Analysing Competitors and Charting your Competitive Strategy
The technique of ‘charting the competition’ is extremely effective in analysing competitors’ strengths and weaknesses in relation to your own business. Using clearly understandable charts, it dramatically illustrates the competitive landscape. Most importantly, however, it allows executives to develop competitive strategies which will beat the competition and from which clear and realistic action plans can be derived.
The methodology is as follows:
- Decide the ‘factors of competition’, ie the things a customer takes into account before deciding to buy from your business (eg location, price, reputation, service, etc). Of course these will vary according to the industry you are in.
- Give every competitor a score (out of 10) for each factor of competition. Plot these scores on a chart (graph) to give a distinctive ‘profile’ for each competitor. (Ideally this process should involve extensive research, but can work well using the existing knowledge of experienced company staff.)
- Score your own business against the factors of competition. Evaluate the current position honestly. Plot the chart.
- Looking at all the charts together, decide the profile your business needs to have in order to compete successfully. Remember that you need not (and indeed cannot) be the best at everything. Choose the factors of competition at which you can excel, and which will give your business a clear market position. Plot the chart.
- Now remove competitor data to clearly see the gap between (a) where your business is now, and (b) where you need it to be.
- Draw up action plans to close the gap for each factor of competition.
References and Further Reading
W.Chan Kim, and Renee Mauborgne. Charting Your Company’s Future. Harvard Business Review, 2002