A Guide on Carrying Out Business Competitor Analysis
The business world today has become highly competitive. Many a times, if a business is not competitive enough it can easily make poor sales or even be edged out of the market altogether. This calls for careful planning and strategic management of all businesses. One of the latest management strategies that businesses today are embracing is the business competitor analysis.
Business competitor analysis is a strategy that involves a thorough evaluation of the strengths and weaknesses of both existent and potential competitors in the market. This is an important strategy that businesses used to ignore in the past. It involves getting important facts about all competitors in the market and using this to your advantage.
Importance of business competitor analysis
Even though business competitor analysis was practised in the olden days, it was done in a nonchalant manner because businesses did not realize the importance of this strategy and did not want to offend their rivals. However in the recent times, competition has driven businesses to become more proactive and use this strategy to curve for themselves a competitive edge. There are several advantages of conducting a business competitor analysis:
- Business competitor analysis can help a company realize its strengths and weaknesses in comparison to its competitors. This can help in making strategic choices and necessary changes to gain competitive advantage in the market.
- This analysis is essential in determining client preferences especially where a particular competitor seems to be making huge sales. The business can use the competitor’s strategy and even improve on it in order to attract more clients.
- Business competitor analysis can be useful in forecasting future plans of a company and also predicting how business rivals may react to these strategic plans.
How to carry out business competitor analysis
In order to carry out business competitor analysis, entrepreneurs must first identify their main rivals in the market. This can be done by carrying out surveys or even using recorded information to identify businesses that offer the same services or sell similar products to yours. There are also well defined methods of identifying and profiling business competitors. These include:
- Media scanning. Using all the materials recorded on the internet or newspapers and magazines to get information on competitors. This mainly includes advertisements.
- This involves creating a detailed chart that has the information of the competitors including their backgrounds, financial status, and business competitive strategies amongst other things.
Once the list of rivals has been made, the entrepreneur has to collect data concerning each competitor. Business experts recommend that competitor analysis information be confined to the following four areas:
- The reasons behind the successes or failures of the competitors
- The major strategies used to attract and retain clients
- The cost components of implementing strategies as well as returns
- Major challenges faced by the competitors
With all the information collected, the entrepreneurs can now focus on drawing up their own strategies. This can be a very involving and intensive process yet it yields a lot of benefits and can help a business gain a competitive advantage in the market.
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