Going Beyond the Strategic Plan: Competitor Analysis and Predictive Strategies
As a family business, your firm faces threats and opposition from your competition continually. How you operate your family business often depends on what your competitors are doing. And though family businesses are traditionally adept at long-term planning and perspectives, there may be more you can do to create strategies that address how your competition affects your business.
Identify the Competition
If your family business makes widgets, you most likely consider the other firm in town making those same widgets to be your competition. Case closed. But what about everyone else? If your widget is, let’s say, a croquet set, then your competition isn’t just croquet set manufacturers. It’s every firm that manufactures outdoor leisure equipment of any kind. Your competition is also video game manufacturers who lure people indoors when they could be playing croquet. And so on and so on. Really think about who your competition is and separate them into groups as to how they affect your business.
Determine What Makes a Competitor Strong
Why is ABC Outdoor Leisure Company such a strong competitor? Why do their customers choose them instead of you? How agile are they? How might their costs compare to yours? Answering these kinds of questions can help you identify how your competition is similar to and different from your own family business.
Anticipate Your Competitors’ Moves
Whatever strategy you act upon, it should always be viewed in the context of the competitive marketplace. That means never introduce a product, change a price or launch a new marketing campaign without first predicting what the competition’s counter move will be. Doing this is difficult, but not impossible. You must have a keen understanding of your competition, its owners, strategists, managers and other stakeholders. What have their past moves really said about what is important to them? To understand them, their values, strategies, motivations and priorities is to then know what they will do next. When your competitor is much like your firm, they may respond in similar ways to market developments. However, when your competitor is dissimilar, they may respond in very dissimilar ways. It’s your job to understand that. Developing an in-depth knowledge base about your competition is all about extensive research, and even though it can be time consuming, it can be time well spent.
Use “What If” and Role Playing
Once you know a bit about your competition, it can be of great benefit to practice formulating competitive strategies with your management team by going over “what if” scenarios and role playing. Brainstorm a variety of scenarios that could affect your market, ranging from global factors (such as economic) to individual firm scenarios (such as the retirement of a competitor’s CEO). Then using what you know about your competition, predict what each competitor would do in response. Would they scale back? Get more aggressive to take over competitor weakness? Would they rebrand? Thinking through these scenarios can help prepare your minds to respond in actual events as they happen.
Once you know who your competition is and why they are a threat to your family business, you can develop strategies that help you overcome a void or leverage an asset that sets you apart from those competitors. When addressing the competition, strategies often focus on product attributes, pricing, distribution, and marketing and promotion of the product or service. These strategies are, much more often than not, formulated on an as-needed basis, rather than in an annual planning session. So be ready.
Contributing Sources: http://www.entrepreneur.com/article/25756; http://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/Getting_into_your_competitors_head_2281