Analysing Competitors and Creating

a Competitive Advantage

Potential entrants

Suppliers Buyers

Substitutes

Industrycompetitors

Rivalry amongexisting firms

Bargaining

Power

Bargaining

Power

Threat fromnew entrants

Threat ofsubstituteproducts

The Porter model of competitive Industry structure

Strategic position

Competitor analysis1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

Competitor

analysis seeks

to answer five

key questions

1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

• Product form• Product substitutes• Generics• New entries

Competitor analysis•Identify competitors

1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

• Financial• Technical• Managerial• Marketing assets• Strengths and

weaknesses

Competitor analysis

•Audit competitor capabilities

1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

• Build• Hold• Harvest• Growth directions

Competitor analysis

•Infer competitor objectives and strategic thrust

1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

• Target segments• Differential advantages• Competitive scope• Cost leadership

Competitor analysis

•Deduce competitor strategies

1. Who are our competitors?

2. What are their strengths and weaknesses?

3. What are their strategic objectives and thrust?

4. What are their strategies?

5. What are their response patterns?

• Retaliatory• Complacent• Hemmed-in• Selective• Unpredictable

Competitor analysis

•Estimate competitor response patterns

Competitor identification

Product form competitors• Technically similar products

Product substitutes• Technically dissimilar products

Generic competitors• Products that solve the problem or

eliminate it in a dissimilar way

Potential new entrants• With technically similar products• With technically dissimilar products

The competitive arena

Company capability profilesOur company Competitor 1 Competitor 2Key success factor

Innovativeness

Financial strength

Technical assistance to customers

Product quality

Well-qualified workforce

Access to international distribution channels

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Competitive Strategy Options

Sources of competitive advantage

• Superior skills.

• Superior resources.

• Core competences.

• Value chain.

Grolsch

Grolsch’s competitive advantage lies in its long history and core competence in the brewing industry

The value chain

Creating a differential advantage

Differentialadvantage

Product

PromotionDistribution

Price

Singapore Airlines

Singapore Airlines

differentiates by offering

exceptional value

Cost driversEconomies of scale

Capacity utilisation

Interrelationships

Timing

Location

Institutional factors

Learning

Linkages

Integration

Policy decisions

Costs