Identify Incumbent Competitors and their Relative Strengths

An incumbent in business most commonly refers to?a leader in the industry- it could be a company or a product. An incumbent possesses the largest market share or may have additional sway within the industry.

"Over the years, I have found that most entrepreneurs do surface-level analysis of incumbents: Who are they? What do they offer? Which customer segments are they focusing on?"

To have a better understanding of incumbents and their relative strengths in a way that you can build a sustainable competitive strategy, I suggest?3?questions of concern:

1. What is the Incumbent's History?

Incumbents do not get where they are by accident. Behind them are stories of hardships, failures, and building momentum with time. Familiarising yourself with their history shows you the pitfalls to avoid and the opportunities to seize.

Consider the following:

• Strengths of the incumbents (e.g., brand recognition, economies of scale, proprietary technology),?and how they built them with time.
• Weaknesses or challenges they faced (e.g., high operational costs, regulatory pressures),?and how they navigated them to emerge as industry leaders.
• Key?products or services they offer and the current trends they seem to be pursuing.?This?will give you a future outlook for the industry.
• Technological advancements or regulatory changes impacting the?industry,?that they are concerned about.?As leaders, such things?have?a large?impact on?incumbents; having answers to these concerns could be your competitive advantage.

Watch the video below where I dispel the notion of "Overnight?Success">>>

2. Does the?Incumbent?have Pricing Power?

Pricing power is a strong indicator of who controls the market. Many companies have market penetration strategies that involve undercutting prices; however, if you find market leaders who do not undercut prices, you need to dig deeper to understand how they do it so that you can do the same.

Consider the following:

• Have there been major?strategic initiatives or recent innovations by the incumbents??This?includes investments in research and development, marketing, or other areas.?This?could give you hints on where they want to go next.
• Who are the major competitors operating in your industry in terms of market share? The level of competition (high, medium, low),?could show you the basis of their pricing power.
• Identify the factors that make it difficult for new entrants to compete?(e.g., high capital?requirements,?and strong brand loyalty). Incumbents with high pricing power tend to focus their investments in these?areas
• Recent financial performance metrics of the incumbents (e.g., revenue, profit margins, growth rates)?are another good indicator of?their pricing power. You get a view of whether they?only?dominate in market share?but also?profitability.

In the video?below?I describe why pricing power needs to be every entrepreneur's goal>>>

What is the Incumbent's Stakeholder Strategy?

Stakeholders can either accelerate or destroy a business.?Seasoned entrepreneurs understand that?to have a sustainable competitive advantage,?trust and collaboration need to be built with stakeholders.

Consider the following:

• Who are the key suppliers and partners for the incumbents??They may be loyal to the?incumbent?and hinder?any?working relations with you, so you?have to?prepare yourself.
• What is the level of dependence on specific suppliers or partners by the incumbents? Is it by choice or by industry default? High supplier power may be a barrier to entry as you would also depend on them.
• Analyze the key regulations affecting the industry-compliance requirements and how they impact competitiveness.?How?the?incumbent?relates to the Government and regulatory bodies?is a?key?insight.
• Have there been any significant financial events (e.g., mergers, acquisitions, bankruptcies) concerning the?incumbent??This?would?speak to?their capacity to acquire resources and deploy capital to initiatives.

In the video?below?I share how you can think about your stakeholder strategy>>>

With this information, you can analyze?the incumbents in your industry and assess their competitiveness.?This?works across?industries?(e.g., technology, healthcare, finance, etc.)?as well as?when considering global competitive dynamics and trade considerations. If you provide?specific data points or examples where possible, you will be able to do a more detailed and tailored analysis.?

Stay tuned for next week's discussion, where we'll explore the?key?questions?essential for gauging the incumbent competitors in your industry.

Let's continue to build business strategies together!

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