Competitive Intelligence For Dummies Cheat Sheet
How to Analyze Competitive Intelligence Information
How to Convince Executives to Act on Competitive Intelligence

10 Forces that Impact Businesses

Competitive intelligence (CI) enables an organization to continually evolve in response to ever-changing conditions. These conditions, or forces, can be classified into ten distinct categories. The first two forces described in this article — market and technological forces — drive the velocity of change. In other words, changes in these areas require your organization to adapt very quickly to take advantage of opportunities and avoid threats. The remaining eight forces affect the complexity of change — the number of issues that may affect an organization.

To beat the competition, you need to constantly monitor the environment in which you operate for potential opportunities and threats. Ten-forces analysis provides a solid methodology for accomplishing that goal.

Market forces

Market forces are those that affect the supply, demand, and price of products, and they come in many forms. The competitive intelligence (CI) team commonly monitors and analyzes

  • Unmet customer needs, because they can be opportunities for your company to step in

  • New competitors, especially nontraditional competitors from other industries

  • Mergers and acquisitions that may strengthen a competitor or cause you to lose a supplier or distributor

  • Changes in the supply chain and distributors

Technological forces

Technological forces impact everything from how a product is produced to how a customer uses it and may affect every function in an organization, including what products are developed, how marketing reaches consumers, and how sales are tracked and managed. Technological changes even provide new and more effective ways to handle shipping and logistics. The CI team can play an important role in your company by tracking technological forces and providing insight into how they affect each area of the company.

Economic forces

All sorts of economic events may impact a business, from an economic downturn to sequestration to the government deciding to invest in solar energy. The CI team must continually monitor for such events so your organization isn’t blindsided by something that negatively affects its bottom line and doesn’t completely miss out on a golden opportunity.

Ideological forces

To compete in the global marketplace, you need to account for differences in ideologies. In some countries, for example, bribery is not only an accepted but an expected business practice. Certain practices that are acceptable in capitalist economies are shunned in communist or socialist states. In addition, religious beliefs may affect purchase decisions in a particular country or region. Competitive intelligence can play a key role in ensuring that an organization enters an area without committing a major faux pas.

Political and governmental forces

In the United States, the government plays a major role in determining how businesses operate, especially in relation to international trade, taxation, and regulations. If your business has government contracts, these forces may have an even bigger impact. The CI team needs to keep an eye on any government and political issues that may affect your organization.

Media forces

The media, including social media, can make or break a company. A bad-news story can go viral in a matter of minutes, and if your organization fails to deliver an acceptable response, the repercussions can last for months or even years. If the bad news is about a competitor, that could be good news for you, so be prepared to jump on such opportunities. The CI team can help monitor the media so your organization isn’t caught off guard in either situation.

Psychological/sociological forces

Psychological and sociological forces often drive what consumers buy and where and how they buy it. More and more consumers, for example, are purchasing products online and reading reviews before making a purchase. As consumer behavior evolves, your organization needs to adapt to serve developing needs and preferences.

Purchase decisions are increasingly affected by social media and attitudes of others as opposed to traditional advertising.

Moral/ethical forces

The safest approach to dealing with moral and ethical forces that impact business is to operate beyond reproach so that consumers hold your organization in the highest regard. Hire quality people to work for you, associate only with reputable organizations, hold everyone in your organization to the highest standards, and always treat everyone (customers, suppliers, distributors, and even competitors) with respect.

Competitive intelligence can help your organization gain insight into what’s expected and identify behaviors that can get organizations into trouble. It can also help leaders recognize problems in the organization that need to be corrected.

Weather and other environmental forces

Environmental issues relate to weather, natural disasters, climate change, pollution, and anything else that could impact business. A hurricane or tornado can completely wipe out businesses. Major environmental events can disrupt supply chains and increase the costs of raw materials. Part of the CI team’s job is to monitor for events that could impact your organization and help develop contingency plans in response to such events.

Legal/regulatory forces

National, state, and local laws and regulations may impact everything from where you can set up shop to how much you have to pay your employees and the measures you must take to ensure their safety. Some regulations can be very costly, and failing to honor the regulations may be even more costly. Competitive intelligence can help your organization monitor for changes rules and regulations so its leaders are prepared to make the necessary adjustments.

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