– Thoughts on Strategy and Management

More on analyzing competitors

To add something not so creative on competitor analysis – here is how I keep track of competitors’ strategic changes and the bigger picture behind. This is not so much about predicting their next strategic move, it is more about getting a feel for what they are actually doing.

I keep a list of the competitors’ major strategic moves. This should not be more than five to seven per year. It is enough to describe the strategic moves very briefly, e.g. acquisition of company xyz or closing of a factory. This is the first column of my chart. In the second column, I list the (supposed) strategic purpose behind each move. The acquisition, for instance, could have several objectives – globalization, acquisition of specific competences, acquisition of market share, diversification etc. Over a timeframe of two to three years, you may see a pattern or bigger picture evolve.

The second thing is that I write down (or actually copy and paste) the competitors’ mission statements that you can find in almost any annual report for several years. The mission or vision of a company is supposed to be fairly consistent over time. It is the long-term guiding principle of the business. So even smaller changes in wording may indicated gradual shifts in focus.

You have to watch these two issues – strategic moves and missions – for a period of about three to four years. It also helps to have a good feeling for this company in general, i.e. their strengths and weaknesses, core businesses and side activities, their financials etc. The point in this exercise is that I don’t try to get more and more detailed information, I rather try to take a helicopter view on the company as a whole. Some things may seem so obvious to us that we forget to set them into the bigger context.

Of course, this technique won’t reveal much new for large companies in industries that are well covered by analysts and media, like the big car makers. It is much more helpful for smaller businesses or businesses in specific industry segments. These companies often publish annual reports, but they enjoy much less public attention. Such companies – especially the not listed ones – often try to conceal their long-term strategic intentions. Here my technique often reveals some early signs for strategic shifts.

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