Chapter 5 - Competitor Analysis Flashcards
Role of competitor analysis
Wilson and Gillian (1997)
- help management understand own competitive advantages and disadvantages
- insight on competitors past, precent and potential strategies
- basis for future own strategies or advantages
and - help forecasting returns on strategic investments
Effects of competiton
price cuts
rival products
aggressive sales reducing own sales
costly product modification (new features)
Porter’s competitive analysis framework
- Competitor’s Strategy
- Competitor’s objectives
- Competitor’s assumptions (over the industry)
- Competitor’s resources and capabilities
Key concept of competitor analysis (3)
market size
market growth
market share
BCG matrix
MARKET
share (low-high)
growth (low-high)
Star (high-high) - hold, divest or build
Question Mark (low-high) - build, harvest or divest
Cash Cow (high-low) - hold, build or harvest
Dog (low-low) - build, harvest or divest
Relative market share (BCG related)
SBU market share compared to the next rival. Divide groups by the line of 1 (40% over next of 10% market share = 4)
Market growth rate (BCG related)
high growth > 10%
BCG limitations
simplistic
correlation between market leader and cost leadership is not there
market leadership is not necessary profitable
competency sharing across portfolio not recognised
Levels of competitors (Kotler)
Brand (Pepsi and Coca Cola)
Industry (BA and Singapore Airlines)
Form (same niche needs: Speedboats and sports cars)
Generic (compete for some budget: home improvements, golf clubs)
Measure threat of competitors
number of rivals and their differentiation
entry and mobility barriers
cost structure
degree of vertical integration
Information source on competitors
- primary
- annual reports
- transcripts from analysts, company information services
- statistical data (ie government)
- newspapers,-letters
- magazines and journals
- patent registrations - secondary
- directories and year books on industries
- market research reviews
- abstracts, index journals, etc
- Government publications: ie special reports, committees, trade commissions
- Grey Literature: - compute based
- CD rom-based abstracts
- online databases of academic journals
- internet
4 Types of research
qualitative: why (observe, interview, focus groups, analysis)
quantitative: what, where and when
non-financial quantitative: ie customer service level
rankings and ratings: (using quantitive data)
Benchmarking
strategic benchmarks
- market share
- return on assets
- gross profit
functional benchmarks
- % of deliveries on time
- order costs per order
- order turnaround time
- average stockholding per order
bid data, 3 V’s, risks
large volumes of data
velocity, volume, variety
lacking support (industry and database know how) data security (leakage) data protection (legal to gather) focus on irrelevant data measuring ensure making sense out of data technical challenges