• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Nowadays, analysing competition is crucial for managers in order to understand the environment in which the business evolves

Extracts from this document...


Nowadays, analysing competition is crucial for managers in order to understand the environment in which the business evolves, its competitors (their goals, plans etc) as well as implement strategies and position their companies. They can use a wide variety of techniques, each having its strengths and weaknesses. According to Prescott and Grant (1988), to select the appropriate techniques, managers have to know the different techniques available, how they are related to each other, the focus and scope of the area and the constraints limiting the extent of analysis. To analyse competition efficiently, they have to combine some of the different techniques available as they all have a specific aim. However, there are limitations that managers have to take into consideration in order to provide a clear and effective work. This essay outlines and evaluates the main weaknesses when understanding the business environment. They vary by nature. They can come from the interpretation of the managers and from the models themselves. However, they are in relation to each other, one flaw leading to another one. When analysing competition, the starting point is to precisely define the industry the firm belongs to and its boundaries. Managers may focus on the market of their company, narrowing their definition of the industry. They then forget or less consider other segments that can change quickly and have impact on the whole industry. ...read more.


Indeed, it is difficult to analyse till which point they contribute to the success of a company. Bagshaw (2000) states that "traditionally, companies have been valued according to their tangible assets, such as property and equipment. This is still important, but the intangible assets such as knowledge, brand and relationship with the customer, are coming into their own." An example of this weakness is that IBM and Merck laid importance on the advantage they could gain from their "specialised skills and capability of their personnel." (Zahra and Chaples) It is also important for a manager not only to focus on where the other firms compete but how they compete as well. This issue deals with how competitors use their skills to position themselves. This point is closely linked with the one above as when a firm has outlined and evaluated the visible and invisible functions of its rivals, it has a more precise knowledge on its competences. Zahra and Chaples (1993) underline the fact that forecasting rivals' decisions and intent is not easy, but managers have to focus on what their rivals can do with their skills. An example is Motorola and Texas Instrument which used new technology to compete on different market segments whereas their competitors thought they would not extend further than their initial market segment. ...read more.


Prescott and Grant (1988) in A Managers' Guide for Evaluating Competitive Analysis Technique evaluate the different techniques a manager can use along several dimensions. Their table sums up the different criteria among them the constraints cited above. Resources required for the different models vary depending on the requirements of the models and their decision criteria. It is important to evaluate them in order to avoid stagnation and obtain qualitative results. As a conclusion, analysing competition is not a simple task. If well orientated, its benefits are numerous as it enables a better understanding of the business environment; however managers have to be vigilant when doing so. Some weaknesses come from the definition of the different variables and their interpretation of the data collected. If they fail in precisely setting some basis, it will lead to an incomplete and/or inaccurate analysis of the situation, their industry and competitors, thus leading to incorrect decisions (some of them can be disastrous for the future of the company) as well as loss of time and money. Weaknesses also come from the models. They require current and specific data which is not easily available. Despite the advantages a company gains by analysing competition, Harari (2004) states that competitive analysis must not hypnotize managers. "The successful organisation conducts brief periodic scans that include what today's competitors are doing, but the primary attention is on doing whatever it takes to lead the race. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Marketing and Markets section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Marketing and Markets essays

  1. Event management

    There will be need skilled sound engineers, (Sound Company) a security staff, (one at the entrance of the exhibition and one in the paintings room) a person, who will be guiding in the parking area, 3 people promoting the event at traffic lights points (in town which is the most busy area)

  2. For this project I have been instructed to come up with a marketing strategy ...

    Nokia Ventures Organization showed an operating loss of EUR 141 million (operating loss of EUR 855 million in 2001). Common Group Expenses totalled EUR 231 million (EUR 231 million in 2001). During 2002, the operating profit was negatively impacted by goodwill impairments of EUR 182 million and net customer financing impairment charges related to MobilCom of EUR 265 million.

  1. Marketing Management

    or proximity cards. The same is being tested in the US market and may be introduced in the United Kingdom market after success in the US market. Environmental: This factor refers to the environmental concerns which are being considered in a bigger way in this current decade due to the raising issues of global warming.

  2. Marketing Strategy - Nintendo Gamecube

    This is because I think price is a very important factor in the video games industry because of the amount of competition in this market. Apr. 27 - 28 * Start putting together some slides for the aspect for presentation.

  1. My business will sell gym/combat sports equipmentBefore I start my business I will need ...

    travel in a vehicle to get to the business location can use this service. * It has good WC facilities for staff (toilet facilities)) which have only recently been made so no changes will be needed to these facilities. * The front of the property has recently been painted meaning there wont be much damage done to the display frontage.

  2. Market Resarch Essay

    It can be expensive and time consuming to use. Consequently, it has a low return rate for postal and newspaper questionnaires. You need to take into account that the larger the sample, the more reliable the results. This method is not suitable because, there are only a few closed questions

  1. International Business Opportunities in the Biotechnology Industry

    sum of knowledge, information, talent, and experience), as a result of leading expenders on research and development within the industry, they are bound to prosper in the near future. One of the most beneficial industries of biotechnological applications is the agricultural industry.

  2. Marketing research - To decide which products and services will be available in my ...

    As part of my research I conducted an interview with Parul Sayania, who is the owner of a similar business in Leeds. I asked the question "What do you make/sell/provide?" Mrs. Sayania informed me that she provides the following services: * Eyebrow threading * Upper-lip threading * Cheek threading *

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work