Understanding the Business Competitive Environment
When designing a new strategy for the company, a firm must fully analyze the respective competitive environment in order to come up with decisions that are beneficial. A company must take into account even the minutest details regarding the competitors to understand the factors driving the success of the competitors. PEST analysis, SWOT analysis and Michael Porter’s 5 forces analysis are some ways that develop an understanding of the success of the competitor firms (Porter, 1998).
Some questions are given below which help the companies to understand the importance of their expertise and their operations. . How strong is the team of the members at the competitor firm? A firm must focus on their own team and work towards the exploitation of expertise of these members. The other firm may perform well because of their specialization in that field. However, at your company you should make your team strong to gain a competitive edge. 2. What are the practices (operations) adopted by the competitor firm? This helps the firm to gather knowledge on the procedures and methods adopted by the competitor firms.
This knowledge helps the company in making its processes efficient in order to stay ahead in the industry and also so that the firms practices can become a benchmark. (Withrow, 2006). 3. What markets or market segments your competitors serve? This question helps the firm in realizing the markets that are being catered and the markets that can be tapped. If the company focuses on itself, it can capture the market of its competitors and create a loyal customer base for itself (Withrow, 2006). 4. What are the competitor’s products/ services prices and promotion strategy?
This helps in gaining an insight about the strategies that the companies adopt in order to capture the market. The firm must focus on improving its strategies of cost cutting and adopting to the technological changes so that it can remain ahead of the competition. (Ward, n. d. ) 5. Why customers buy from your competitors? The answer to this question tells about the added value that customers receive as a result of using the competitor products. The firm must focus on providing best services to the customers so that they remain loyal.