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Competitor profiling whitepaper april-2012

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Competitor analysis is a key input in the strategic planning process. It enables the organization to analyze its own position in the industry. While the need for the profile is generally clear, the …

Competitor analysis is a key input in the strategic planning process. It enables the organization to analyze its own position in the industry. While the need for the profile is generally clear, the end users are typically ill-defined. As a result, the information presented is misaligned with their needs, resulting in a sub-optimal return on the investment made by the analysts. This white paper presents a framework for efficiently creating competitor profiles that meet the needs of multiple users in the organization.

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  • 1. Competitor profiling:Many needs behind the need ValueNotes White Paper April 2012
  • 2. Competitor analysis is a key input in the strategic planning process. It enables the organization to analyze its own position in the industry. While the need for the profile is generally clear, the end users are typically ill- defined. As a result, the information presented is misaligned with their needs, resulting in a sub-optimal return on the investment made by the analysts. This white paper presents a framework for efficiently creating competitor profiles that meet the needs of multiple users in the organization. Executive Summary Profiling is a key tool that enables organizations to undertake competitor analysis. They: o Cut out the “noise” and provide relevant insight into the hearts (resources,Competitor profiling: Many needs behind the need capabilities and cultures) and minds (objectives, strategies and assumptions) of an organization‟s competitors o Enable an organization to flag off areas that need attention and further investigation Competitor intelligence needs of different functional units vary. In order to avoid information overload to users of the profiles from different functional units, their individual needs must be recognized. Further, an understanding of key pain points of each internal client group is essential for customizing analysis and presentation to requirements. To derive maximum value from competitor profiles, competitive intelligence (CI) professionals need to master the art of packaging for different customer groups. The old „everything for everybody‟ adage needs to be re-looked at, to instead deliver ‘just the right thing for each person’, making CI dissemination more meaningful. White paper | April 2012 | Competitor profiling: Many needs behind the need 2
  • 3. Contents 1. What are competitor profiles and how do they fit into competitor analysis? ................................... 4 2. Why are they still relevant, in the age of information? ........................................................................ 4 3. Who are the different internal clients for competitor profiles and how do their needs differ?....................................................................................................................................................... 5 4. How do we make the most out of competitor profiles, for these different users? ............................ 6 5. A sample competitor profile framework ............................................................................................... 7 6. Final thoughts… ..................................................................................................................................... 8Competitor profiling: Many needs behind the need White paper | April 2012 | Competitor profiling: Many needs behind the need 3
  • 4. 1. What are competitor profiles and how do they fit into competitor analysis? Competitor analysis is a key activity in the strategic planning process. It presents to the decision-makers; the evolving competitive environment in which a company operates, a comprehensive view of competitors, competitor benchmarking, analysis and recommendations for current and future strategy development, and forecast of future business opportunities and threats. Tracking the competition is critical in understanding current behavior and predicting future direction. Profiling is a key tool that enables organizations to undertake competitor analysis. The information areas in a profile serve to provide fresh insight into the hearts (resources, capabilities and cultures) and minds (objectives, strategies and assumptions) of an organization‟s competitors. Competitor profiles thus enable an organization to undertake extensive competitor analysis, by identifying key information (for each function) to flag off areas that need further investigation. E.g. If the competitor‟s margins are much higher than ours – we know we need to look at our own and their cost structures. Similarly, for the marketing function, if a competitor website ranks higher on SEO, marketing needs to sit up and take notice. Flagging off top-level warning signs is a critical function of competitor profiles. Depending on the current level of knowledge, we may choose to start with a basic profile of a competitor and move to increasing levels of granularity, based on our diagnosis of which areas of the competitor‟s operations pose a threat to our position and performance.Competitor profiling: Many needs behind the need 2. Why are they still relevant, in the age of information? In today‟s „information overload‟ age, there is a wide array of information available about a company‟s competitors. However, it is more than likely that not all of this information will merit equal importance in a competitor profile. Profiles help filter out the noise, presenting only the most relevant data and top-level analysis to stakeholders. As competitive intelligence gathering moves to a dynamic, multi-channel method, competitor profiles must evolve and deliver more value accordingly. What an inebriated executive may spill on Twitter about his company needs to be corroborated and analyzed against the entire firm‟s dataset, to really make sense. This is all the more essential with “counter intelligence” tactics developing online. And even when we have all this filtered information, a CI profile is only useful when it can contribute meaningfully towards solving business problems. Meaning, less chatter, more analysis. Profiles that read like Google News Alerts (or even expensive information databases) are surely redundant. Good competitor profiles must facilitate strong analysis; it is enabling the extrapolation, massaging and scenario testing that still offers competitor profiles a place at the CI table. White paper | April 2012 | Competitor profiling: Many needs behind the need 4
  • 5. A key property of a CI deliverable is that it must be actionable by decision-makers that use it. To that extent a standalone competitor profile is not a CI deliverable; the competitor analysis that it facilitates, is. 3. Who are the different internal clients for competitor profiles and how do their needs differ? Competitor profiles are potentially useful to multiple business functions within an organization. There is a wealth of valuable information that can be cross-examined and „actioned‟ by different organizational units, to truly benefit from competitor analysis. In our experience, most often, the need for the profile is generally clear, but the end users are not clearly identified. Hence, the profile is created with an all encompassing scope of content. The breadth of information presented is misaligned with the needs of the users and under-utilized overall. It creates an information overload for the personnel, resulting in a sub-optimal return on the investment made by CI professionals. When creating a competitor profile, analysts must first identify the business users of the intelligence. The need, for instance may come from the marketing function, but analysts can recommend a wider audience from other functions such as finance, HR, sales, etc. so as to increase the utility of the profile within the organization. CI analysts can present their analysis in the context of these varied business needs.Competitor profiling: Many needs behind the need a) CXO level – The senior management audience is concerned with the implications of various strategic decisions, at the corporate level. This means they don‟t look for tactical and data heavy profiles. Rather, they value the competitor analysis that comes out of profiling of competitors - early warning signs, business threats and opportunities. b) Line of business (LOB) executives (VPs, Directors, etc.) – At this level, executives look for more detailed profiles that present analysis, as well as hard data about market conditions and competitor benchmarks (market shares, functional unit information, etc.). c) Functional units – There is large amount of information about competitors that functional units (especially customer facing) can use to plan for the future. At this level, we‟re talking real time tactical inputs that guide operational level decision making, in response to competitive conditions. The most prominent units for competitor profiles are illustrated in the adjoining figure (though this will vary slightly with different industries). Which brings us to the next question… White paper | April 2012 | Competitor profiling: Many needs behind the need 5
  • 6. Exhibit 1: User groups for competitor profiles Finance Function LOB Sales and Human Marketing CXO Resources Users of competitor profiles Research and Operations Development 4. How do we make the most out of competitor profiles, for these different users?Competitor profiling: Many needs behind the need Now that we‟ve outlined the multiple internal beneficiaries of competitor profiles, one thing becomes apparent. To derive maximum value from these profiles, CI professionals need to master the art of packaging for different customer groups. The old „everything for everybody‟ adage needs to be re-looked at, to instead deliver ‘just the right thing for each person’, making CI dissemination more meaningful. Before even beginning to collect intelligence for compiling competitor profiles, practitioners must broach the subject with a wide (but relevant) audience in the organization (some of which have been identified above). An understanding of major pain points of each internal client group is essential. Based on this, CI professionals can understand the common and independent information areas (key factors and variables which address pain points) that are of interest to these stakeholders. This will enable them to understand how each information area means different things to varied business users. Most importantly, practitioners develop a better understanding of the end objectives of the activity, and analysis and presentation can then be customized to requirements. Exhibit 2: Process for creating actionable competitor profiles Identify Understand List common and Collect Customised users their pain independent information packaging for points information areas user groups White paper | April 2012 | Competitor profiling: Many needs behind the need 6
  • 7. 5. A sample competitor profile framework The following table elaborates on the most meaningful elements of a competitor profile, as they are used today. That is, as far as generic industry-agnostic profiles go; these are meant to be customized according to the needs of the competitive environment a particular industry faces. Exhibit 3: The meaningful elements of a competitor profile Information area Details usually included in a competitor profile General Operational - Name, Location, Short description, History, Organizational structure, Management Information team, Contact details, Stock information Strategic - Mission and vision, Goals, Objectives, Future plans, Positioning, Synergies, Corporate Strategy portfolio, Strengths and weaknesses Operational - Resources/capabilities, Core competencies, Innovations Strategic - Number of products/services, Breadth of product lines, Share of revenues, Quality, Products and Embedded customer value, Projected new products/services Services Operational - Current market shares by product and product line, Workforce and revenue split by products/services, Quality levels/framework, Product/service delivery mechanisms Strategic - Market segmentation strategies, Branding/Image, Probable growth drivers, Advertising/promotions, Market research capability, Customer service emphasis, 4 P parameters, Sales and Sales/ channel strategy, Product development Marketing Operational - Sales network, Channel partner network, Marketing spend, Key customers, Customers types and numbers, Geographical distribution of customers, Customer satisfactionCompetitor profiling: Many needs behind the need levels Strategy - Delivery models, Engagement models, Outsourcing, Sourcing strategy Operations Operational - Delivery/ manufacturing centers – size & locations, Delivery capabilities/ capacity, Process technology, Key suppliers, TQM, Customization, Overhead costs Strategic - Level of training, Flexibility, Talent sourcing strategies Operational - Number of employees by geography, Type & qualifications, Attrition rates, Union Human Resources relations Function-specific- Hierarchy, Size, Compensation structure, Qualifications, Key functional head profiles, Key promotions, Hires and exits, Depth of managerial talent Strategic - Capital structure Financial Operational - Financial statements, Key financial ratios – liquidity, Profitability, Activity analysis, Information Capital market analysis, Stock performance Function-specific - Budgets and operational overheads Strategic - R&D strategy, Internal technology strategy, Access to outside expertise through licensing, Alliances, Joint ventures Technology Issues Operational - Proprietary technology, Patents, Copyrights, Process technology, Information and communication infrastructure, R&D expertise Source: ValueNotes Research (2012) Following the theme we‟ve developed thus far, it is possible to map out the applicability and potential benefits of presenting relevant information areas to different internal client groups. In the format presented below, we have considered the five functional organization units identified earlier – Finance, HR, Operations, Research & Development and Sales & Marketing. It is easily possible to add others as required. White paper | April 2012 | Competitor profiling: Many needs behind the need 7
  • 8. Exhibit 4: Competitor profile with functional usability mapping Information area Finance HR Operations R&D S&M Strategic General Information Y Y Y Y Y Operational Function- specific Y Y Y Y Y Strategic Strategy Y Y Y Y Operational Function- specific Y Strategic Products and Y Y Y Y Operational Services Function- specific Y Y Y Strategic Sales & Marketing Y Y Y Operational Function- specific Y Y Y Y Strategic Operations Y Y Y Y Operational Function- specific Y Y Y Strategic HR Y Y Operational Y Y Y Y Y Function- specific Y Strategic Financial Information Y Y Y OperationalCompetitor profiling: Many needs behind the need Y Y Y Y Y Function- specific Y Strategic Technology Issues Y Y Operational Function- specific Source: ValueNotes Research (2012) This functional usability mapping highlights the different needs that functional units have for competitor profiles, and how they may be addressed at a broad level. If we were to present the entire superset (Exhibit 1) to say, an HR professional, it would most likely be unusable due to an information overload, and lack of relevancy. Imagine those data-heavy profiles (and accompanied analysis), created for several competitors – why would HR be interested with, for example, strategic level R&D inputs? Instead, a customized HR profile, as mapped above, would better help it identify its early warning signals, and raise flags for further investigation (e.g. significantly higher retention rates for competitors). This mapping exercise, naturally, needs to be granular and customized to address a company‟s specific competitive environment and CI needs. 6. Final thoughts… We have highlighted the different potential patterns of (and opportunities for) consumption of competitor profiles by different „internal client groups‟ in an organization that will enable CI analysts realize greater ROI on their efforts. We would like to reiterate that this is meant to be an illustrative „matching‟ exercise, which will hopefully stimulate more discussion among our CI peers! White paper | April 2012 | Competitor profiling: Many needs behind the need 8
  • 9. ValueNotes is a leading provider of research-based business intelligence. Over the past decade, through our research products and research support services, we have helped organisations across diverse industries, markets and geographies in gaining competitive advantage. Our strong capabilities in collecting, interpreting and analysing data enable us to provide actionable intelligence to our client. We take pride in our ability to provide insights as an independent, unbiased third party. Our strengths lie in our industry expertise, strong relationships across an intricate network of industry participants, proven methodology for research and analysis, and a team of researchers with rich experience adding up to several hundred man years. Research Services: we provide a wide range of bespoke business and financial research services about specific markets, industries, companies and competitive environments such as market segmentation/sizing, sector/ industry reports, company reports/ profiles, investment appraisal, due diligence, partner selection, competitive analysis, investor/user/buyer perception studies, desk research, news tracking Information Products: we publish proprietary market intelligence on the (services) outsourcing industry – in BFSI, e- learning, engineering, healthcare, legal and publishing – with an emphasis on knowledge services or KPO. Competitive Intelligence Consulting: with over a decade‟sCompetitor profiling: Many needs behind the need experience in conducting competitive intelligence (CI) and advising firms on their CI strategy, we are able to assist companies implement CI to gain a strategic advantage. Learning & Development: a consolidation of our own experience of doing CI into a set of highly effective training programmes for corporate teams and individual practitioners. ValueNotes.com: India‟s leading financial & equity research portal that provides an independent and unbiased aggregation of opinions, research, analysis and insights on the Indian financial markets. Copyright © 2012 ValueNotes Database Pvt Ltd All rights reserved For more information, please contact: Varsha Chitale Director, Competitive Intelligence Practice T: +91-20-6623 1767 / 1743 E: research@valuenotes.co.in ValueNotes Database Pvt Ltd 1 Bhuvaneshwar Society Abhimanshree Road, Pashan Pune 411 008. Maharashtra, India W: www.valuenotes.co.in White paper | April 2012 | Competitor profiling: Many needs behind the need 9