Article Type : Research Article
Authors : Kumar S
Keywords : Competitive advantage; Competitor mapping; Innovation strategy
Like Motorola, most companies have to build fresh
competitive advantages and destroy others’ advantages faster than they used to.
As innovation pervades the value chain, they must migrate quickly from one
competitive position to another, creating new ones, depreciating old ones, and
matching rivals. The process is disorderly and unstable. Senior executives
desperately need new tools to help them systematically analyze their own and
other players’ competitive positions in hypercompetitive markets. In a competitive
business environment, a thorough understanding of the market and analysis of
the competition has become an essential practice for achieving goals and
success in any business. Competitive analysis helps a company develop a
sustainable competitive advantage. By understanding the strengths and
weaknesses of competitors, a company can capitalize on its own assets and
resources to stand out in the marketplace. Competitor analysis is part of any
marketing plan and is essential to assess both direct and indirect competitors
in terms of their strengths, weaknesses, strategies and market position. This
assessment will provide valuable information that can be used to develop a
competitive advantage over the competition, discover a market niche or improve
the overall performance of the company. This article emphasizes on explaining
in detail how a competitive advantage can be built by using competitor mapping.
The competitor analysis helps in
understanding the competitor in the industry and identifies strengths and
weaknesses of the competitors. However, competitor analysis gives more
possibilities to outsmart the competitors in the market. Benchmarking makes it
easier to ensure that services and products meet and exceeds the level that the
market requires. However, it has become imperative to study the activities of
competitors. This information can be helpful for the company to compete in the
desired area [1]. Again, competing in the saturated area raise the companies’
expenses, however, the competitor is still better to get the customer was
possible. It has become crucial to companies to identify the activities of
their competitors, such information gives opportunities, helps the company to
win market share in that area with little money than in harder competition [2].
Companies when carrying out competitor analysis should bear in mind that
everything competitors do might not be working, for instance, a big company can
spend thousands on face book marketing and this does not mean it’s worth it.
When conducting competitor analysis, the competitor’s manners of operations
should not be copied [3]. Where the company copy its competitors, they always
seem to be the competitor’s shadows. So, to avoid this, the company should do
things differently. However, companies should not spend much time on
competitors [4]. In an industry, companies can be creative against competitors;
however, the company can gain more information and methods from another
industry. Furthermore, competition between firms is seen as a rivalry between
their respective business line product and-firm-level [5]. Competitor analysis
otherwise known as "acumen" provides valuable competitive intelligence
by creating an accurate, strategic method of understanding competitors
operations and thus becomes a driver of competitive success. Porter argues that
competition between firms can be classified based on customer offerings that
differ in terms of specific functions and associated ease for the use
technology [6]. It is also the fiercest form of competition that exists between
firms with hardly any differentiation between their product offerings. Firms
can become indirect competitors in a given business domain, if they serve the
same customer needs but with different resources. Finally, there are the
potential competitors who do not serve the same customer base but use the same
resource base or have equivalent capability. In short, the operational manager
needs to clearly understand the extent of competition existing in their domain
and benchmark various types of competitors present in the market [7].
Theoretically and practically, the idea of competitive advantage is considered
a real revolution in the world of business. The concept behind competitive
advantage, is the ability of an organization to perform its activity in such a
way that it becomes difficult for their competitors to imitate. The Competitive
advantage can only be achieved when jobs are implemented in other to produce
value in areas of cost reduction as equated to its competitors. The ability to
maintain this eminence competitive advantage is said to be the ability of an
organization to fulfil the needs of its consumers or the value that it wishes
to incur from a product which include, high quality, low price in other to
distinguish its product and services through benefits incurred as compared to
its competitors [8]. This article emphasizes on explaining in detail how a
competitive advantage can be built by using competitor mapping.
Technology and innovation for competitive
advantage
The term innovation has a commercial aspect
different from scientific research. Innovation has a very important role in
economic development of countries, because innovative companies, through
commercializing their research and development results, are creating new and
nonexistent value. Furthermore, these same companies are getting an important
share of the newly created value. By this way, they are mainly creating wealth
for themselves, for their country and for the world. Innovation includes both
product / service and process innovations. Product innovations are products
that are perceived to be new by either the producer or the customer; the latter
includes both end-users and distributors. Process innovation refers to new
processes which either reduce the cost of production or enable the production
of new products. In spite of the increasing importance of innovation and the
role played by technological capabilities in a firm’s growth trajectory, little
is known how technological innovation in different organizations is driven by
their technology strategy, the plan that guides the accumulation and deployment
of technological resources and capabilities. That is, the most innovative firms
engage in a continual search for better products, services, and ways of doing
things. They try to continuously upgrade their internal capabilities and other
resources. Aggregate innovative capacity of a nation is derived from the
collective innovative capacity of its firms. The more innovative firms a nation
has, the stronger that nation’s competitive advantage. Innovation also promotes
productivity, the value of the output produced by a unit of labour or capital.
The more productive a company is, the more efficiently it uses its resources.
The more productive the firms in a nation are, the more efficiently the nation
uses its resources. Innovation and entrepreneurial activity are the engines of
long-run economic growth. Often, entrepreneurs first commercialize innovative
new products and processes, and entrepreneurial activity provides much of
dynamism in an economy. For example, the economy of the United States has
benefited greatly from a high level of entrepreneurial activity, which has
resulted in rapid innovation in products and processes.
Human resources for competitive advantage
Human resources are a term used to describe
the individuals who comprise the workforce of an organization, although it is
also applied in labour economics to, for example, business sectors or even
whole nations. Firms can develop this competitive advantage only by creating
value in a way that is difficult for competitors to imitate. Traditional
sources of competitive advantage such as financial and natural resources,
technology and economies of scale can be used to create value. However, the
resource-based argument is that these sources are increasingly accessible and
easy to imitate. Thus, they are less significant for competitive advantage
especially in comparison to a complex social structure such as an employment
system. If that is so, human resource policies and practices may be an
especially important source of sustained competitive advantage. Within the best
practices approach to strategic HRM, the first practice, internal career
opportunities, refers to the organizational preference for hiring primarily
from within. Second, training systems refers to whether organizations provide
extensive training opportunities for their employees or whether they depend on
selection and socialization processes to obtain required skills. Third,
appraisals are conceptualized in terms of outcome-based performance ratings and
the extent to which subordinate views are taken into account in these ratings.
Fourth, employment security reflects the degree to which employees feel secure
about continued employment in their jobs. Although formalized employment
security is generally on the decline, organizations may have either an implicit
or an explicit policy. Fifth, employee participation, both in terms of taking
part in decision making and having opportunities to communicate suggestions for
improvement, has emerged as a strategic HRM practice. Sixth, job description
refers to the extent jobs are tightly and clearly defined so that employees
know what is expected of them. Finally, profit sharing reflects the concern for
overall organizational performance on a sustainable basis. Ulrich and Yeung
argue that the future HR professional will need four basic competencies to
become partners in the strategic management process. These include business
competence, professional and technical knowledge, integration competence and
ability to manage change. Human Resources seeks to achieve this by aligning the
supply of skilled and qualified individuals and the capabilities of the current
workforce, with the organization's ongoing and future business plans and
requirements to maximize return on investment and secure future survival and
success. In ensuring such objectives are achieved, the human resource function
purpose in this context is to implement the organization's human resource
requirements effectively but also pragmatically, taking account of legal,
ethical and as far as is practical in a manner that retains the support and
respect of the workforce.
Organizational structure for competitive
advantage
Organizations are a variant of clustered
entities. An organization can be structured in many different ways, depending
on their objectives. The structure of an organization will determine the modes
in which it operates and performs. Organizational structure allows the
expressed allocation of responsibilities for different functions and processes
to different entities such as the branch, department, workgroup and individual.
Individuals in an organizational structure are normally hired under
time-limited work contracts or work orders, or under permanent employment
contracts or program orders. Also, this correlate of changing structures and
processes is reinforced by increased competitive pressure forcing companies to
focus on their core competencies, redrawing their boundaries around what
constitute and support their competitive advantage. This pressure is reflected
in the changing organizational structures from a functional to a
multi-divisional one, through the shifting of business towards smaller, decentralized
units. When superior skills or resources exist outside the company, firms are
making increased use of strategic alliances to supplement and sometimes enhance
their own competencies. Whenever by alliances, outsourcing or down scoping,
firms appear to be drawing in their boundaries around narrower spheres of
activities. An effective organizational structure shall facilitate working
relationships between various entities in the organization and may improve the
working efficiency within the organizational units. Organization shall retain a
set order and control to enable monitoring the processes. Organization shall
support command for coping with a mix of orders and a change of conditions
while performing work. Organization shall allow for application of individual
skills to enable high flexibility and apply creativity. When a business
expands, the chain of command will lengthen and the spans of control will
widen. When an organization comes to age, the flexibility will decrease and the
creativity will fatigue. Therefore, organizational structures shall be altered
from time to time to enable recovery. If such alteration is prevented
internally, the final escape is to turn down the organization to prepare for a
re-launch in an entirely new set up.
Strategy - differentiation
This strategy involves selecting one or more
criteria used by buyers in a market - and then positioning the business
uniquely to meet those criteria. This strategy is usually associated with
charging a premium price for the product - often to reflect the higher
production costs and extra value-added features provided for the consumer.
Differentiation is about charging a premium price that more than covers the
additional production costs, and about giving customers clear reasons to prefer
the product over other, less differentiated products.
Firms that succeed in a differentiation strategy often have the following internal strengths:
Strategy - cost leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. Many (perhaps all) market segments in the industry are supplied with the emphasis placed minimizing costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will (in theory) enjoy the best profits. This strategy is usually associated with large-scale businesses offering standard products with relatively little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a low-cost leader will also discount its product to maximize sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. Firms that succeed in cost leadership often have the following internal strengths:
Strategy - differentiation focus
In the differentiation focus strategy, a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. Companies following focused differentiation strategies produce customized products for small market segments. They can be successful when either the quantities involved are too small for industry-wide competitors to handle economically, or when the extent of customization (or differentiation) requested is beyond the capabilities of the industry-wide differentiator. The important issue for any business adopting this strategy is to ensure that customers really do have different needs and wants - in other words that there is a valid basis for differentiation - and that existing competitor products are not meeting those needs and wants.
Strategy - cost focus
Companies that compete by following cost
leadership strategies to serve narrow market niches generally target the
smallest buyers in an industry (those who purchase in such small quantities
those industry-wide competitors cannot serve them at the same low cost). Here a
business seeks a lower-cost advantage in just on or a small number of market
segments. The product will be basic - perhaps a similar product to the
higher-priced and featured market leader, but acceptable to sufficient
consumers.
Competitor analysis amongst business helps team to build better marketing strategies. Moreover, it identifies the opportunities in the market that are currently under-served. Again, it takes advantage of competitor’s weaknesses to grow market share. It has become imperative for organizations to carry out competitor analysis throughout the life cycle of its business in other to stay up to date with the market trends and product offerings. However, this provide better idea about the type of services currently available to the target customer and the areas being neglected. This idea shouldn’t sound complicated rather, it is a common knowledge that an organization understands it competitors and gets the better chance of beating them. Competitor analysis helps organizations to understand their competitors and the market structure. It also enables management to identify competitors making and selling strategies. Competitor analysis serves as multi-disciplinary function affecting the sales, marketing, product development, operations strategy and product re-engineering, seeking for information spanning these departments. Fewer sources of information conducted on competitor advantage was a difficult activity in the past, limiting the power of advanced business analysis, such as conjoint analysis, multi-dimensional scaling mapping, market cluster and voice of consumers. For a company to be competitive in the market, it is paramount for operations managers to have a clear understanding of their firms’ competitors. However, they should have an operations strategy that reflect the planning, design and implementation of strategic decisions that span across business process of a firm which strengthen a firm’s competitiveness in the market through improved quality, better delivery, lower cost and enhanced market adaption flexibility and quick design of product. Mononen state that competitor analysis can be used to find new opportunities in business analyses which include:
When competitor analysis is done frequently,
it assists companies in running the business.
“How many model runs do you plan on using this year for your artificial intelligence needs?” It’s a question a software salesperson might ask a prospective customer during a conversation about purchasing AI models for vehicle detection, license plate detection, facial recognition and dozens of other use cases. This hypothetical B2B software company uses a pricing structure where customers pay each time an AI model runs. The prospect in this scenario doesn’t have a clear answer—understandably. Predicting the approximate number of model runs is tough. The prospect gives a vague answer, telling the salesperson that the number of model runs will depend on various factors. The salesperson tries to get the prospect to provide a ballpark, but the prospect grows increasingly uncomfortable with the possibility of being locked into a contract where they don’t know if they’ll be paying more than their actual usage (because they can’t accurately predict it). The deal crumbles. This type of scenario, where a bad approach to pricing negatively impacts sales negotiations, is one many software salespeople regularly experience. B2B software company executives tend to get a lot wrong about pricing. A core mistake? They view pricing as a product attribute when pricing is really a sales enablement tool. The job of pricing is to enable a simple sales dialogue where prospects can quickly understand what they’re paying for, how much they’re paying for it and why the cost is worth it. Unfortunately, when deals drag along or don’t close, software salespeople tend to get the brunt of the blame. But the reality is that their employers, the software companies, set them up to fail by giving them an incomplete playbook. If pricing doesn’t make selling a product easier, then it’s really just an academic exercise in futility.
Simplicity wins the day
Every time software executives add complexity
to pricing, they pour molasses into the sales cycle, increasing the likelihood
of extended sales cycles and, worse, deals not closing. When executives are
multiple layers removed from their sales departments, they don’t have the
complete picture of what’s happening on the ground between their salespeople
and prospects—and often make pricing decisions that are harder to change later.
In fact, many times, executives simply fail to properly understand the groupings
of their customers and how those customers use their software. In turn, they
don’t package the software correctly, either over-complicating it or
over-simplifying it. When software gets packaged poorly, it ripples into
product engineering and sales. Engineers will have to weave decisions, such as
feature limitations spurred by overly complicated usage constraints, into the
product’s code. Over time, these engineering decisions become harder to undo,
creating a set of self-imposed constraints. Salespeople are left to deal with
the mess. They often adjust the pricing to accommodate special use cases. For
instance, going back to the hypothetical example above, if a customer lives in
a city with 10 times the number of cars per capita as the company’s customers,
the salesperson might decide to discount the product more heavily because of
that odd-ball characteristic. After all, salespeople feel pressured to hit
their numbers—they need to make a living. But special discounts can jeopardize
software providers’ long-term financial health because they simply won’t be
getting paid the true value of their products. Prospects talk, and when one
realizes that someone with a similar use case got offered a much better deal,
it’ll negatively paint their impression of the company. Even if prospects
become customers, discounts set up subsequent renewal challenges because these
customers will likely want to secure additional discounts down the road.
Pricing shapes the dialogue salespeople have with prospects. Simplicity in pricing
leads to simplicity in sales conversations. The Gartner study I referenced
earlier also found that 47% of businesses took three to six months “to finalize
a software purchase” in 2022 and that 48% considered four to six software
providers before making a final decision. Given the time prospects take to
finalize a purchase and the number of potential providers they engage with,
it’s all the more important for software companies to simplify their sales
approaches. In a sea of complex pricing, the company that steers the ship with
the most streamlined sales process has the advantage.
Sales strategies should align with
sales teams’ strengths
Executives should work hand-in-hand with
salespeople as they go through the steps of building new pricing strategies. As
part of that collaboration, executives should examine quantitative and
qualitative data to make the right pricing decisions. Quantitatively,
executives should develop a pricing approach that addresses all the various
types of deal configurations by producing a reasonable (and rational) net price
that is consistent with the value being delivered. That scheduled net price can
be used to assess each salesperson’s performance. Salespeople should be
recognized and rewarded for how closely they sell to the company’s scheduled
net prices over time. Qualitatively, executives should listen to recorded or
live sales calls to see how pricing is playing out across sales dialogues. By
listening to these calls, executives can determine to what extent their
company’s issue has to do with pricing strategy and to what extent it has to do
with sales skills. From there, executives can create and implement the proper
pricing structure and policy for their company and provide the appropriate
training to their salespeople, ultimately setting up everyone involved the
executive team, salespeople, other employees, prospects and existing customers
for success.
Competition always induces firms to revise
their product portfolio as also to revisit their product market to understand
changing needs, expectations and perceptions of a different market segment. It
also motivates to make their product features rich and versatile. As a result,
competitor analysis: enlarges a company’s understanding of the multiple choices
that customers have; is a source of new ideas; facilitates better predictions
about the future; enforces management to evaluate any prospective course of
action in the light of possible responses by competitors; focuses a specific
company’s product/services that need to be emphasized; and helps point out
competitors’ weaknesses. Competitor analysis can therefore be said to be a
worthwhile contemporary managerial practice for reasons discussed below. First,
an organization engages in competitor analysis to gain a general understanding
of the competitors in the product area, identify any vulnerabilities of the
competitors, assess the impact of its own strategic actions against specific
competitors, and identify potential moves that a competitor might make that
would endanger the organization’s position in the market. Analyzing competitors
assists organizations in identifying a clear competitive advantage (some basis
on which they are willing to compete with anyone). Competitive advantage is the
means by which the organization seeks to develop cost advantage or to
differentiate itself from other organizations. Organizations constantly take
offensive and defensive actions in their quests for competitive advantage
vis-à-vis competitors [9]. Competitive advantage might be centered on image,
high-quality services, an excellent and widely recognized staff, or efficiency
and low cost, among others. Depending on the intent of the competitor analysis,
an organization might use all of these attributes or just one or two. For
example, in the early stages of competitor analysis, the organization may seek
only general information. As the organization plans to enter new markets,
offensive information may be the primary focus of the competitor analysis. In
the face of strategic moves by a powerful competitor, defensive information may
take precedence. In large, complex markets, all of these information categories
are appropriate and essential for positioning the organization. General
competitor information is important for an organization to: avoid surprises in
the marketplace; provide a forum for leaders to discuss and evaluate their
assumptions about the organization’s capabilities, market position, and
competition; make everyone aware of significant and formidable competitors to
whom the organization must respond; help the organization learn from rivals
through benchmarking (specific measures comparing the organization with its
competitors on a set of key variables); build consensus among executives on the
organization’s goals and capabilities, thus increasing their commitment to the
chosen strategy; and foster strategic thinking throughout the organization.
Companies compare themselves with similar companies in the same industry to
identify their strengths and weaknesses. For example, Bank of East Asia sets
Hang Seng Bank as its benchmark for comparison, as both are local banks in Hong
Kong. It is helpful for a company to conduct best-practice benchmarking,
comparing its performance against that of the best competitor in the industry.
This helps to increase company productivity growth and competitive advantage.
Subsequently, the company can break through to a higher standard of performance.
Offensive competitor information is helpful to: identify market niches and
discontinuities; select a viable strategy; and contribute to the successful
implementation of the strategy. Defensive competitor information will aid in:
anticipating competitors’ moves; and shortening the time required to respond
(countermoves) to a competitor’s moves. Secondly, competitor analysis is an
indispensable process in marketing planning. Henderson stated that “the success
of any marketing strategy depends on the strengths of the competitor analysis
on which it is based”. As a strategic analysis tool, Competitor Profiling
Matrix (CPM) provides several benefits to the company. Capps III and Glissmeyer
argue that CPM includes company’s key success factors (KSFs) which help the
company identify strengths and deficiencies in those significant areas [10].
Analyzing organizations in this manner is an effective way to evaluate many
competitors in one framework to support an effective strategic plan as cited in
(Capps III and Glissmeyer) [11]. CPM enables a company to evaluate the
strengths and weaknesses of its major competitors which is a prerequisite in
developing an effective competitive strategy. An understanding of competitive
behavior including firms’ moves and counter moves is fundamental to strategic
management [13]. Chen found evidence that the stronger an action attack on key
markets of competitors, the greater the number of counteractions by the
competitors. Competitor analysis provides both an offensive and a defensive
strategic context for identifying opportunities and threats. The offensive
strategy context allows firms to more quickly exploit opportunities and
capitalize on strengths. Conversely, the defensive strategy context allows them
to more effectively counter the threat posed by rival firms seeking to exploit
the firm’s own weaknesses. Business organizations have long engaged in
competitor analysis, viewing it as an essential part of environmental analysis
in strategic management. These companies have learned that focusing on
competitor analysis aids in the identification of new business opportunities,
the clarification of emerging ideas, improved ability to anticipate surprises,
and the development of market penetration and market share growth strategies
[15]. As a matter of fact, one well-documented reason Japanese automobile firms
were able to penetrate the US market successfully, especially during the 1970s,
was that they were much better at doing competitor analysis than US firms [12].
In addition, effective competitor analysis requires predicting how competitors
plan to position themselves. Although often difficult, determining competitors’
strategic intent is at the heart of competitor analysis. An effective
competitor analysis should focus on what rivals can do with their resources,
capabilities, and competencies; an extension of what competitors are currently
doing, and include possible radical departures from existing strategies [14].
Accurate and timely information concerning competitors is extremely important
in competitor analysis. Misjudging or underestimating competitors’ resources,
capabilities, or competencies is a serious misstep. Faulty assumptions can
suggest inappropriate strategies for an organization. Poor environmental
scanning perpetuates faulty assumptions. Third, competitive analysis provides
information to enable the focal firm to predict competitive actions of
competitors. Porter believes that the desire to pre-empt competitors in
deliberations on capacity expansion is one of the clearest examples of
organizational decision making where competitor information can play an
invaluable role. In a similar vein, Zajac and Bazerman saw a need for
competitor analysis when considering capacity expansion. Rouach and Santi point
to the fact that information in the contemporary era is even changing industry
structures and is altering the rules of competition. To succeed in such
circumstances, it is critical to establish a capability to continuously monitor
and analyze the dynamics in the external environment based on information
gathered. Such a capability could assist a firm to act in time upon any changes
that may impact on its strategic thrust into the future. Hamel and Prahalad
[16] concur with this view when they argued that business risk recedes as a
firm’s knowledge about its external environment grows, and as knowledge grows,
so does the firm’s capacity to advance. Fleisher and Blenkhorn added that
accurate and timely competitive intelligence could mean the difference between
correct and incorrect global strategic decision making. Through competitor
analysis, firms identify who their key competitors are, develop a profile for
each of them, identify their objectives and strategies, assess their strengths
and weaknesses, gauge the threat they pose, and anticipate their reaction to
competitive moves. Firms that develop systematic and advanced competitor
profiling have a significant competitive advantage. Fourth, competitor analysis
links with the traditional strengths, weaknesses, opportunities and threats
(SWOT) analysis for handling both business opportunities and threats. This
benefit comes from expanded dialogue within the development team, and with
other units in the company, about what competitive data means to strategic
direction. Such dialogue can open up new opportunities and options that would
not otherwise have been considered. Competitors may be taking various
approaches to reaching the customer base, so multiple possibilities exist. In
this situation, a completely novel approach might be best, since no standard is
emerging. Value-chain analysis is also helpful since it helps a company to
understand where and how it adds value. It helps the company to determine its
own sources of competitive advantage, and it can then dissect strategically
relevant activities so as to understand the sources of competitive advantage
through cost leadership or product specialization. Similarly, in an environment
of rapid change, intellectual capital represents a primary value creation asset
of the organization [17]. According to Porter and Teisber, in healthy
competition, ongoing improvements in processes and methods drive down costs;
product/service quality improves; innovation leads to improvements which are
quickly adopted; uncompetitive producers go out of business; value-adjusted
prices fall; and the market expands. Companies try to identify their
competitors’ strengths when choosing competition methods, either by cutting the
product price to exercise cost leadership or by launching a new product or service
to achieve product specialization. Companies practicing competitor analysis
should also carry out competitive position monitoring. Through this they
analyze competitor positions within the industry by assessing and monitoring
trends in competitor sales. In addition, companies should conduct industry
profitability analysis. This provides them with a gauge for the nature and
intensity of competition. Competitive advantage requires different positioning
strategies through strategically choosing a different mix of value chain
activities in order to deliver a unique value at a competitive price.
Competitor analysis helps decision makers
understand who competitors are and what the market structure is. It allows
management to identify its competitors’ making and selling strategies. This
study has revealed that in competitor analysis, detailed attention is given to
each competitor’s apparent objectives, resources and competitive moves which
lead a company to readily identify the area of strengths and weaknesses of its
competitors and this can be used in the process of developing effective
strategies. By understanding who the competitors are and how they operate,
managers can tackle the issue of other companies making moves that are
detrimental to their companies’ health. Managers can also learn from their
competitors. Indeed, firms that pay adequate attention to competitors’ actions
have been found to achieve better business performance than those who pay less
attention to their competitors. The findings from competitor analysis are
likely to factor strongly into a company’s strategic plan. One of the key
elements of a strategic plan is to analyze the capabilities of an organization
which should include a clear identification of the key strength and weaknesses
of the organization relative to its competitors. Companies study similar market
experiments to those which they are planning. For example, mobile phone service
companies compare plans of other mobile companies when planning a new promotion
of phone services. Another benefit of competitive analysis involves expanding
the knowledge base of those working on your website or web application. The
analysis offers information about content and functionality that they have
probably not considered. Exploring competitor websites offers the opportunity
to discover what is working well for them, as well as what is commonly being
offered via the Web. For example, if all competitors are offering specific
content and functionality, users will likely expect your site to offer similar
content and functionality.