Competitor Analysis

Introduction and Case Study:

MTC Inc. is a leading supplier rental of Heavy Equipment such as heavy equipment, Dump trucks, lifting equipments and Marine equipment for the past six decades. It has carved a niche for itself in this area and captures the largest market share in its industry and segment in Dubai.

However, now MTC wants to venture into new markets in Saudi Arabia. It has decided to open a branch in Riyadh to cater to the various segments such as construction, Oil & Gas and Manufacturing.

What do you think MTC should do to become successful in its venture? Yes, careful and thorough competitor analysis will help MTC recognize its position in the market, its competitors, and challenges etc. to help it become successful in its new venture.

Hence, analyzing its competitors will help MTC to discover its weaknesses, to identify opportunities for and threats to the organization from the industrial environment.

Also, the MTC’s management must consider the strategies of the organization’s competitors while formulating MTC’s strategy for venturing into the market.

Competitor analysis is a driver of an organization’s strategy and effects on how firms act or react in their sectors. The organization does a competitor analysis to measure/assess its standing amongst the competitors.

After doing some research we figured out the following:

There exist 124 Heavy Equipment companies in KSA alone including American Giants such as AVIS, Hertz, Budget.

Hence, you can understand that ‘Competitor Analysis’ is extremely crucial and the management should have a thorough knowledge and analysis of the general and competitive environment of the organization in order to make an organization successful.

Let us learn about ‘Competitor Analysis’ in detail.

In this article we will cover the following:

1. Explain What is Competitor Analysis
2. List the Dimensions in Competitor Analysis
3. List the Objectives of Competitor Analysis
4. Explain Competitor Analysis in Strategic Planning
5. List the Benefits of Competitor Analysis
6. Explain the Steps of Competitor Analysis
7. Explain How to Identify Current & Potential Competitor
8. Explain What is Company Profiling

Let's get started.

1- Explain What is Competitor Analysis

Organizations always operate within a competitive industry environment. They do not exist in a vacuum.

Analyzing an organization’s competitors helps an organization to discover its weaknesses, to identify opportunities for and threats to the organization from the industrial environment.

While formulating an organization’s strategy, managers must also consider the strategies used by the organization’s competitors. Competitor analysis is a driver of an organization’s strategy and affects how firms act or react in their sectors.

The organization carries out a competitor analysis to measure/assess its standing amongst its competitors. Competitor analysis begins with identifying present as well as potential competitors.

It portrays an essential appendage to conduct an industry analysis. An industry analysis gives information regarding the probable sources of competition (including all the possible strategic actions and reactions and effects on profitability for all the organizations competing in the industry).

However, a well-thought competitor analysis permits an organization to concentrate on those organizations with which it will be in direct competition and it is especially important when an organization faces a few potential competitors.

Did you know?

You have an unrealistic business plan if you ignore or minimize that impact competition will have on your business prospects.

Importance of Competitor Analysis

Competitor Analysis is a framework that strategy consultants use to scan the external macro-environment in which a firm operates. This analysis is essential for an organization to design an effective marketing strategy.

It’s a way of working out what is going on ‘out there’ so that businesses can then respond to it. It is important to note here that Competitor Analysis can be performed and is relevant for any type of business whether large, small or medium.

Also, you should keep in mind that the macro-economical factors can differ per continent, country or even region, so normally a Competitor Analysis should be performed per country.

Competitor Analysis should involve a thorough analysis of the macro-environment of a business. Thus, Competitor Analysis should analyze the four external influences on a competitors’ and his own business such as:

We will go in detail at a later time.

2- List the Dimensions in Competitor Analysis

Competitors should be analyzed along various dimensions such as their:

• Size
• Reputation
• Culture
• Growth and Profitability
• Objectives

As well as:

• Weaknesses
• Cost Structure
• Strength
• Business Strategy
• Exit Barriers

3- List the Objectives of Competitor Analysis

Objectives are numerous but the main ones are a follows:

• To predict & forecast the organization’s demand & supply
• To study the market
• To formulate strategy
• To increase the market share
• To study the market trend and pattern
• To understand the current strategy, strengths, and weaknesses of a competitor which can suggest opportunities and threats that will merit a response
• To study forthcoming trends in the industry
• To develop a strategy for organizational growth
• When an organization wants to plan for diversification and expansion plan
• To gain an insight into future competitor strategies which may help in predicting upcoming threats and opportunities

4- Explain Competitor Analysis in Strategic Planning

Competitor Analysis helps in strategic planning in the following manner:

It is a source of information for strategic planning. It helps in setting of objectives for strategic planning.

Competitor Analysis provides information that helps in synchronizing the firm’s resources and capabilities with the competitive environment.

It helps in knowing past, present, and future so that by using past and current data, future plans can be chalked out. It helps in identifying the core competencies of the firm.

It helps to build the organization’s strengths and to maximize organization’s response to opportunities. It helps also to overcome the organization’s threats and reverse the weaknesses.

Finding Information for Competitor Analysis

Information is POWER and there are many sources we can use such as:

5- List the Benefits of Competitor Analysis

Competitor Analysis is crucial in designing effective strategies for the business. Competitor Analysis helps:

6- Explain the Steps of Competitor Analysis

The following are the steps to be conducted for carrying out a Competitor Analysis:

Going through each one is beyond the scope of this article. Please inquire and will be happy to send it over.

7- Explain How to Identify Current & Potential Competitor

There are two main approaches used by organizations in order to identify their current and potential competitors.

These two approaches are:

• Industry-based Analysis
• Market-based Analysis

An ‘Industry-based Analysis’ approach will help to provide an understanding of the structure of the industry and the products offered by all existing players in the market.

Also, an ‘Industry’ is defined as a group of organizations whose products and services are close substitutes of each other.

The following are the various categories into which industries are primarily classified based upon the number of sellers involved and the degree of product differentiation:

A ‘Market-based Analysis’ approach will help to provide an understanding of a wider view of current and potential competitors by focusing on the customer need and the various organizations trying to satisfy those needs. Hence, in this approach, the companies that satisfy the same customer need are considered to be competitors rather than only those companies that make the same product. You should bear in mind that under this approach your range of current and potential competitors becomes very broad.

Hence, the competition faced by companies has been classified based on the degree of product substitution in the following categories:

8- Explain What is Company Profiling

After the first step of identifying the primary competitors, an organization then needs to assess and analyze its objectives, strategies, strengths, and weaknesses as well as their competitive reactions.

There are various factors that can determine and shape the competitors’ objectives such as the company’s size, history, current management, and economics.

Some of the objectives that can be attributed to competitors can include the following:

I will end this here but the full service includes the following:

Thank you for your attention.

Dr Hussein Saad

+961 71 493 991 [email protected]