Chapter 5 - Competitor Analysis

Question 1

Role of competitor analysis

Answer 1

Wilson and Gillian (1997)

• help management understand own competitive advantages and disadvantages
• insight on competitors past, precent and potential strategies
• basis for future own strategies or advantages
  and
• help forecasting returns on strategic investments

Question 2

Effects of competiton

Answer 2

price cuts
rival products
aggressive sales reducing own sales
costly product modification (new features)

Question 3

Porter’s competitive analysis framework

Answer 3

1. Competitor’s Strategy
2. Competitor’s objectives
3. Competitor’s assumptions (over the industry)
4. Competitor’s resources and capabilities

Question 4

Key concept of competitor analysis (3)

Answer 4

market size
market growth
market share

Question 5

BCG matrix

Answer 5

MARKET
share (low-high)
growth (low-high)

Star (high-high) - hold, divest or build
Question Mark (low-high) - build, harvest or divest
Cash Cow (high-low) - hold, build or harvest
Dog (low-low) - build, harvest or divest

Question 6

Relative market share (BCG related)

Answer 6

SBU market share compared to the next rival. Divide groups by the line of 1 (40% over next of 10% market share = 4)

Question 7

Market growth rate (BCG related)

Answer 7

high growth > 10%

Question 8

BCG limitations

Answer 8

simplistic
correlation between market leader and cost leadership is not there
market leadership is not necessary profitable
competency sharing across portfolio not recognised

Question 9

Levels of competitors (Kotler)

Answer 9

Brand (Pepsi and Coca Cola)

Industry (BA and Singapore Airlines)

Form (same niche needs: Speedboats and sports cars)

Generic (compete for some budget: home improvements, golf clubs)

Question 10

Measure threat of competitors

Answer 10

number of rivals and their differentiation
entry and mobility barriers
cost structure
degree of vertical integration

Question 11

Information source on competitors

Answer 11

1. primary
   - annual reports
   - transcripts from analysts, company information services
   - statistical data (ie government)
   - newspapers,-letters
   - magazines and journals
   - patent registrations
2. secondary
   - directories and year books on industries
   - market research reviews
   - abstracts, index journals, etc
   - Government publications: ie special reports, committees, trade commissions
   - Grey Literature:
3. compute based
   - CD rom-based abstracts
   - online databases of academic journals
   - internet

Question 12

4 Types of research

Answer 12

qualitative: why (observe, interview, focus groups, analysis)
quantitative: what, where and when
non-financial quantitative: ie customer service level
rankings and ratings: (using quantitive data)

Question 13

Benchmarking

Answer 13

strategic benchmarks

• market share
• return on assets
• gross profit

functional benchmarks

• % of deliveries on time
• order costs per order
• order turnaround time
• average stockholding per order

Question 14

bid data, 3 V’s, risks

Answer 14

large volumes of data

velocity, volume, variety

lacking support (industry and database know how)
data security (leakage)
data protection (legal to gather)
focus on irrelevant data measuring
ensure making sense out of data
technical challenges