Competitive
Analysis
Helpful in strategic planning
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Allows companies to:
 Develop
competitive advantages relative to
competitors
 See competitive disadvantages
 Understand competitors’ strategies
What to consider
Who are our competitors?
 What is their strategy?
 What are their strengths/weaknesses?
 How do they compare to us?
 How do they operate? (products, pricing,
promotion, production, facilities, etc.)
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What would you like to know in the
simulation?
Where to find data
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Annual reports
Industry publications
Market research
Speeches
Newspaper articles
Promotional material
Trade shows
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Talking with exemployees
Patent applications
Press releases
Government reports
or data
SWOT Analysis
SWOT analysis is a tool to analyze a
company’s current performance and
position in a marketplace
 It can be used for decision making at a
variety of levels
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SWOT stands for:
S: Strengths
 W: Weaknesses
 O: Opportunities
 T: Threats
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Strengths
What advantages do you have?
 What do you do well?
 What relevant resources do you have
access to?
 What do other people see as your
strengths?
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To discover strengths, look at:
 major
sources of revenue and profit
 market share of company in its various
product lines
 strong brands
 marketing/advertising effectiveness
 availability of skilled employees
 morale of employees
 What
is the cost of capital?
 What is the stock price?
 Does the company harness information
technology effectively?
 Does the company manage its inventories
efficiently?
 Has the company demonstrated the ability to
adapt and change?
 Is the company able to innovate?
 How has the company withstood international
competition?
Weaknesses
What could you improve?
 What do you do badly?
 What should you avoid?
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To discover weaknesses, look at:
least profitable product lines
weak brands
marketing/advertising effectiveness
Lack of focus
Ability to attract talent
biggest expenditures of the company
Ability to raise money
 stock
price history
 Has the company been able to bring new
ideas and products to the market place?
 Employee morale
 Do employees have faith in management?
 Competition
Opportunities
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Where are the good opportunities facing you?
What are the interesting trends you are aware
of?
Useful opportunities can come from such things
as:
 Changes
in technology and markets
 Changes in government policy related to your field
 Changes in social patterns, population profiles,
lifestyle changes, etc.
 Local Events
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To discover opportunities, look at:
 Competitive
position of the company
 New technologies that innovate or lower costs
 Inexpensive acquisition opportunities
 Use of internet
 Possible incentive plans to boost employee
performance
 International opportunities
 Is
there an opportunity to demand better
prices from suppliers?
 Are there opportunities to cooperate with noncompetitive businesses for mutual benefit?
 Can dead-wood work-force or product lines
be reduced to boost profitability?
 Can the company get more predictable cash
flows by establishing better relations with
customers?
Threats
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What obstacles do you face?
What is your competition doing?
Are the required specifications for your job,
products or services changing?
Is changing technology threatening your
position?
Do you have bad debt or cash-flow problems?
Could any of your weaknesses seriously
threaten your business?
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To find threats, look at:
 level
of reserves needed to withstand sudden
changes in the environment
 level of regulation in industry
 trade union activity that could have an
adverse effect
 international competitors
 amount of trained and motivated employees
 Financial
soundness
 Ability of company to keep up with
technological changes
 Pressure on margins
 Size of transactions
 Competition in cyberspace
Example:
A start-up small consultancy business might carry
out the following SWOT analysis:
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Strengths:
respond very quickly (no red tape, no need for higher
management approval, etc.)
really good customer care, as the current small amount of
work means we have plenty of time to devote to
customers
lead consultant has strong reputation within the market
change direction quickly if marketing is not working
little overhead means good value to customers
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Weaknesses:
Our company has no market presence or
reputation
We have a small staff with a shallow skill base in
many areas
We are vulnerable to vital staff being sick,
leaving, etc.
Our cash flow will be unreliable in the early
stages
Opportunities:
 Our business sector is expanding, with
many future opportunities for success
 Our local council wants to encourage local
businesses with work where possible
 Our competitors may be slow to adopt new
technologies
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Threats:
 Will developments in technology change
this market beyond our ability to adapt?
 A small change in focus of a large
competitor might wipe out any market
position we achieve
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The consultancy might therefore decide to
specialize in rapid response, good value
services to local businesses. Marketing
would be in selected local publications, to
get the greatest possible market presence
for a set advertising budget. The
consultancy should keep up-to-date with
changes in technology where possible.