Competitive Intelligence: Ideas for Analysis

1
Competitive Intelligence Ideas for Analysis

• Dr. John T. Drea
• Professor of Marketing
• Western Illinois University

2
What should I analyze?

• To answer this, you must ask the client what
  decisions does the business face today, this
  year, and in the next 5-10 years?
• Pin the client down Have him/her explain why
  they want to know certain information.

3
Ideas for Analysis

• Porters framework can be useful for analyzing
  the actions of a competitor.
• Does the competitor appear to be forming a
• Cost-leadership strategy
• Differentiation
• Cost focus
• Differentiation focus
• Be careful to look at the totality of the
  information, not 1-2 items in isolation.
• E.g., just because someone attempts to cut costs
  doesnt mean they are a pursuing a cost-driven
  strategy

4
Ideas for Analysis

• Another useable framework for analyzing larger
  competitors with multiple SBUs can be the BCG
  GrowthShare Matrix.

If you can position a competitors SBU into the
appropriate cell, you may have some insight into
their likely actions with the SBU.
5
Ideas for Analysis

• Critical Success Factors
• This involves rating two general areas
• Industry attractiveness
• Business attributes
• These two factors are used to plot a business
  relative to its competitors it may suggest
  likely business decisions concerning cash flow
  and future investment with an SBU.

6
Critical Success Factor Method - How it works

• Step 1 Identify the relevant attributes for
  assessing industry attractiveness Example
• Market size
• Profit margin
• Growth
• Vulnerability to business cycles
• Threats from new competitors/substitute products
• These are the factors which would determine the
  relative attractiveness of one industry compared
  to others.

7
Critical Success Factor Method - How it works

• Step 2 Assign weights for the importance of each
  attribute.
• Example (All weights should total to 1)
• .20 Market size
• .30 Profit margin
• .20 Growth
• .15 Vulnerability to business cycle
• .15 Threats from new competitors/substitute
  products
• These are the weights you would assign to each of
  the factors to determine the attractiveness of
  one industry compared to others.

8
Critical Success Factor Method - How it works

• Step 3 Assign a rating (1-5) for each industry
  attribute, indicating the performance of the
  industry on the attribute (compared to others)
• Step 4 Multiply the weight times the rating to
  get an overall industry value.
• See next slide for an example.

9
Critical Success Factor Method - How it works
10
Critical Success Factor Method - How it works

• Step 5 Next, using the same factors and weights,
  evaluate the competitors along using a 1-5 scale
• Step 6 Multiply the weight times the business
  attribute rating for each competitor.
• See next slide for an example.
• Competitors in the same industry will be in a
  vertical line, but you can change weights to
  reflect different segments of an overall market.

11
Critical Success Factor Method - How it works
12
Critical Success Factor Method - How it works

• Step 7 Plot the resulting point on a 2D grid

A
5
4
Industry Low, Business High
Industry High, Business High
3
Business Attractiveness
2
Industry Low, Business Low
Industry High, Business Low
1
0
B
0 1 2 3 4
5
You can plot different Competitors in different
Industries on the same grid.
Industry Attractiveness
13
Identification of core competencies

• Companies achieve competitive advantage by
  developing core competencies that set them apart
  from other firms. A core competency has the
  following characteristics
• It differentiates a company from its competitors.
• It provides competitive advantage
• It is transferable to other businesses
• Marriotts core competency is not in the ability
  to manage hotels.

14
Identification of core competencies

• What are the core competencies of your
  competitors?
• Dont rely on annual reports to identify it.
• Look at the functions of a business, such as
• Production efficiency
• Understanding and anticipating customer needs
• Training
• Billing
• Purchasing
• Managing cash
• Product design
• Ability to manage channel relationships
• A core competency doesnt just mean you do
  something well it means you have an important
  advantage that is transferable.