Competition Analysis

Question 1

Competition analysis

Answer 1

Here are the smart notes:

Analysing Competition

• Analysing competition is crucial in strategic position analysis.
• Assess the strength of competition in a market and understand what makes it weak or strong.
• Monitor major competitors to gain a competitive advantage.

Porter’s Five Forces Model

• Framework for analysing the strength of competition in a market.
• Not used to analyse individual competitors or differentiate firm performance.
• Used to explain why some industries are more profitable than others.

Profitability and Competition

• Profitability is affected by the strength of competition.
• Stronger competition leads to lower profits.
• Two factors affect profitability:
  
  1. Industry structure and competition.
  2. Sustainable competitive advantage.