3 min read

Industry and competitive analysis

Industry and competitive analysis are critical components of strategic planning, providing businesses with insights into the marketplace dynamics, competitive landscape, and potential areas for growth and improvement.
This analysis helps companies identify their position within an industry, understand the forces that shape the industry, recognize their main competitors, and develop strategies to achieve a competitive advantage.
Here's an overview of how industry and competitive analysis can be conducted:

Industry Analysis

Industry analysis involves examining the external environment in which a business operates to understand the industry's structure, performance, and trends.
A popular framework for conducting industry analysis is Porter's Five Forces, which assesses the competitive intensity and, therefore, the attractiveness of an industry in terms of profitability:

Threat of New Entrants: The ease or difficulty for new competitors to enter the industry affects competitive pressure and pricing.
Bargaining Power of Suppliers: Powerful suppliers can influence the terms and conditions of supply, affecting costs and prices.
Bargaining Power of Buyers: Strong buyers can demand lower prices or higher product quality, impacting profitability.
Threat of Substitute Products or Services: The presence of alternatives can limit the potential of an industry and reduce loyalty.
Rivalry Among Existing Competitors: The intensity of competition among existing players affects pricing, advertising, and innovation strategies.

Competitive analysis focuses on understanding the competitors within the industry, their strategies, strengths, weaknesses, and potential moves.
It enables a company to establish what makes its offering unique and how to leverage its strengths to gain a competitive edge.

Key components include:

Recognizing direct and indirect competitors, as well as potential future competitors.

Understanding competitors' marketing, sales, and product strategies to identify their strengths and weaknesses.

Using SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to evaluate competitors' market positions.

Keeping track of competitors' actions can provide insights into their strategies and possible future directions.

Assess the strengths, weaknesses, opportunities, and threats related to competitors to identify areas for competitive advantage.

Compare your business processes and performance metrics to industry bests or best practices from other companies.

Use tools and sources like industry reports, financial statements, social media monitoring, and customer feedback to collect data on competitors’ activities and strategies.

Evaluate the competitive intensity and profitability of an industry by examining the five forces that shape strategy.

Identify and analyze different market segments to find niches with less competition or where competitors are weak.

Publicly Available Reports: Industry reports, financial statements, and market research studies.
Regulatory Filings: Documents like 10-Ks and annual reports provide insights into a company’s strategy and performance.
Trade Associations: Often publish industry data, trends, and benchmarks.
Customer Feedback: Insights from customers can provide information on competitors' performance and customer satisfaction.
Social media and Websites: Analyzing competitors’ online presence can reveal their marketing strategies and customer engagement.

Understanding both the broader industry and specific competitors gives companies a strategic lens through which they can navigate their market positioning, innovate effectively, anticipate shifts in the market, respond to competitive threats, and ultimately, make informed decisions that drive growth and profitability.
Industry and competitive analysis are not one-time activities but require ongoing attention to adapt to the dynamic business environment.