Developing CI Strategies – Planning A Competitive Review

The Competitive Review process involves 6 basic Steps:

Step 1: Plan your review at 3 levels:

• Strategic level
• Tactical
• Operational

Step 2: Identification and classification of your competitors – current and future.

Step 3: Define Intelligence Requirements – focusing on needs (vs. wants) and a specific outcome you want to achieve.

Step 4: Determine how your results will be credible, trustworthy and actionable by decision makers.

Step 5: Develop a systematic intelligence collection and analysis capability then gather intelligence developing profiles and “apples-to-apples” benchmarks for each competitor.

Step 6: Establish a two way communications channel between theCI analyst and the user(s) of the information. Disseminate and explain findings and make any necessary refinements on intelligence requirements (Begin Step 3 again).

This section will focus on the first important step.

Defining the terms: Objectives, Goals, Strategies and Tactics

There is usually a lot of confusion between the terms Objectives, Goals, Strategies and Tactics so it is useful to define these terms.  According to the Merriam Webster Collegiate Dictionary these terms in this context are defined, as follows:

Objectives: something toward which effort is directed : an aim, goal, or end of action b : a strategic position to be attained or a purpose to be achieved by a military operation.

Goals: the end toward which effort is directed. 

Strategies: a careful plan or method : a clever stratagem b : the art of devising or employing plans, tactics or stratagems toward a goal c : the science and art of military command exercised to meet the enemy in combat under advantageous conditions.

Tactics: a device for accomplishing an end 2 : a method of employing forces in combat.

First, Establish Your Objectives

A typical Competitive Review has the following 4 Key objectives:

 

1.Identify competitor strategies – now and in the future.

2.Predict and monitor competitor’s likely responses to your strategies and tactics.

3.Understand a competitor’s strengths, weaknesses, opportunities and threats (SWOT).

4.Determine how well a competitor’s capabilities and resources are to support their chosen strategies to gauge the likelihood of success.

Key ingredients in any competitive review are that the findings be: timely, trustworthy, concise, relevant, actionable and accessible to key decision makers. From this basic framework, establish specific Objectives around the competitor you are profiling. Objectives must be:

• A single one line statement
• Specific in focus
• Measurable

They can also:

• Relate to a specific time period
• Relate to a specific competitor

Developing Strategies and Tactics

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before the defeat.”

- Sun Tzu ”The Art Of War,”

Strategy may be defined as the general scheme of the conduct of a war, tactics as the planning of means to achieve strategic objectives.

By achieving the Objectives of the competitive review, the investigation strategy can then be structured. Depending on the needs, some strategies may entail:

• A SWOT analysis to understand the competitor’s strengths, weaknesses, opportunities and threats.
• Determination of a company’s strategy: low cost provider, vertical niche focused and/or products and services differentiation.
• Leverage: Research into partnerships, relationships, clients, technology solutions, and platforms.

Additional information on Strategies and Tactics can be found at http://www.bartleby.com/65/st/strategy.html

Media Analysis

The media is certainly a primary source in researching competitors. Newspapers, magazines, newswires, and publications all contain pieces of information that may assist you in formulating an opinion and conducting a competitive review.

When investigating a competitor, always start locally or regionally and “fan out” from there. In many cases, companies you are reviewing are more prominent in their locale or nearest major city and these publications will often contain more details about the competitor than national publications. Events such as: layoffs, facility changes, accidents, fines, large account awards/lossess or changes in management will receive local press before they reach the national newswires.

Online newspaper databases will help you locate these publications. AJRNewslink is an example.

Click here for other available sources.

Media Analysis Tips

Examine all sections of the paper. Don’t overlook help-wanted ads, legal notices, and editorials. They often provide insight and assist in formulating conclusions about strategy changes, product improvements, possible expansion, or news about key personnel. For example, if a company is continually advertising for technology positions, it could imply that it is expanding its computer structure. Observing what skills are being recruited is an important technique in uncovering something new the competitor is doing.

Note that job sites and the company’s website will also assist in this research – but be careful about the bias inherent in press releases.

Click here to view some of these resources.

Newswires are also useful in CI research. Many newswire stories never make it to the newspapers or if they are printed, only contain a portion of the whole story. They also provide periodic updates; so, if information was inaccurate or changed, the newswire story will be updated accordingly.

Trade and Industry publications are another source for conducting media analysis. To those inside a particular industry, these publications are of great value. Trends, news in the industry, rumors, vendors, key players, and other informative bits of information can be gathered. More in-depth details on a particular industry is provided, which may facilitate in a review of competitors’ actions.

Trade journal and association sources are available here.

Competitive Intelligence Research Tips

The first step in any research endeavor or project is to define the research problem. An information gap is then recognized and research will be performed to close the gap giving management a clearer idea of how to proceed strategically. Alan R. Andreason has developed an interesting research model that essentially, identifies what the final stage of the specific marketing or management decision will be and then works backward. He recommends the following procedures:

• Determine how the research results will be implemented (which helps to define the problem). The work backwards from here.
• To ensure the implementation of the results, determine what the final report will contain and look like.
• Specify the analyses necessary to “fill the gaps” of information.
• Determine the kind of data that must be assembled to carry out these analyses.
• Scan primary and secondary sources to identify where this data can be obtained and whether or not it can be obtained quickly and cheaply.
• If no such easy way out exists then design instruments and a sampling plan that will yield data to fit your requirements.
• Carry out the field work. Be sure to collect only information that will help you solve your specific problem.
• Do the analysis and watch it have its intended effect. (1)

 Researching “Outside the Box”

The Competitive Intelligence is found in a variety of areas. Sometimes, however, the most useful information is uncovered in areas unconnected with the question or decision at hand. As you do your research, you may also have times when you just can’t find the answers you need. It is at these times when researching “outside the box” is necessary.

Words of Wisdom

“The most meaningful way to differentiate your company from your competition, the best way to put distance between you and the crowd, is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or lose.” 
- Bill Gates, Business @ the Speed of Thought: Using a Digital Nervous System

Researching “Outside the Box” (Continued)

There are many additional forms of “Out of the Box” Research sources available in the CICLibrary. Here are a few examples of these non-traditional sources of information.

Determine Your Standard Industrial Classification (SIC) Code

In order to place your product within its proper industry you should know what SIC (Standard Industrial Classification) code applies. The SIC Code is a U.S.based system developed to classify or group industries. Many public Web sites, including OSHA’s SIC Search allow you to search by your product type and select the appropriate SIC code for each product. Once you have identified the relevant SIC code, you need to do some research to determine what other companies operate in your business – in other words, your competition. You can obtain this company information from sources such as Hoover’s Online and other business sites.

Trade, Business and Commerce Associations

Trade association documents often include valuable data that the industry group has gathered and analyzed. They are often available online.

Click here to view resources that might provide these documents.

Some trade associations provide information packages when requested. The American Society of Association Executives provides a database to locate these organizations.

Executive Compensation

Analyzing executive compensation figures is another example of researching “outside the box”. Industry standards can be viewed and conclusions can be made concerning retention of employees. Paywatch.org is a helpful site for this topic. It contains information directly from SEC filings. For companies not listed in this site, refer to the SEC EDGAR site and research individual companies proxy statements. See also Rob Magazine “Top 1000 Paid Executives”

Political Contributions – By Industry, Company, Politician and Political Party

Tracking competitors’ political contributions through The Center for Responsive Politics also assists in drawing conclusions about the competitor. Numerous databases are featured which may provide useful facts and figures about the soft money, PAC and other political contributions being made to political parties and politicians.

Conference Calls

Conference calls are another avenue to take when conducting a competitive review. By analyzing calendars of conferences, you may uncover the speakers are actually your competitors. By accessing the conference papers, patterns, presentations and trends in the industry can be determined. You can uncover what the competition is planning straight from the source and learn the names of some of your competitor’s top employees. In many cases, conference proceedings occur online facilitating in the retrieval of documents.

Industry Analysis

Industry Analysis is helpful in compiling a competitive review for the purposes of keeping up with developments in industry or industry trends, watching developments or trends in another industry, moving into a new industry, or considering an acquisition or merger.

When studying an industry, it’s necessary to comprehend fully the direction the industry is taking. To make this determination, it’s important to analyze:

1. History of the Industry accessible through trade publications or associations and industry-specific databases.
2. Industry trends also obtainable through trade publications or associations and industry-specific databases.
3. Forecasts on the size of the industry.
4. Customers for Products or Services
5. Potential New Customers
6. Changes Affecting the Market such as import patterns
7. Market Forecasts
8. Distribution Methods
9. Product Leaders
10. Potential for duplication or complimenting products or services
11. Price Structure/ Price Margins
12. Technology being used / Emerging technologies and trends
13. Fiscal position
14. Productivity

Researching Business Websites / Monitoring Competitors

There is an abundance of business-to-business sites available over the Internet. These sources can be located through search engines.

Click here to view some recommended search engines.

Some important business information sites to include in your research are:

• Hoovers
• Red Herring
• Company profile sites
• Sites featuring recent mergers/acquisitions.

See also the Toolbox section entitled: Research Tips>

Free CI tool called C4U Scout: is a link utility used to browse through your competitor sites and to check whether changes have occurred in them. C4U automatically scans the Web pages you specify, checks the types of changes you are interested in, and delivers a summary of the changes. Program is:  easy-to-use, excellent for checking news sites, job opportunities sections, press releases and constantly updating sites. It even sets scans on an interval to your liking. -Download

Researching Business Websites / Monitoring Competitors

Many business sites constantly monitor selected competitors at no cost. Companysleuth allows you to monitor public companies and provides daily reports in areas you have selected. There is a feature titled “Who is Watching Me?” which assists you in defensive CI.

Other CI monitoring sites include:

• Newsedge
• Tracerlock
• Excite
• Pumatech - alerts you to changes in competitor’s web site

Public Records and Government Databases

Public records can be gathered at the national, state, and local government level. They offer many services to assist you in conducting your CI review. Some ways they assist include:

• Identifying corporate relationships (Obtainable through the Secretary of State)
• Identifying affiliations of officers/directors of companies (Obtainable through online public record services)
• Discovering adverse information (Obtainable through credit reports, bankruptcies, etc.)
• Identifying and locating assets and identifying a company’s real property holdings (Obtainable through state or local contracts, grants, applications).

• Public Records and Government Databases
• Government databases also provide services important for competitive intelligence. The information provides insight on which companies are selling to the government. State government agencies can be identified where the competition is selling goods and services. SEC Filings reveal all the required filing information by competitors. A helpful site to refer to for this information is NASIRE.

Government Online Resources

Biz.com; CBDNet; Congress and Government Resources; Environmental Protection Agency; Federal Register; Federal Web Locator; FirstGov; Infomine; National Insititute Of Standards and Technology; National Science Foundation;Occupational Safety and Health Administration; Securities and Exchange Commission; U.S. Bureau of the Census; U.S. Business Advisor; U.S. Department of Agriculture; U.S. Department of Agriculture (USDA) Economics and Statistics; U.S. Government Online Gateway; U.S. National Technology Transfer Center;[CLOSE]

Analyzing Competitor Websites

Competitors’ websites are a highly recommended competitive intelligence source. It is a free, content-rich starting place to begin your research. It’s also advantageous in uncovering information on small or new companies where traditional information about a young business is difficult to locate elsewhere.

Key sections of the site, listed in order of priority, to take note of include:

• People/Management team - identifies key individuals and allows you to do more thorough research on executives’ management styles and accomplishments elsewhere.
• Corporate philosophy - will assist in understanding their strategy and planning your own direction
• Company history - older companies often provide more information; by analyzing prior behaviors, future actions can be predicted.
• Investor relations - information for shareholders is always useful to competitors.
• Products and services - gives clues on how competitor is positioning these products and services and assist you in determining if your products and services need improvement and are of comparable value.

• Partners and subsidiaries – allows you to analyze these websites and examine their stature and selling points.
• Accomplishments/Demos of products – will involve what the competitor views as their prime selling product or service.
• Location(s) of company – often lists detailed information on employees and branches of company.
• Press releases – often announce new partnerships, products and services being introduced.
• Employment opportunities – identifies the area the company needs assistance in and reveals possible areas of weakness, expansion or development.
• Company publications – posted company magazines, white papers, brochures, reports, etc. provide insight into current projects, employees, research and development, strategies, etc.

Websites are usually an updated resource providing both general and inside knowledge about the company. However, professionals still warn users to exercise caution when studying competitors’ websites. Information may be deliberately misleading and overly optimistic. Negative topics are rarely included yet often do exist. It is important to research other sources and validate what is uncovered here for credibility.

Competitive Analysis

There are a variety of different tools and approaches for gathering intelligence and analyzing competitors. Jan Herring suggests there are 5 basic types of intelligence analysis:

1. Preventing surprises to the organization by providing early warning
2. Supporting the decision-making process.
3. Competitor assessment and monitoring.
4. Intelligence assessments for planning and strategy development.
5. Analysis as a key part of the collection and reporting process. (1)

A 1998 SCIP membership survey asked members what methods of analyzing CI information were most used, and which Tools for Analyzing Information were rated most effective:

[Percent using each tool]:

• Competitor profiles: 88.9%
• Financial analysis: 72.1%
• SWOT analysis: 55.2%
• Scenario development: 53.8%
• Win/loss analysis: 40.4%
• War gaming: 27.5%
• Cojoint analysis: 25.5%
• Simulation/modeling: 25%

Effectiveness of Analysis Tools

[Percent rating each tool extremely or very effective]

• SWOT analysis: 63.1%
• Competitor profiles: 52.4%
• Financial analysis: 45.5%
• Win/loss analysis: 31.4%
• War gaming: 21.9%
• Scenario development: 19.2%
• Co-joint analysis: 15.8%
• Simulation/modeling: 15.4%

Competitor profiles, Financial analysis and SWOT analysis are the most popular and effective CI tools and therefore, will be featured throughout the Competitive Intelligence Center (CIC). (2)

Words of Wisdom

“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.” - Arnold Glasgow (1908-1970)

 

If you have any suggestions, comments or questions, please contact The Competitive Intelligence Center.

Acknowledgements:

(1) Herring, J. (1996) “Creating the intelligence system that produces analytical

intelligence” from The Art and Science of business intelligence analysis (pp53-81).

(2) Source: Survey of SCIP membership conducted by The Pine Ridge Group, Inc. and the T.W. Powell Company, 1998. 3) Prescott, John E. (2001 John Wiley & Sons, Inc.) Proven Strategies in Competitive Intelligence – Lessons from the Trenches, p216-239.

Formulating Competitive Intelligence Objectives

When conducting a competitive review, there can be several intelligence topics to be explored, an exorbitant amount of information and sources available and the end users may become overwhelmed if there is not a primary focus to your research.  Initiating a competitive review requires one mandatory step. The direct need for the competitive review needs to be defined – what specific questions are to be answered to serve the needs of decision makers?  If this is not done, the CI effort may prove to be worthless.  Successful Competitive Intelligence requires acquisition, analysis and interpretation of information to meet the needs of the decision maker. Always formulate the CI objectives first.

Presentations

1) Introduction to Competitive Intelligence

Click here to view a brief introductory presentation on Competitive Intelligence.

2) Conducting a Competitive Review

Click here to view a presentation on the steps used in the review.

3) Analyzing Competitive Forces Using Michael Porter’s “Five Forces”

Analysis

Introduction to Michael Porter’s Five Forces Analysis

4) Preparing a S.W.O.T. Analysis

Click here to view a brief introductory presentation on preparing a Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis – which is a great foundation for Competitive Intelligence Activities.

NOTE: These presentations are in PowerPoint. If you do not have PowerPoint installed on your computer click here to download a free PowerPoint Viewer from MicroSoft.

There are 6 Steps in the Basic CI Process

1. Planning – at the strategic, tactical and operational levels. CI coordination and integration is key. Learn More>
2. Identification and classification of competitors – current and future potential competitors. Learn More>
3. Define Intelligence Requirements – focusing on needs (vs. wants) and a specific outcome you want to achieve. Learn More>
4. Determine how your results will be credible, trustworthy and actionable by decision makers.
5. Develop a systematic intelligence collection and analysis capability then gather intelligence developing competitor profiles with “apples-to-apples” comparative benchmarks.
6. Establish two way communications between the CI analyst and the users of the information. Disseminate and explain findings and make necessary adjustments to intelligence requirements and begin Step 3 again.

Then, by defining the needs of the research, the competitive review strategy can then be structured. Depending on the needs, some strategies and tactics may entail:

• Operational review: A review of the organization’s operations to determine what is actually known about the competitors; their people, their operations, strengths, weaknesses, opportunities and threats.
• Products and Services Review: Determination of a company’s products, services, points of differentiation, pricing, benefits, features, methods of production and distribution.
• Alliances: Research into partnerships, vendors, technology solutions, and platforms.
• Competitor Matrix: Development of a list of companies with products and capabilities in the same industry sector containing similar attributes. Consider applying the Market Effectiveness Capabilities Assessment (MECA) methodology developed by Jean-Claude Larreche in his Competitive Fitness of Global Firms initiative at INSEAD.

Learn More>

• Compilation of surveys/overviews of trends: Interact with marketing and sales people to obtain their views.
• Acquisition of facts: figures and financial data.
• On-site observations
• Analysis and recommendations: the most important steps!

Download a Whitepaper entitled: “Using Sales and Marketing Intelligence to Improve Performance”.

 

Words of Wisdom

“Plans are nothing; planning is everything.”- Dwight D. Eisenhower

If you have any suggestions, comments or questions, please contact The Competitive Intelligence Center.

Compiling a Competitive Review

View the Competitive Intelligence Center’s complimentary step-by-step, “best practices” competitive review process.

CIC Presentations on Box.net

Introduction to Competitive Intelligence

http://www.box.net/shared/pfcpstqt8gq5g7g666nr

SWOT Analysis

http://www.box.net/shared/4a77jxprjgza111hn3ac

Five Forces Analysis

http://www.box.net/shared/4nqj2x1a9977t4b81lig

Competitive Reviews

http://www.box.net/shared/8vz20278sohrx6r62r9g

NOTE: These presentations are in PowerPoint. If you do not have PowerPoint installed on your computer click here to download a free PowerPoint Viewer from MicroSoft.

Words of Wisdom

“Speed is the foreshortening of product life cycles from years to months or even weeks. And, Speed is the worldwide electronic network over which financial institutions transfer money at the rate of $41 billion a minute. For the individual, Speed is scores of messages a day, creating near continuous communication. Miss a day and your world moves on without you. Accelerated product life cycles and time-based consumption have become part of the business lingo. These experiences change people’s perceptions. We now expect real-time responsiveness, 24 hours of every day of the year. This premium placed on anytime, real-time responsiveness is just one example of the growing importance of intangible value.”

- From the book Blur: The Speed of Change in the Connected Economy, by Stan Davis and Christopher Meyer

Sample Reports

Compiling the review can be difficult. The review can be organized potentially into many optional formats depending upon your intelligence requirements and access to rich and reliable intelligence sources. Depending on the type of the review you chose, you can use one or more of these 6 formats as a base for compiling your information.

Each category links to report guidelines for your use.

Company Profile Report

Merger/Acquisition Checklist

Employment Report

Company Strategy Report

Products and Services Report

Finance Report

Download this PDF file format “Sample Profile” as a base for creating your own competitive review or profile.

To access the format “Downloads and Whitepapers section click here“

Words of Wisdom

“A competitive advantage in terms of capabilities is the ultimate form of competitive advantage.”-Jean-Claude Larreche, “Beyond Strategy: Market-Based Capabilities”, p87-88, Business The Ultimate Resource, Bloomsbury Publishing, 2002.

If you have any suggestions, comments or questions, please contact The Competitive Intelligence Center.

Introduction to Competitive Intelligence

Understanding Competitive Intelligence

Successful CI enables companies to predict a competitor’s next move and respond more quickly. By knowing the competitors’ strategies, their weakness could potentially be transformed into your strength. CI also allows companies to proactively stay ahead and anticipate changes occurring in their marketplace and industry. In short, competitive intelligence is used primarily to gain or maintain competitive advantage.

Competitive Intelligence as A Critical Success Factor

Competitive Intelligence has become a necessity for a vast number of people in the corporate world. The Society of Competitive Intelligence Professionals (SCIP), mentioned previously, is a significant resource for providing information on Ethical standards, education, and training relevant in obtaining competitive intelligence. Its annual membership numbers have risen substantially in the past few years.

The Stakes Are Rising

Due to the rapidly changing face of business, competition now spreads across the continents and information technology networks. Technology is speeding the flow of transactions, decisions, and knowledge-flow and as a result, corporations are demanding more CI information. Some firms depend on their senior-level management to locate key information on competitors.

Others have a centralized internal division solely for the purpose of conducting CI reviews. Still others spend large amounts of money through the employment of Competitive Intelligence companies, in exchange for a wealth of competitor information. CI teams come in all sizes, yet it must be realized that information must reach the right people at the right time. Communication, credibility, collaboration, teamwork, consistency and confidentiality are key elements in conducting CI.

By understanding competitive intelligence and how important it has become in businesses all over the world, it is evident it has become a requirement in corporate management’s strategies and decisions and a necessity to master and comprehend in order to succeed.