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 What is Competitive Advantage Explain the Blind Spots in Competitor Analysis

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 Business Competitor 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 Planning Competitor 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.

Benefits of Competitor Analysis 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.

Steps of Competitor Analysis The following are the steps to be conducted for carrying out a Competitor Analysis: 1 Step 1: Identify Potential Competitors 2 Step 2: Carry out a thorough Competitor Profiling 3 Step 3: Understand Competitors’ Strategies 4 Step 4: Analysis of Strengths and Weaknesses against Competitors 5 Step 5: Assess Market Attractiveness 6 Step 6: Analyze Sources of Competitive Advantage 7 Step 7: Design Competitive Strategies Let us now look at each in detail.

Market-based Analysis Hence, the competition faced by companies has been classified based on the degree of product substitution in the following categories: Brand Competition Industry Competition Product Competition Generic Competition Let us look at each in detail.

CSF for Automobile Industry CSF Analysis Look at the given table which shows the Critical Success Factor (CSF) of a company for an ‘Automobile Industry’. CSF for Automobile Industry Critical Success Factor Company Competitors A B C D Engine Technology 8 7 9 5 Styling and Features 6 Brand Reputation 10 Strong Distribution Network Efficient Manufacturing Effective Marketing 4

National Environment Industry Environment Repetition Analyzing the national environment needs an appraisal of whether the national framework helps in achieving competitive advantage in the globalized environment. Repetition National Environment Macro -Environment Composition

Risk of Entry by Potential Competitors 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 Threat of Substitute Products/Services Bargaining Power of Suppliers Bargaining Power of Buyers 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. Rivalry among Current Competitors

Searching Extensively for Competitors It is critical for conducting an effective Competitor Analysis that you do not overlook any competitor, both current as well as future competitors. You should consider all competitors including the following: Product competitors Generic competitors Total budget competitors

Mistaking Industry Boundaries Most of the times organizations define their industry around their current products, customer groups, and geographies. One of the greatest blind spots that strategists face in competitor analysis is that they wrongly define the industry boundaries. This causes them to overlook their adjacent competitors who ultimately enter their current space.

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