‘Competitor Analysis’ is extremely crucial to make an organization successful.
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Instructor(s): Management Study Guide
‘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. 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.
While formulating an organization’s strategy, managers must also consider the strategies used by the organization’s competitors. Competitor analysis is a driver of an organization’s strategy and affects how firms act or react in their sectors. The organization carries out a competitor analysis to measure/assess its standing amongst its competitors. Competitor analysis begins with identifying present as well as potential competitors. It portrays an essential appendage to conduct an industry analysis. An industry analysis gives information regarding the probable sources of competition (including all the possible strategic actions and reactions and effects on profitability for all the organizations competing in the industry).
Competitor Analysis is a framework that strategy consultants use to scan the external macro-environment in which a firm operates. This analysis is essential for an organization to design an effective marketing strategy. It’s a way of working out what is going on ‘out there’ so that businesses can then respond to it. It is important to note here that Competitor Analysis can be performed and is relevant for any type of business whether large, small or medium. Also, you should keep in mind that the macro-economical factors can differ per continent, country or even region, so normally a Competitor Analysis should be performed per country.
One of the approaches to create great working strategies is to look to the past to seek ideas for the present. Hence, you can look at the past trends that worked in the market and for your organization and create ideas by tweaking those strategies to work in the present day environment. The first and foremost step of conducting a Competitor Analysis is identifying your current, potential as well as future competitors. This is a crucial step because if an organization does not carefully identify its competitors, its competitor analysis would fail to reflect the true picture of the company’s position in the market.