Business Plan Training Series
Section 3: CompetitionChuck Behn
1 September, 2011
1. Executive Summary2. Product/Business3. Market opportunity definition4. Competition5. Marketing & Sales6. Management7. Finance/Risks8. Appendices
Components of a Business Plan
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle. - Sun Tzu
The will to win is important, but the will to prepare is vital. - Joe Paterno
What counts is not necessarily the size of the dog in the fight, it’s the size of the fight in the dog. - Dwight D. Eisenhower
The ability to learn faster than your competitors may be only sustainable competitive advantage. - Arie de Geus
Competition brings out the best in products and the worst in man. ~Author Unknown
Never interrupt your enemy when he is making a mistake. – Napoleon Bonaparte
Competition Quotes
Identify Threats
Gather Data
Analyze Data
Compare Results
Build Strategy
Competitive Assessment Process
Identify Threats Gather Data Analyze Data Compare Results Build Strategy
Direct
•Currently providing products
•Announced entering market
Indirect
•Substitute products/services
•Similar products/services
Potential
•Looking for acquisitions
•Alliance or partner with competitor
Porter’s 5 Forces
Porter’s 5 Forces
Competitive Rivalry
Supplier Power
Buyer Power
Threat of New Entry
Threat of Substitution
Porter’s 5 Forces
Competitive Rivalry
• Switching costs• Customer loyalty• Costs of leaving market
• Number of competitors• Quality differences• Other differences
Porter’s 5 Forces
Competitive Rivalry
Buyer Power
• Number of customers• Size of each order• Differences between
competitors
• Price sensitivity• Ability to substitute• Cost of changing
Porter’s 5 Forces
Competitive Rivalry
Buyer Power
Supplier Power
• Number of suppliers• Size of suppliers
• Uniqueness of service• Your ability to substitute• Cost of changing
Porter’s 5 Forces
Competitive Rivalry
Buyer Power
Supplier Power
Threat of Substitution
• Substitute performance
• Cost of change
Porter’s 5 Forces
Competitive Rivalry
Buyer Power
Supplier Power
Threat of Substitution
Threat of New Entry
• Time and cost of entry• Specialist knowledge• Economies of scale• Cost advantages• Technology protection• Barriers to entry• Etc.
Porter’s 5 Forces
Competitive Rivalry
Supplier Power
Buyer Power
Threat of New Entry
Threat of Substitution
Identify Threats Gather Data Analyze Data Compare Data Build Strategy
Market
•How many competitors, suppliers, customers
•Competitiveness of market
Industr
y
•Standard measures
•Market leaders
•Industry organizations
Company
•Quantitative (financials, market share, IP, etc)
•Qualitative (quality, customer service, product value, etc)
What kind of information is available?
Market Competitiveness Examples
McDonald’s
Burger King
Wendy’s
Jack-in-the-Box
In-N-Out
Sonic
Whataburger
Hamburger Fast Food Market
AT&T
Verizon Wireles
s
Sprint Nextel
T-Mobile
Wireless Telecommunications Market
Industry/Company Data
Quantitative Qualitative
Financial reports Market share IP (# of patents
awarded) Products/services
offered Pricing
Quality Customer service Product value Company image/style Employee treatment Location Convenience
Identify Threats Gather Data Analyze Data Compare Data Build Strategy
What is important and what are trends?
Major differences
Similarities
Missing data
Example
Differences/Similarities
Identify Threats Gather Data Analyze Data Compare Data Build Strategy
Against
Industry
•Industry averages
•Industry standards
Against
Leaders
•Strengths
•Weaknesses
Your Company
Predictions
•Financial projections
•Other projections
How do you match against your competition?
Comparing Industry/Leaders/Self
Perceptual Map Example
Quality
Customer Service
McD’s
BK
Wendy’sSonic
J-in-Box
Identify Threats Gather Data Analyze Data Compare Data Build Strategy
Do you have the right strategy to succeed?
Market leadership
Market challenger
Market follower
Market niche
Expand the total market Defending market share Expanding market share
Market Leadership
Frontal attack Flanking attack Bypass attack Encirclement
attack Guerilla attack
Cheaper goods Prestige goods Product
proliferation Product innovation Improved services Distribution
innovation Promotion focused
Market Challenger
Cloner – counterfeiter of leader’s products Imitator – copies some aspects of leader but
differentiates in others Adaptor – builds on top of the leader’s
products by improving on them
Market Follower
End User Specialist Vertical level
specialist Customer size
specialist Specific customer
specialist Geographic
specialist
Product/product line specialist
Product feature specialist
Job-shop specialist Quality/price
specialist Service specialist Channel specialist
Market Niche Examples
Summary
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle. - Sun Tzu
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Thank You!