This story came as an output of an exercise done in one of the planning processes that I was involved, where we summarized some questions that could help an organization to better understand their current competitors and even anticipate possible new entrants to the market where they operate. I am sharing with China Daily readers since they can contribute for the organizations that are analyzing competition, something that should permanently be performed in companies that are demand driven and paying attention to what is happening.
The first process is related to current competitors and we should try to describe not only the competitor, but how their network, involving suppliers, distributors, and others, is operating. The following 20 questions should receive attention and people at the organization to search for information.
1 – How their network operates?
2 – What are their production costs?
3 – What companies are their major suppliers and how they operate?
4 – What companies are their major distributors and how they operate?
5 – How is their ownership and financial structure?
6 – What are their plans for the following years?
7 – What is their overall strategy to reach objectives of the company?
8 – How their product line is structured and possible new product developments?
9 – What about the strength of their brands, equity and brand movements?
10 – What are the services offered?
11 – What about the packaging process and styles and changes happening?
12 – How is their communication, in terms of advertisement, public relations and promotions evolving, the major messages and changes expected?
- – How is their pricing strategy and adaptations?
- – How is the selling process and the management of the sales team?
- – What about internal culture, major assets and talent procurement and management?
- – How changes in the macro-environment (political/legal; economic and natural; sociocultural and technology) may affect possible competitors?
- – How is the market structured, level of rivalry and what about the shares per product line?
These questions above are related to current competitors. We can answer them and then consolidate in a strength and weakness table and also in comparative tables with our company’s situation. The major objective we may pursue with these questions is to how to build sustainable competitive advantage against our competitors.
But one of the most intriguing issues when we analyze business and markets has to deal with new competitors, companies that are expanding abroad, or are going through strategies of diversification to other business and may enter in this market, and these questions are much more broader and difficult to pursue, since we are dealing with the unknown, or with “the dark side of the moon”. The following 3 questions may help:
- – Which companies may enter in this market based on international activities, culture, asset ownerships, adjacencies perceived?
- – What are the barriers to enter in this market and how are they evolving
- – What products are emerging as substitutes or could be substitutes?
To permanently analyze markets and competitors is a difficult challenge, but should be done in order to create and maintain sustainable competitive advantage. I hope these 20 questions may help.
The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker. Author of 50 books published in 8 countries and in China, “The World on the Tongue”.