Competitive Analysis

Helpful in strategic planning

Allows companies to:Develop competitive advantages relative to

competitorsSee competitive disadvantagesUnderstand 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.)

What would you like to know in the simulation?

Where to find data

Annual reports Industry publications Market research Speeches Newspaper articles Promotional material Trade shows

Talking with ex-employees

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

SWOT stands for:

S: Strengths W: Weaknesses O: Opportunities T: Threats

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?

To discover strengths, look at:major sources of revenue and profitmarket share of company in its various

product linesstrong brandsmarketing/advertising effectivenessavailability 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?

To discover weaknesses, look at:least profitable product lines weak brandsmarketing/advertising effectiveness Lack of focusAbility to attract talentbiggest expenditures of the companyAbility to raise money

stock price history Has the company been able to bring new

ideas and products to the market place?Employee moraleDo employees have faith in management?Competition

Opportunities 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

To discover opportunities, look at:Competitive position of the companyNew technologies that innovate or lower costs Inexpensive acquisition opportunitiesUse 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 non-competitive 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

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?

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 soundnessAbility of company to keep up with

technological changesPressure on margins Size of transactions Competition in cyberspace

Example: A start-up small consultancy business might carry out the following SWOT analysis:

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

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

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

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.