future strategy?
  3. Analyse the information – Focus the analysis of providing answers to the need to know questions.
  4. Make deductions – There are always information gaps. But with the information you have, you can sometimes make informed deductions. Think of this as trying to complete a jigsaw puzzle where some of the pieces are missing. You will almost certainly have to deduce your competitor’s current and future strategy.
  5. Draw conclusions – Summarise what you have learnt about each key competitor or type of competitor and think about the implications for your business.
  6. Take action – This is the most important part of competitor analysis. Use your learnings to inform your strategy and strategic plan.

Once you have defined the strategic plan for your business, it is worth considering what each of your main competitors would do if they had a copy of your strategic plan. Do so, and you will always find some ways to improve the robustness of your plan.

As Sun Tzu, an ancient Chinese general famously said, ‘If you know yourself and know your enemy, you need never fear the result of 100 battles.’

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