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Competitor Analysis

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Sunny Patel

on 6 March 2011

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Transcript of Competitor Analysis

Legal in the public domain

Companies will sometimes go beyond ‘acceptable lengths’ to obtain private information

Laws not clearly defined

Obtaining information of a private nature is often considered industrial espionage Chinese alleged to have reverse engineered a US F-117 Nighthawk Stealth fighter shot down in 1999

Alleged to have aided the design of the Chinese Chengdu J-20 Stealth fighter

No legal action could be taken
Although F-117 designs are confidential
All parts obtained legitimately
No laws against reverse engineering What is competitor analysis? It is the process of identifying the strengths and the weaknesses of our competitors.
Why do companies employ competitor analysis? Aggressive modern market

More companies actively participating

A larger market due to globalisation

A great price - drop war Aims & Benefits? Competitor
Analysis Aims Benefits Competitor’s objectives

Competitor’s strategy

Competitor’s resources and capabilities

Competitor’s assumptions
Learn more about your own strengths and weaknesses

Proper identification and classification of threats (i.e. competitors) can be assessed

Determining what aspects can influence (or lead to) success and failure in a new market venture

Stronger contingency planning can then take place Identifying
Competitors Why
identify competitors? Types of competitors: Direct Competitors Indirect Competitors Future Competitors Methods to Conduct a Competitive/ Market Analysis In order to gain
advantage over
competitors SWOT Analysis PEST Analysis Value Chain
Analysis Porter's Five
Forces SWOT Analysis SWOT Internal
Environment External
Environment Strengths Weaknesses Opportunities Threats


IT skills

Marketing awareness
Poor quality

Lack of innovations

High stocks
Demographic factors

Political factors

Economic factors
Competence and
competitive advantages Limitations
Changes in environment: Interviews
Focus groups
How? PEST Analysis PEST Macro-Environmental Political Economic Social Technological Political stability

Environmental regulations

Favoured trading partners
Unemployment policy

Consumer confidence

Exchange rates between industries Culture


Leisure interests Energy use and cost

Technology legislation

Latest technological developments How? Market Publications
Methods 1. Inbound Logistics Involves the flow of products into a company – receiving raw materials from suppliers. Value Chain Analysis This method for analysing competitors follows the idea that an organisation’s activities can be organised into the following five ‘primary activities’: 2. Operations 3. Outbound Logistics 4. Marketing & Sales 5. Service Activities processes where the inbound materials are changed in form and/or packaged carrying the product from manufacturer to the buyer, includes both storage and distribution making sure the customers are aware of the product or service A combination of training, installation and repair Four support activities are also included in value chain analysis:
human resources
procurement of various inputs

While not directly affecting the product these activities are linked to the primary activities and will affect the value in some small way. Porter's Five Forces This method of competitor analysis suggests that there are five contributing factors that shape the competition which can be used to analyse both current and potential new competitors. Competitive
Rivalry This is the prime source of competition among existing companies. Bargaining
Power of
Buyers Bargaining
Power of
Suppliers Buyers can have a large amount of bargaining power, especially when there are other sources of supply and buyer switching costs are low. When there are few or highly differentiated suppliers, these suppliers tend to hold a lot of bargaining power. Threat of
Substitutes Threat of
Market Entry Organisations should also be aware of the potential for other companies to enter the market. Substitution is the act of revolutionising a market through leapfrogging. Taken together, these five forces offer a useful framework for assessing the factors likely to drive competition. They show a company when to expect greater levels of competition and where it will come from. Laws on
Competitive Analysis May be considered
illegal if? Information obtained by questionable methods, unacceptable, unethical or illegal

Nature of information is private or confidential

Information obtained for purposes against public interest Examples of Industrial Esponage Trusted insiders
Unhappy employees
Blackmailing employees

Directly obtaining
Breaking in
‘Dumpster diving’
Posing as maintenance, leaving a guided tour

Travelling business person, easy target

Computers aid copying information
Industrial Esponage in Defence Case Study 1: Disgruntled Ferrari employee
780 pages of technical documents to McLaren chief designer
Technical data to McLaren drivers when requested

288 SMS and 35 phone calls
emails between McLaren drivers
Industrial Esponage in Sport - Formula 1 Case Study 2: Punishment
McLaren fined $100 million dollars
Stripped of manufacturers points for the season
Car inspected for designs that could have been gained from Ferrari
Mobile Phone Industry Dominated by established companies: Big Four Case Study Figure 1 – Market share across mobile phone networks – 4th Quarter 2010
Figure 2 – Customer satisfaction of Mobile Phone Networks – From Which? Mobile Survey Average score considering:
Cost, network coverage, customer service, range of phones, overseas costs and bills
Pay monthly contracts for the “Samsung Galaxy”.

Show that contracts offer same features for the same prices Figure 3 – Found using Carphone Warehouse deal finder Phone networks gain customers through:

Strong brand reputation and loyalty

Marketing: TV campaigns, sponsorship, telemarketing

Promotions: Cheap cinema tickets, early concert tickets

Exclusivity: Apple Iphone - O2 Orange and T-Mobile merged in 2010:

Larger market share

Larger network coverage

Due to market dominance by "big four":

Newcomers join as Mobile Virtual Network Operators, using established network’s infrastructure

e.g. Companies established in other sectors: Tesco Mobile, Asda Mobile, Virgin Mobile Marketing:
Analysis MEC 210 | Group 8 Drawbacks SWOT is not enough for analysis
! Not possible to reveal all factors
Further research on subject area needed

SWOT uses same technique for all factors
! Not all factors can be approached similarly
Need to combine more methods / techniques
Find appropriate time to use SWOT effectively

If used correctly : SWOT and PEST are powerful tools for competitor analysis SWOT and PEST
Profile Templates Done similarly
PEST is conducted before SWOT
PEST analyses factors used in SWOT
SWOT helps in Decision making
PEST Profile SWOT Profile Political Environment Technological Environment 1.
10. 1.
10. 1.
10. 1.
10. Economic Environment Social Environment Potential Internal Strengths 1.
10. 1.
10. 1.
10. Potential Internal Weaknesses Potential External Opportunities 1.
10. Potential External Threats A competitor analysis of the first three groups, led us to the following innovative presentation... Hill T, Westbrook R. SWOT Analysis: It’s Time for a Product Recall. [internet]. 1997 [cited 2011 Feb 20];30(1):[46-52 p.]. Available from : http://lubswww.leeds.ac.uk/MKB/lubs30703/LRP-SWOT.pdf

Balamuralikrishna R, Dugger John. SWOT Analysis: A Management Tool For Initiating New Programs In Vocational School. [internet]. 2003 [cited 2011 Feb 19];[26 p.]. Available from : http://www.paec.org/aboutpaec/departments/risk/safetymanual/5._hazard_identification/hazard_analysis_items.pdf

Netmba.com [Internet]. Internet Center for Management and Business Administration, Inc.;c2002-10. Available from: http://www.netmba.com/strategy/pest/

Lawson R. Environmental Analysis. In: illustrated editors. The PR buzz factor. London: Kogan Page Publishers, 2006. p. 74-80.

Identifying competitors : http://www.searchingsolutions.com/wp-content/uploads/2008/10/competition_research.jpg

Red apple: http://www.marketingpicture.co.uk/wp-content/uploads/2009/03/apple.jpg

Green apple : http://www.artisticphotos.co.uk/content/images/products/Photos/GREEN-APPLE-AP00243/main/GREEN-APPLE-AP00243-category.jpg

Tick: http://photos1.fotosearch.com/bthumb/CSP/CSP402/k4028851.jpg

Justice Scales: http://cannazine.co.uk/images/stories/courtsand%20police/scales_of_justice2.jpg

Fighter jet: http://www.china-defense-mashup.com/chinese-j-20-logs-first-flight.html

Mobile promotions: http://www.kornicis.co.uk/images/events/Orange-Wed-241-main-meals.gif

Orange logo: http://www.techworld.com/cmsdata/news/3252658/Orange.jpg

Tmobile logo: http://www.digitaltrends.com/wp-content/uploads/2010/06/logo_tmobile.jpg

References Image Sources
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