Competitive analysis is a process that involves relating the company to its environment. Competitive analysis helps to identify the strengths and weaknesses of the company, as well as the opportunities and threats that affect it within its target market. This analysis is the basis on which the strategy will be designed; for this, we must know or Intuit as soon as possible:
- The nature and success of the likely changes that the competitor may adopt.
- The probable response of the competitor to the possible strategic movements that other companies may initiate.
- The reaction and adaptation to possible changes in the environment that may occur from the various competitors.
The competition is integrated by the companies that act in the same market and perform the same function within the same group of clients regardless of the technology used for it. It is not, therefore, the competitor that manufactures a generic product like ours, but one that satisfies the same needs as we do concerning the same target audience or consumer, for example, thematic parks can compete in the cinema, since both are embedded in leisure.
To give an accurate idea of the importance of competitive analysis, we must refer to the business strategy planning process, which answers three key questions:
- Where are we? Answering this question, we are forced to analyse the situation that responds to the position we occupy.
- Where do we want to go? It supposes a definition of the objectives that we want to reach and to which we need to move.
- How will we get there? At this point, we must point out the development of actions or strategies that we will carry out to reach the objectives and if we will be able to withstand the rhythm.
About the analysis of the situation, from which we start to carry out the strategic planning process, and from which we can determine the opportunities and threats, weaknesses and strengths of the organisation, we must focus, in turn, on two types of analysis:
- External analysis. It involves analysing the environment, the competition, the market, the intermediaries and the suppliers.
- Internal analysis. It involves analysing the organisational structure of the company itself, and the resources and capabilities it has.
Top 5 Competitive analysis tool to choose your competitor