Competitive Analysis Should Be All Inclusive

Analyzing your business competitors is very important in every stage of your business. When you are still planning to start your business, you need to know first if you have a chance of beating your already established or not so established business competitors.

If you determine that you can’t beat your already established business competitors, then why bother starting your business in the first place? This way, you won’t waste time, effort and resources. You can then decide to start another business or find a job.

But unfortunately, many amateur businessperson fail to realize that not only your business competitors are your competitors but other factors as well. Are you planning to sell women’s miniskirts in a country where the culture is very conservative and downright regressive?

Chances are that you may make a few sales but not enough to cover your overall expenses in setting up a business in this conservative country. Sure, you have no other business competitor selling miniskirts in the country, but the answer to this is very obvious.

FUNDING: We often hear a lot of small business owners and startup companies complain that their more established competitors have capital than they have. They complain that their competitor can always use their financial might to crush them.

And this is for the most part true. Big companies usually crush their competitors using the attrition strategy. This usually means that these big companies would cut their prices and incur financial losses in order to force their smaller competitors to cut their prices as well.

The big companies would continue to lower their prices until their smaller competitors cannot compete anymore and are forced to close up shop. This is a very nasty strategy but a complete reality in the world of business.

Another thing a big company can do to squash smaller competitors is to spend heavily on advertising until they virtually become synonymous with a certain product. It doesn’t happen often but it does.

For example, the photocopier company Xerox established such a hold on the photocopier market that every photocopier is called Xerox machine now. Think about this if ever you are planning to enter an industry already dominated by well-funded companies.


ESTABLISHED BRAND OR IMAGE: I already touched lightly on how a brand name can dominate a specific industry like what the Xerox company did with the photocopier industry.

But image is an entirely different thing from a brand. An image is what separates your products from the products of your competitors. For example, in the automotive industry there are certain cars with their own particular images.

A car can have an image for speed, fuel efficiency, cheapness and so on. American muscle cars and European sports cars are known for their speed while Asian cars are known for their fuel efficiency and cheapness. Each image caters to a different group of consumers.

So, right from the onset, you have to decide what kind of image you would want your product to be known. The Tesla car company wants to be known as an electric car company and they would never compete with petrol car makers in terms of building petrol cars.

But the Tesla company dominates the electric car segment that a lot of people are actually planning to own a Tesla car rather than another electric car brand. The Tesla company have even forced petrol car makers to also build electric cars.


MANAGEMENT: You should also think if you can compete with other companies in terms of management. Ask yourself these two questions:

1. Does my management team (if ever you do have one) have enough skills and industry experience to compete with the management team of my competitors? Can my management team handle the daily crisis in my company which competitor managers would only laugh at?

2. Does my management team have enough contacts within the industry that they can facilitate the fast growth of my business? Can the management of my competitors influence the industry?

This is the reason why there are many companies who poach the CEOs, presidents and management teams of business competitors. They know that without the right management in their business, it would fail.


WORKFORCE: This is especially critical in industries that are involved in very highly skilled and creative work like automation, AI, software, fashion and so on. Right from the start of your business, you need already to determine if your competitor’s workforce is better.

For example in the world of fashion, there are fashion designers who are simply irreplaceable for the fashion houses that they work for that their absence from the company would directly hit the company’s financial bottom line.

Ask yourself the following questions: Do I have the right workforce working for me? Are they loyal to me? How would my company be affected if a competitor company poaches them from me?

EXISTING AND FUTURE TECHNOLOGIES: This especially relates to technology products like machines, software, medicine, chemicals and so on. Today, it is virtually impossible to find a product that has no competition in terms of technology.

For example, the humble frying pans we use at home. They all used to be simple metal pans and they have stayed that way for centuries. Then a company introduced non-stick frying pans and slowly but surely ordinary metal frying pans became obsolete.

At first, the non-stick pans were expensive and the company which originated the invention made a lot of money but soon business competitors were able to create the same technology at a much lower price.

So, ask yourself: Is there any competing technology out there that could beat my product? Would there be a product in the future that would make my product obsolete? Would I make enough money from my product before it becomes obsolete?

But it doesn’t have to be a similar product that would be your biggest competitor but an altogether different technology. Television was the king of entertainment for ages until the internet came along.

These two are vastly different technologies but in just a matter of a few years or decade, the internet have already stolen a lot of people’s television viewing time. There are even many people today who don’t watch television anymore and solely use the internet.

A good example would be Netflix which at first was so beaten by the then reigning home movie entertainment company Blockbuster that they even approached Blockbuster just to be bought. Blockbuster just laughed at them and rejected them.

But Netflix saw the potential in movie streaming via the internet and the rest is history. Blockbuster no longer exists except for one store in America while Netflix has become a giant among giants in movie streaming.


GOVERNMENT: Like it or not, the government could become your biggest business competitor. The reason is obvious, your business and the government have different social purpose.

You, as the business person want to sell as much of your product to the public at the highest price that they can afford. The government meanwhile can set a restriction on the price and quantity that your product can be sold for its perceived public benefits.

For example, there are governments that require that you license your technology to local companies in exchange for you to be granted a license to sell your product in their country. This arrangements could result in a lot of lost profits for your business.

The government can also setup government funded and controlled corporations that could directly compete with your business. For example, in the industry of public electricity generation and supply, the government can setup their own and compete with yours.

So, be very mindful of the government policies and laws in your country and in each of the country you plan to do business with. Make sure that you don’t run into legal trouble if ever a government creates policies and laws that is counterproductive for your business.


CULTURE: This especially applies to products that might prove to be controversial or divisive in terms of morality, customs and so on. For example, whale meat is a much sought after food in some countries while it is frowned upon and even banned in others.

The same goes for seal meat. Both whale and seal meat is regularly bought and sold in many countries where there’s a huge population of these two animals. These are usually countries that are icy where not much farming and animal raising can be done.

If you are going to sell these people bat meat, you might not become successful. You might think that eating whale and seal meat is barbaric but to them you might be the barbaric one for selling bat meat.

There are also countries where a certain sport is preeminent in the people’s mind. For example, there would be countries where basketball is the most popular sport while there are countries where the most popular sport is soccer.

If you are going to position a product that’s related to soccer, you might face competition from the companies that sell basketball gear in that country. But it doesn’t have to be on a per country level.

While the biggest sport today in the world is soccer, in America, the biggest sport is still football. Though American style football is hardly played outside of America, the viewership of American football is global.

This is how competitive a certain culture can get. But we can also mention the dominance of American culture globally. How America greatly influences the things we eat, see and buy. In fact many successful companies are creating similar products to American products.

And why are they doing this instead of producing their own unique products? This is because they know it’s almost impossible to beat certain American products in terms of build and perception.


SEASONALITY AND BUSINESS CYCLES: Seasonality is especially very apparent in the fashion industry. In countries where the seasons change from extreme heat to extreme cold, a fashion designer cannot simply create just one product for both.

That is why many fashion houses sell different clothes for spring, summer, fall and winter. The same can be said of foods. There are foods that sell well during summer like ice cream and there are foods that sell well during winter like soups.

You should also consider business cycles. For example the tax filing service industry is usually very busy and popular during the second half of the year while lackluster during the first half of the year.

If you are selling a product that is affected by weather seasons and business cycles, make sure that your business can compete in both scenarios where your products are on season and off season.

For example, a lot of supermarkets and manufacturers already gear up for the Christmas season a few months before December because they already know that a lot of people are buying Christmas products months before December.

By not following this business cycle, you could lose a lot of money and be financially beaten by companies who do follow this Christmas products business cycle.

A lot of people fail to consider that besides competing companies, there could be other competing factors which could result in the failure of your company and your products. Existing and future technologies, governments and a certain country’s culture are just some.

But don’t forget the seldom considered but equally important seasonality and business cycles of products. They might not be apparent when you first start your business but they become problems or opportunities in due time.

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