Competitive analysis rather than competitor analysis
For the level three planning company, competitive analysis is a vital element in the creation and maintenance of the short, medium and long term plan. The emphasis should be on
competitive rather than competitor analysis. For the progressive company, competitive analysis considers a range of factors to put the company in control of the market and its internal environment – whereas competitor analysis in isolation will always tend to be reactive. Competitive analysis tells you that to remain competitive you should be following this policy
before the competition decides that it is correct – while competitor analysis says “Company x has changed its pricing – we should follow suit”. There will obviously be occasions when competitive analysis will have an input into the
contingency plan with the result that reactive responses will a consequence of competitive analysis as well – but it should ideally be the minor element.
Because it is complex, and company wide, Ibis has developed a successful standard operating procedure
(SOP) which creates a step by step guide to the creation and maintenance of competitive analysis which looks forward.
The advantages of such a system are substantial:
It provides an action and implementation based framework;
It is an ideal training platform for junior management on a rotating basis, similar to
cost cutting;
It links into the company-wide KPI framework which can be used as a forecasting and planning tool to consider the implications of a variety of “what-if” scenarios;
It has been found to generate emergent strategies by identifying competitive opportunities;
Enables management and outside investors to drill down within the data to identify the best investment returns to generate improved competitive advantage;
It integrates a host of information in a digestible format;
It provides a central element in the strategic component of the plan.
What are the outputs of the competitive analysis SOP?
The SOP creates a framework based on five key components of competitive advantage:
Organisation for competitive analysis
Strategy for competitive advantage
Market direction for competitive advantage
Product/ service analysis
Operational comparison for competitive advantage
The main elements of this SOP are listed below:
Better organisation for competitive analysis
The right individual(s)
The right level of responsibility
Right data collection
Right systems for analysis and collection
Right presentation (frequency, detail)
Identification of key failure points for links with contingency planning.
A better strategy for competitive advantage
An analysis of market drivers and how competition is responding to them
A better balanced scorecard
A better mix of strategies than the competition to control market development
A better implementation policy within the market
Better definition of segmentation demands and how they are evolving
A better mix of implementation routes for each segment than the competition
A better product/ service mix
Customer satisfaction
Comparison through technical evaluation of product/ service delivery
Better operational performance
KPI by operational area
Benchmark to define levels of competitive performance
Targets to drive competitive performance in each operational area
Linked action plans to implement new targets
A more structured contingency plan to react more quickly than the competition
How can the range of material be summarised?
Creating a weighted scoring system for each component of data in the SOP enables management to generate a fairly accurate (though obviously subjective) score for each component in the competitive analysis. An example would be as follows:
Totally uncompetitive
Uncompetitive
Average
Competitive
Highly competitive
Organisation
*************
Strategy
*************
Market
*************
Product/ service
*************
Operations
*************
Such a scoring system provides a quick method of identifying where problems exist in building competitive advantage – and drilling down into the data will provide more precise information on what changes need to be made. For example, the weightings given to customer satisfaction levels should be higher than technical comparisons.
At what stage should the competitive analysis SOP be introduced?
The SOP depends on a range of other systems and skills within the organisation. Within a typical monitoring and skills development programme, as outlined in the Ibis FAQ, the introduction of a competitive analysis SOP should be towards the end – normally after 6 to 9 months integration of new systems into the company. This will provide the greatest benefit to the company in its annual planning cycle and in the operation of the contingency plan.
