7 competition questions
7 competition questions
Competitor Concentration*
- #
- Revenue market share concentration
Competitor behaviors
- Target customer segments
- products
- pricing strategy
- distribution strategy
- brand loyalty
Best practices
- Are they doing things we’re not?
Barriers to entry*
- do we need to worry any new entrants to market?
Supplier concentration*
- optional: ex: Microsoft or Intel in PC Market… use full 5 forces if this is a likely issue
Industry regulatory environment
Life-cycle of industry
Why ask Competitor Concentration* ?
Why ask Competitor Concentration* ?
Why: understand how much power competitors posses
- How many competitors are there?
- How big are they in terms of sales or market share?
Where does competitor power come from? (2)
Where does competitor power come from? (2)
- a dramatically lower cost structure that can support lowering prices while maintaining profitability
- a concentration so high that customers have no alternatives (competitor can raise prices and “force” customers to buy because they have few or no other choices).
Competitor Behaviors (4)
Competitor Behaviors (4)
- What strategic choices do key competitors make?
- Who are their customers?
- What products do they offer?
- What distribution channels do they use?
a single piece of information isn’t often very useful by itself—comparing it to something else increases its utility. Once you know what top competitors are doing, you can compare that information to your findings from both your customer and company analyses
why ask about best practices?
why ask about best practices?
- understand what comp advantage competition has
- If your client can’t beat the competitor in its area of strength, one strategic option is to refocus your client’s business on a competitor’s weakness
- low price vs high price high quality
why ask barriers to entry?
why ask barriers to entry?
game plan for market entry/ new product
why ask supplier concentration?
why ask supplier concentration?
The key here is to determine how concentrated or fragmented the suppliers are.
If many suppliers all do a pretty good job, that means it’s a competitive market that you don’t have to worry too much about.
But if the suppliers are highly concentrated or if one supplier has a monopoly- could influence industry behavior
Regulatory environment
Regulatory environment
- any changes in the regulatory environment? (create new opportunities)
I will rarely finish the entire business situation framework. By the time I’ve worked through part of the framework, I usually discover some key insight that gives me a feel for what’s really going on in a case. Once this happens, no matter where I am in the framework, I immediately synthesize, revise my hypothesis, and determine what is the least amount of information I need to test my revised hypothesis.
