Competitor analysis in business and marketing is an assessment of the strengths and weaknesses of current and potential competitors. All organizations are bound to operate within a competitive environment, they don’t exist in thin air.
Analysis of competitors helps in discovering the weaknesses, identifying the opportunities and threats from the industry environment. Strategies involved in handling competition must be considered by the management while formulating a company’s goal setting and strategy management.
An organization involves in competitor analysis to measure or assess themselves against the competitors.
While focusing on identifying the present competitors, we must think futuristically as well.
What is Industrial Analysis?
Industrial Analysis gives information regarding the probable sources of competition. It is difficult to simultaneously focus on a potential competitor and the direct competition, but then, that’s the challenge!
Michael Porter has stated that the competitive environment within the industry depends on the 5 forces:
- Threat of new potential entrants
- Threat of substitute services or products depending upon the industry
- Bargaining the power supplies
- Bargaining power of buyers
- Last one being, rivalry among the current competitors.
These are to be used as conceptual background for identifying and analyzing the SWOT of any company.
The main objectives to conduct the competitive analysis are
- To study market
- Predict and forecast company’s demand and supply
- To formulate strategy
- Increase the market share
- Study the market trend and pattern
- To study the forthcoming trends in the industry
- To have an insight into future competitors may predict upcoming opportunities
Analysis done in various dimensions are fruitful – parameters
- Cost structures
- Business strategy and
- Exit barriers