Using frameworks to analyse your competitors is important for your competitor analysis
Using frameworks to analyse your competitors is important. It helps you find the insights to help us make better strategic decisions. SWOT is a common starting point as it is seen as easy. Tool 1.1 for every business school. Other models can offer different views and deeper insights. We explore several useful frameworks for comparing competitors and discuss how to apply them effectively.
SWOT Analysis
SWOT (Strengths, Weaknesses, Opportunities, Threats) is a simple tool for assessing your competitors. It looks both internally and externally. However, it’s not easy to use it properly.
Strengths
Identify what your competitor does well. This could include product features, brand reputation, market share, financial resources, etc.
Weaknesses
Find the areas where the competitor is weak, such as poor customer service, a limited product range, or a weak geographic presence.
Opportunities
Look for trends or regulatory changes the competitor could exploit.
Threats
Seek external risks to competitors, such as new entrants, changing consumer preferences, or economic downturns.
Porter’s Five Forces
Porter’s Five Forces helps evaluate an industry’s competitive intensity and attractiveness. This framework for competitor analysis can reveal their industry position.
Industry Rivalry
The intensity of competition among existing competitors.
Threat of New Entrants
How easy it is for new companies to start competing.
Threat of Substitutes
The degree to which different products can replace competitors’ offerings.
Bargaining Power of Suppliers
How much power do suppliers have on production costs and pricing?
Bargaining Power of Buyers
How much power do customers have to drive prices down?
PESTEL Analysis
PESTEL Analysis looks at external factors that might affect a competitor. It has six categories: Political, Economic, Social, Technological, Environmental, and Legal.
- Political: Government policies and stability, trade tariffs, etc.
- Economic: Economic growth rates, exchange rates, inflation, etc.
- Social: Cultural trends, demographics, consumer behaviours.
- Technological: Technological advancements, automation, research and development.
- Environmental: Environmental issues, ecological concerns, waste management.
- Legal: Laws, regulations, patent infringements.
Value Chain Analysis
Value Chain Analysis looks at your competitors’ internal activities. It aims to find advantages or weaknesses in their processes, from production to sales.
- Inbound Logistics: Handling and storage of incoming materials.
- Operations: Processes they use to convert inputs into outputs.
- Outbound Logistics: Distribution of the finished goods.
- Marketing and Sales: How they promote and sell their product.
- Service: After-sales support and customer service.
- Firm Infrastructure: The company’s support systems, such as IT and finance.
- Human Resource Management: Employee management and organisational culture.
- Technology Development: Innovation and improvement of products or processes.
Using These Frameworks Strategically
- Use multiple frameworks to get a complete view of each competitor’s strategy. Each framework offers different insights that can complement each other.
- Identify their competitive edge. Analysing competitors can help you identify areas to gain an edge. Look for better innovation, market positioning, or operations.
- Use these frameworks to guide decisions on market entry, product development, and partnerships, all of which will provide a defence against competitors.
Key Questions: The So What?, Why’s That?, and What Ifs?
Frameworks like SWOT, Porter’s, PESTEL, and Value Chain should be more than just gathering information. It’s the analysis that creates your intelligence. The critical questions—like “So what?”, “Why’s that?” and “What if?”—help turn raw data into insights. These insights can drive strategic decisions.
The So What?
After identifying their strengths, weaknesses, opportunities, and threats, ask, “So what?”. A question pushes you to think about the relevance of your findings. It makes you feel about what’s next and see what’s missing. For example, if a competitor has a strong brand, so what does that mean for your positioning? Does it mean you should invest more in marketing? Or should you differentiate through better customer service or product innovation? Asking “So what?” at each analysis stage is very powerful. It helps you understand its impact on your strategy and decisions. It can make you feel uncomfortable and think differently. That’s a good thing.
The Why’s That?
Once you’ve explored the implications of your insights, the next question is, “Why’s that?” This digs into the root causes behind the findings. If your competitor is gaining market share, find out why. Is it due to pricing, better technology, or market conditions? Knowing the cause can help you develop better strategies. If a competitor is struggling, we should analyse why. Their problems, like inefficiencies or regulations, may offer clues. We could avoid their mistakes or exploit their weaknesses. Asking “Why’s that?” uncovers the drivers behind your competitive landscape. This enables a deeper, more proactive approach.
The What Ifs?
Finally, the “What if?” question is critical for strategic foresight. It allows you to model scenarios and anticipate future competitive moves. For instance, what if a new entrant disrupts the market with a low-cost offering? How would that impact your current position? Or, what if technological advancements render your competitor’s current edge obsolete—how would you pivot? You can stress-test your strategy by using various “what if” scenarios. This will help you create contingency plans. They will keep your business adaptable and resilient to future uncertainties. This mindset of strategic flexibility keeps you ahead of the competition. It prevents you from just reacting to changes after they happen.
Using frameworks to analyse your competitors is important
Using these frameworks in your competitor analysis lets you go beyond surface-level comparisons. You will gain a deep understanding of the strategic landscape. It helps you anticipate market changes and respond to competitors. It also allows you to seize opportunities to improve your market position. These frameworks enable you to react to the market and shape your strategic destiny.
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