Keys to competitive analysis

Looking beyond trends and drilling deeper into the analysis of the competitive landscape can help you shore up the barriers that can prevent competition from entering your market, show you weaknesses that can be exploited and position you for long-term success.

Share Menu attached Email Facebook Twitter LinkedIn | Print
Published: November 01, 2010

You know your business, but understanding the overall market environment in which you operate can seriously boost your potential. Looking beyond trends and drilling deeper into the analysis of the competitive landscape can help you shore up the barriers that can prevent competition from entering your market, show you weaknesses that can be exploited and position you for long-term success.

There are many ways to approach competitive analysis. If you’re looking to gain some real depth on the health of the industry and your positioning vs. your competition, emerging competition, and the market at large, you might consider modeling your work on a framework created by Harvard Business School Professor Michael E. Porter. Named the Five Forces model, it’s composed of: rivalry among existing competitors, the threat of new market entrants, bargaining power of buyers, bargaining power of suppliers, and the threat of substitute products or services (including technology change).

Analyzing the Five Forces can help companies anticipate shifts in competition, shape how industry structure evolves, and find better strategic positions within the industry.

"As you fill in each area, you begin to see where your capabilities set you apart and where opportunities arise."

Within each area of the Five Forces model are specific points that can help you map out and guide your analysis:

Rivalry among existing competitors

  • Number and size of firms

  • Industry size and growth trends

  • Fixed vs. variable cost bases

  • Exit barriers

  • Company goals and approaches to competing

Threat of new market entrants

  • Economies of scale

  • Geographical factors

  • Incumbents' resistance

  • Government restrictions

  • Routes to market

  • Capital requirements

Bargaining power of buyers

  • Buyer choice

  • Size/number of buyers

  • Customer switching costs

  • Product/service differentiation

Bargaining power of suppliers

  • Brand reputation

  • Size/number of suppliers

  • Cost of switching suppliers

  • Relationships with customers

  • Product/service differentiation

Threat of substitute products or services

  • Price/performance trade-off

  • Fashion and trends

  • New technology

Additional resources:

For more on the Five Forces model, please visit the Institute for Strategy and Competitiveness website.

846 Views