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U. LINDAHL Should you consider researching your business rivals? If you want to get a grasp of where your competitors are situated and understand their likely next steps, the answer is a resounding “yes.” Most experts agree that knowledge of the competition can be critical to successful business planning and management. Carefully scrutinizing your competitors’ strategies can help you become more effective in your own business doings. Your analyses can provide insight into your competitors’ likely responses to your own actions, as well as to external changes, such as in the business environment. Closely examining the competition can help you devise sounder and more robust strategic plans for your own business development. Yet not all companies engage in competitor research. For many firms it is a low priority, or may not be on the agenda at all. As a result, by undertaking such exercises, you can get an even greater edge. Good surveillance goes far beyond visiting competitors’ stands at trade shows. The best way to go about it is to create a structured and precise framework for analysis. If you are unable to allocate full attention to this task, at least work on it gradually and build a filing system over time, piece by piece. If you have a large number of competitors, you may find it best to prioritize your list before you set out to investigate them. Usually, looking at a handful of the most important ones is a good start. What should you include in the dossier? It often makes sense to look at main factors such as: your competitors’ existing strategies, objectives, financial results and reaction patterns. It also pays to find out as much you can about your rivals’: ? Product line, pricing policies, product positioning, service policies, etc. ? Distribution methods. Does the competitor undertake its own distribution? If not, does it maintain some level of control? Does it receive adequate market intelligence from its channels? ? Organization and management. ? R & D; capabilities. What is the size of their R & D; staff? How much money do they allocate to such activities? ? Production capabilities. What production technology does the company use? Has it recently invested in new or improved technology? ? Economical and financial matters, including past and projected profitability. ? Financial strength. There is, of course, a myriad of information you could put into the file, and you may want to filter the data. But you should concentrate on finding information about factors that will significantly determine the competitors’ ability to function and compete, and substantially differentiate the competition from other companies. Look for obvious weaknesses or strengths, especially compared to your own. Then, look at your competitors’ responses and counteraction to initiatives of others. Assess their ability to respond quickly. Based on that, attempt to form an understanding of the underlying beliefs and perceptions of your peers. With that in mind, you can often guess their probable actions and reactions. You might be surprised to learn how easy such information can be to obtain. A lot of the data can be obtained from the competitors themselves, from such sources as: promotional materials, press releases, Web sites, speeches, articles, announcements, personnel changes, want ads, manuals, technical papers, patents, lawsuits, prospectuses, annual reports and annual meetings. Don’t overlook third-party sources, such as books, articles, case studies, consultants, newspapers, environmental groups, suppliers, vendors, trade press, industry studies, customers and subcontractors. Although public companies typically produce more literature about themselves, many private companies also put out a wide selection of information. All of these sources can help you ascertain your rivals’ targets and plans. Remember: you don’t need to reinvent the wheel. If you are part of a larger group or a multinational company, see if anything relevant has been done at the corporate level or in other markets. It may not give you all you need, but could save you time, provide guidance, or allow you to save cost by avoiding unnecessary repetition. It is likely that your competitors will be somewhat reluctant to disclose sensitive information to somebody they consider a rival. Still, it certainly is not advisable to resort to deception or dishonest methods. Apart from any legal problems that may be connected with such methods, they are unethical and deceitful. Sharing, exchanging or discussing general information with your competitors may be an option. After all, your competitors may be just as keen as you to hear about certain developments in the industry or business, even though you may not be actual allies. In some cases, an unbiased third party may be a good catalyst for an exchange of information. Of course, you should take care not to become so focused on your competitive interest that you neglect attention to developments in the marketplace. While your greatest competitive rivalry may be from companies with structures, designs, and methods that closely resemble your own, this may change over time. You may find that competition emerges or exists already from companies that are less like yours. This makes a case for not taking too narrow a view of your trade. One pitfall is to look at your industry solely on the basis of the products or services you offer. Your business may be better understood and described by the needs and demands of the customers you serve. This should have an effect on the scope of your research. There may be companies that you would not presently consider rivals, but nevertheless have products that can compete with your own. It may be very worthwhile for you to analyze some of them as well. U. Lindahl is a business consultant who works for Chatsworth-based Vidac Business Consulting. His e-mail address is [email protected]