SWOT Analysis: Analyzing Your Competition
When they’re strategically planning next moves, some organizations don’t worry about what their competitors are doing and just charge ahead. Others track every move and assess how to react. You want to fall somewhere in the middle.
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to have an understanding of what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
To help you assess whether your competitive advantage is really an advantage: Your competitive advantage, by its definition, means you have an advantage over your competition. (Flip to Chapter 5 for more on competitive advantage.) If you don’t know your competitors well enough, you won’t know whether you’re really better than they are in the areas you’ve isolated as your competitive advantages.
To understand what your competitors’ current and future strategies are so you can plan accordingly: You don’t want to be crafting the same strategy as they are or you won’t be successful. Remember, you want to be unique in the value you provide to your customers.
To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing: By looking at what your competitors are and aren’t doing, you may find out whether you’re missing something they’ve already identified. Or, conversely, if you’re on to a trend that they haven’t noticed, you may need to move faster.
The process of gathering competitive intelligence is like putting together a big puzzle. Each piece individually may not seem that interesting, but when all the pieces are put together, you have a complete and useful picture. In the same vein, if you don’t have enough information, the picture is incomplete.
Before conducting your competitive analysis, decide your basis of comparison. In other words, are you doing the analysis on a product or service? A product or service line? Or on the company as a whole?