The Basic Principles of Competitive Intelligence
This guide to competitor analysis is by its nature, elementary and is a summary and precursor to a more detailed article published in Business Information Review in June 2002. (This can be accessed from our CI Articles request form). There are also many books on the subject - covering everything from finding information on competitors, to analysing the information and finally using it in business strategy. We list a number of titles on our recommended books pages - (for example the classic texts on strategy by Michael Porter - Competitive Strategy and Competitive Advantage). We can also help you in most aspects of CI offering research and analysis services, as well as training and CI workshops so that you can learn how to do CI effectively yourself. However, enough of the preamble.... Introduction
No business is an island. For success, the business will need to deal with customers, suppliers, employees, and others. In almost all cases there will also be other organizations offering similar products to similar customers. These other organizations are competitors. And their objective is the same - to grow, make money and succeed. Effectively, the businesses are at war - fighting to gain the same resource and territory: the customer. And like in war, it is necessary to understand the enemy: * how he thinks;
* what his strengths are;
* what his weaknesses are;
* where he is vulnerable;
* where he can be attacked;
* where the risk of attack is too great....
and so on. And like in war, the competitor will have secrets that can be the difference between profit and loss, expansion or bankruptcy for the business. Identifying these secrets is thus crucial for business survival. But all this is not new... Sun Tzu and the Art of War
Around the year 500 BC, the great Chinese military strategist, Sun Tzu wrote a treatise on the Art of War. From a 21st century perspective, many of Sun Tzu's approaches would be viewed as barbaric today. Nevertheless, his views on strategy are still relevant today - for both military commanders and business leaders looking at how to win against competitors. For instance: If you are ignorant of both your enemy and yourself,
then you are a fool and certain to be defeated in every battle. If you know yourself, but not your enemy,
for every battle won, you will suffer a loss.
If you know your enemy and yourself, you will win every battle. Who is a competitor in business?
Business competitors are:
* Other organizations offering the same product or service now. * Other organizations offering similar products or services now. * Organizations that could offer the same or similar products or services in the future. * Organizations that could remove the need for a product or service. Why monitor competitors?
By knowing our Competitors we may be able to
predict their next moves,
exploit their weaknesses
and undermine their strengths.
Customer's usually know the differences between companies - their good points and bad points. They know that company A is cheaper than company B and that company C has a better after-sales service. For a business to operate in a market and not know the same, and more, is tantamount to giving up the battle without even starting. As Frederick the Great said: It is pardonable to be defeated, but never to be surprised
So what is involved?
There are four stages in monitoring competitors - the four "C"s: * Collecting the information (with a first stage - deciding what to collect) * Converting information into intelligence
(with three steps: CIA -Collate and catalogue it, Integrate it with other pieces of information and Analyse and interpret it) * Communicating the intelligence.
* Countering any adverse competitor actions - i.e. using the intelligence. One mistake a lot of people make is to start by collecting information without...