What is Competitor Analysis? What are the main aspects of Competitor Analysis?

INTRODUCTION

This article focuses on the key aspects of competitor analysis. It defines competitor analysis and gives suggestions on how to write a good competitor analysis. The article identifies sources on where to find information for a good competitor analysis, and also gives organisational examples to provide good illustrations of utilising information for competitor analysis.

Competitor analysis is a critical part of a firm's activities. It is an assessment of the strengths and weaknesses of current and potential competitors, which may encompass firms not only in their own sectors but also in other sectors. Directly or indirectly, competitor analysis is a driver of a firm's strategy and impacts on how firms act or react in their sectors. Gluck, Kaufman and Walleck (2000) showed that competitor analysis is one of two components that give a firm a strong market understanding (see figure 1). This drives the formulation of a strategy and it applies whether a firm formulates a strategy through strategic thinking, formal strategic planning, or opportunistic strategic decision making. Competitor analysis, together with an understanding of major environmental trends, is a key input in strategy formulation and should be developed properly.

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