SIE 415 Thursday, April 23, 2009 Competition Guest Speaker Carrie Speth  Technical Sales Professional with IBM   Please wr...
SIE 415 Thursday, April 23, 2009 <ul><li>Upcoming: </li></ul><ul><li>No Class on Apr 28th  - view video and review slides ...
The Competitive Environment <ul><li>Competitive Intelligence </li></ul><ul><li>Methods and Models </li></ul><ul><ul><li>Co...
What is CI? <ul><li>Competitive Intelligence: A systematic and ethical program for gathering, analyzing, and managing exte...
Categories of Competitive Intelligence <ul><li>Market Intelligence </li></ul><ul><ul><li>Industry level information on  </...
Uses/Applications of Competitive Intelligence <ul><li>Facilitate Strategic Direction </li></ul><ul><li>Strategic Alliances...
Methods & Models used in CI <ul><li>Competitor Profiling </li></ul><ul><li>SWOT </li></ul><ul><li>Porter’s 5 Forces Model ...
Competitor Profiling <ul><li>What businesses probably already know their competitors </li></ul><ul><ul><li>Overall sales a...
Competitor Profiling <ul><li>What businesses would really like to know about competitors </li></ul><ul><ul><li>Sales and p...
SWOT Analysis <ul><li>Strategic planning method </li></ul><ul><li>Credited to Albert Humphrey (Stanford University, 1960’s...
Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.  Threat of substitutes Potential entrants...
Five Forces Analysis <ul><li>helps the marketer to contrast a competitive environment </li></ul><ul><li>tends to focus on ...
Threat of Entry Economies of scale Benefits associated with bulk purchasing Cost of entry Cost for the latest technology  ...
Power of Buyers <ul><li>Few, large players in a market  </li></ul><ul><ul><li>large grocery chains  </li></ul></ul><ul><li...
Power of Suppliers <ul><li>The power of suppliers tends to be a reversal of the power of buyers. </li></ul><ul><li>Switchi...
Threat of Substitutes <ul><li>Product-for-product substitution </li></ul><ul><ul><li>email for fax </li></ul></ul><ul><li>...
Competitive Rivalry <ul><li>This is most likely to be high where: </li></ul><ul><ul><li>entry is likely </li></ul></ul><ul...
Competitor’s Strength Grid <ul><li>Method to visually illustrate strengths and weakness of a company, product or service <...
Competitive Analysis Homework <ul><li>See assignment in D2L </li></ul>
CLASSROOM ACTIVITY <ul><li>Consider one of the following familiar products or services:  </li></ul><ul><ul><li>single-serv...
Format for Competitor’s Strength Grid <ul><li>Weakness  Strength  </li></ul><ul><li>Attribute 1 </li></ul><ul><li>Attribut...
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  1. 1. SIE 415 Thursday, April 23, 2009 Competition Guest Speaker Carrie Speth Technical Sales Professional with IBM Please write down and submit two questions for our guest speaker. (Be sure to include your name.)
  2. 2. SIE 415 Thursday, April 23, 2009 <ul><li>Upcoming: </li></ul><ul><li>No Class on Apr 28th - view video and review slides </li></ul><ul><li>(D2L Unit 20: Customer Relationship Management - </li></ul><ul><li> Bill Price Presentation) </li></ul><ul><li>Homework: </li></ul><ul><li>Peer Evaluations (see form in D2L) </li></ul><ul><li>Due April 28 th </li></ul><ul><ul><ul><li>Competitive Analysis Report or Presentation </li></ul></ul></ul><ul><li>Due April 30 th </li></ul><ul><li>Individual or Small Groups (up to three students) </li></ul><ul><li>Read: </li></ul><ul><li>“ Do you really know what the competition is doing?” </li></ul>
  3. 3. The Competitive Environment <ul><li>Competitive Intelligence </li></ul><ul><li>Methods and Models </li></ul><ul><ul><li>Competitor Profiling </li></ul></ul><ul><ul><li>SWOT Analysis </li></ul></ul><ul><ul><li>PEST Analysis </li></ul></ul><ul><ul><li>Five Forces Analysis </li></ul></ul><ul><ul><li>Competitor’s Strength Grid </li></ul></ul><ul><ul><li>Etc. </li></ul></ul>
  4. 4. What is CI? <ul><li>Competitive Intelligence: A systematic and ethical program for gathering, analyzing, and managing external information that can affect your company's plans, decisions, and operations. </li></ul>
  5. 5. Categories of Competitive Intelligence <ul><li>Market Intelligence </li></ul><ul><ul><li>Industry level information on </li></ul></ul><ul><ul><ul><li>Trends </li></ul></ul></ul><ul><ul><ul><li>Government regulations </li></ul></ul></ul><ul><ul><ul><li>Geopolitical issues </li></ul></ul></ul><ul><li>Partner Intelligence </li></ul><ul><ul><li>Monitoring activities of </li></ul></ul><ul><ul><ul><li>Company’s major suppliers </li></ul></ul></ul><ul><ul><ul><li>Strategic partners </li></ul></ul></ul><ul><li>Competitor Intelligence </li></ul><ul><ul><li>Detailed monitoring & analysis of key competitors </li></ul></ul><ul><ul><li>High-level scans of other competitors </li></ul></ul><ul><ul><li>Ongoing identification of new entrants </li></ul></ul><ul><li>Technical Intelligence </li></ul><ul><ul><li>Monitoring advancements of technical developments </li></ul></ul><ul><li>Customer/Prospect Intelligence </li></ul><ul><ul><li>Determining & monitoring </li></ul></ul><ul><ul><ul><li>Key internal influences </li></ul></ul></ul><ul><ul><ul><li>Budget cycles </li></ul></ul></ul><ul><ul><ul><li>Key focus areas </li></ul></ul></ul>
  6. 6. Uses/Applications of Competitive Intelligence <ul><li>Facilitate Strategic Direction </li></ul><ul><li>Strategic Alliances </li></ul><ul><li>New Product/Service Development </li></ul><ul><li>Sales Process </li></ul><ul><li>Marketing/Communications/Public Relations </li></ul><ul><li>HR and Recruitment </li></ul><ul><li>Rival Firms </li></ul><ul><li>Competitor & Market Scenarios </li></ul><ul><li>Acquisitions/Preventing Acquisition </li></ul>
  7. 7. Methods & Models used in CI <ul><li>Competitor Profiling </li></ul><ul><li>SWOT </li></ul><ul><li>Porter’s 5 Forces Model </li></ul><ul><li>PEST Analysis </li></ul><ul><li>Competitive Strength Grid </li></ul><ul><li>Strategic Group Map Technique </li></ul><ul><li>Executive Management Profiling </li></ul><ul><li>Financial Ratio Analysis </li></ul><ul><li>Environmental & Event Analysis </li></ul><ul><li>Plus more… </li></ul>
  8. 8. Competitor Profiling <ul><li>What businesses probably already know their competitors </li></ul><ul><ul><li>Overall sales and profits </li></ul></ul><ul><ul><li>Sales and profits by market </li></ul></ul><ul><ul><li>Sales by main brand </li></ul></ul><ul><ul><li>Cost structure </li></ul></ul><ul><ul><li>Market shares (revenues and volumes) </li></ul></ul><ul><ul><li>Organization structure </li></ul></ul><ul><ul><li>Distribution system </li></ul></ul><ul><ul><li>Identity / profile of senior management </li></ul></ul><ul><ul><li>Advertising strategy and spending </li></ul></ul><ul><ul><li>Customer / consumer profile & attitudes </li></ul></ul><ul><ul><li>Customer retention levels </li></ul></ul>
  9. 9. Competitor Profiling <ul><li>What businesses would really like to know about competitors </li></ul><ul><ul><li>Sales and profits by product </li></ul></ul><ul><ul><li>Relative costs </li></ul></ul><ul><ul><li>Customer satisfaction and service levels </li></ul></ul><ul><ul><li>Customer retention levels </li></ul></ul><ul><ul><li>Distribution costs </li></ul></ul><ul><ul><li>New product strategies </li></ul></ul><ul><ul><li>Size and quality of customer databases </li></ul></ul><ul><ul><li>Advertising effectiveness </li></ul></ul><ul><ul><li>Future investment strategy </li></ul></ul><ul><ul><li>Contractual terms with key suppliers </li></ul></ul><ul><ul><li>Terms of strategic partnerships </li></ul></ul>
  10. 10. SWOT Analysis <ul><li>Strategic planning method </li></ul><ul><li>Credited to Albert Humphrey (Stanford University, 1960’s – 1970’s) </li></ul><ul><li>Internal </li></ul><ul><ul><li>Strengths </li></ul></ul><ul><ul><li>Weaknesses </li></ul></ul><ul><li>External </li></ul><ul><ul><li>Opportunities </li></ul></ul><ul><ul><li>Threats </li></ul></ul><ul><li>Company SWOT analysis </li></ul><ul><ul><li>Internal attributes of an organization and external conditions that affect ability to achieve objectives </li></ul></ul><ul><li>Product SWOT analysis </li></ul><ul><ul><li>Direct comparison with the products/services of competitors within a given market segment </li></ul></ul>
  11. 11. Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4. Threat of substitutes Potential entrants Threat of entrants Suppliers Bargaining power Substitutes Buyers Bargaining power COMPETITIVE RIVALRY Five forces analysis
  12. 12. Five Forces Analysis <ul><li>helps the marketer to contrast a competitive environment </li></ul><ul><li>tends to focus on the single, stand alone business or SBU (Strategic Business Unit) rather than a single product or range of products. </li></ul><ul><li>looks at five key areas: </li></ul><ul><ul><li>threat of entry </li></ul></ul><ul><ul><li>power of buyers </li></ul></ul><ul><ul><li>power of suppliers </li></ul></ul><ul><ul><li>threat of substitutes </li></ul></ul><ul><ul><li>competitive rivalry </li></ul></ul>
  13. 13. Threat of Entry Economies of scale Benefits associated with bulk purchasing Cost of entry Cost for the latest technology Ease of access to distribution channels Competitors have the distribution channels sewn up Cost advantages not related to the size of the company Personal contacts or knowledge that larger companies do not own or learning curve effects. Government action New laws that may be introduced that will weaken competitive position Importance of differentiation Champagne brand cannot be copied
  14. 14. Power of Buyers <ul><li>Few, large players in a market </li></ul><ul><ul><li>large grocery chains </li></ul></ul><ul><li>Large number of undifferentiated, small suppliers </li></ul><ul><ul><li>small farming businesses supplying the large grocery chains </li></ul></ul><ul><li>Cost of switching between suppliers is low </li></ul><ul><ul><li>One fleet supplier of trucks compared to another </li></ul></ul>
  15. 15. Power of Suppliers <ul><li>The power of suppliers tends to be a reversal of the power of buyers. </li></ul><ul><li>Switching costs are high </li></ul><ul><ul><li>One software supplier to another </li></ul></ul><ul><li>Powerful brand </li></ul><ul><ul><li>Apple, Pizza Hut, Microsoft. </li></ul></ul><ul><li>Possibility of the supplier integrating forward </li></ul><ul><ul><li>Brewers buying bars </li></ul></ul><ul><li>Customers are fragmented (not in clusters) so that they have little bargaining power </li></ul><ul><ul><li>Gas/Petrol stations in remote places </li></ul></ul>
  16. 16. Threat of Substitutes <ul><li>Product-for-product substitution </li></ul><ul><ul><li>email for fax </li></ul></ul><ul><li>Substitution of need </li></ul><ul><ul><li>better toothpaste reduces the need for dentists </li></ul></ul><ul><li>Where there is generic substitution competing for the currency in your pocket </li></ul><ul><ul><li>video suppliers compete with travel companies </li></ul></ul><ul><li>We could always do without </li></ul><ul><ul><li>cigarettes </li></ul></ul>
  17. 17. Competitive Rivalry <ul><li>This is most likely to be high where: </li></ul><ul><ul><li>entry is likely </li></ul></ul><ul><ul><li>there is the threat of substitute products </li></ul></ul><ul><ul><li>suppliers and buyers in the market attempt to control </li></ul></ul><ul><li>This is why it is always seen in the center of the diagram. </li></ul>
  18. 18. Competitor’s Strength Grid <ul><li>Method to visually illustrate strengths and weakness of a company, product or service </li></ul><ul><li>WEAKNESS STRENGTH </li></ul><ul><li>Product quality A B C D </li></ul><ul><li>Product differentiation B A C D </li></ul><ul><li>Pricing D B C A </li></ul><ul><li>Marketing/promotion C B A D </li></ul><ul><li>Brand recognition B C A D </li></ul><ul><li>Distribution channels C B D A </li></ul>
  19. 19. Competitive Analysis Homework <ul><li>See assignment in D2L </li></ul>
  20. 20. CLASSROOM ACTIVITY <ul><li>Consider one of the following familiar products or services: </li></ul><ul><ul><li>single-serving frozen entrees </li></ul></ul><ul><ul><li>bottled water </li></ul></ul><ul><ul><li>handheld digital musical players </li></ul></ul><ul><ul><li>cell phones </li></ul></ul><ul><ul><li>internet service providers (ISP) </li></ul></ul><ul><ul><li>choose your own </li></ul></ul><ul><li>Create a Competitor Strength Grid with five or more attributes and four or more competitive products or services. </li></ul><ul><li>Be prepared to present your grid. </li></ul><ul><li>Submit grid with names of students who participated on the assignment. </li></ul>
  21. 21. Format for Competitor’s Strength Grid <ul><li>Weakness Strength </li></ul><ul><li>Attribute 1 </li></ul><ul><li>Attribute 2 </li></ul><ul><li>Attribute 3 </li></ul><ul><li>Attribute 4 </li></ul><ul><li>Attribute 5 </li></ul><ul><li>A – ABC Company </li></ul><ul><li>L – LMN Company </li></ul><ul><li>T – TUV Company </li></ul><ul><li>X – XYZ Company </li></ul>
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