How to analyse competition and prepare for them
Oct. 26, 2019, 8:38 a.m.

How to analyse competition and prepare for them

Oct. 26, 2019, 8:38 a.m.

Do we need to discuss why competition analysis is important?

I think answer is a clear “NO”. If you are reading this article that proves you understand the need of the topic. If you don’t analyse your competition, that can be the last mistake you can do as an entrepreneur. “But” (it’s the favourite word of an entrepreneur)…..   I have a unique product and there is no competition for that. Why should I be worried about competition analysis?

Great, let me tell you a story.

One day I went into the past. There was a king, he asked his army to march in a direction where there was no enemy, so that he can easily win the area to rule. And, he was successful in doing that.  Hurraaayyyy.. The King started ruling happily as there was no enemy. Few days later, on a beautiful morning the army general informed the king that there is a small army standing outside the castle and was challenging them to fight. The King ordered them to fight back to protect themselves but they lost the war and his territory.

Can you guess WHY? I thought to ask the king himself.
Let’s go....

ME: Hey Mr. King, why did you lose the war? 
Mr. King: Oh please, I won this territory when there was no king interested in here. It was a unique choice to rule here. I wasn’t prepared for war as I didn’t expect anyone else will have any interest to rule here so soon.
ME: But you had a better and bigger army?
Mr. King: Yaaa.. I had, but I hadn’t thought that anyone will be interested in the same territory so soon, as I was the first one to come here. I hadn’t prepared for competition coming so early and was not ready to take an attack, so I lost the war.


And I came back to present.

Let me ask you now “do you still think you don’t require competition analysis if your business area is unique and there is no challenger”? You can continue reading the article if your answer is “Yes”, because you know you will need it. You HAVE TO continue reading if your answer is “NO”, because you will need it.

So anyway, lets move ahead. Now the question remains, how to analyse the competition? For that you should understand that there are 2 types of competition

  1. Visible Competition: Already doing business in similar trades. Easy to find.
  1. Invisible Competition: No competition yet but as soon as you get success these will start coming up from nowhere. These are hard to anticipate.

How can we have better competition understanding?

Let’s start with

Visible Competition:

Define the key industry success factor for your industry and then give weightage to competition.

For better understanding I have used 4 points as key industry success factors: Extensive distribution, Customer focus, Economies of scale and Product innovation. You can add as many points as you think as key industry success factor. Once decided let’s use below shared graph to find the strong competition.

Key Industry Success FactorsWeightageCompetitor
Comp 1Comp 2Comp 3Comp 4
Extensive distribution106543
Customer focus104743
Economies of scale103434
Product innovation107446

 As per this chart Comp 1 and 2 are the toughest as they have scored 20 out of 40. Competition 1 is good at Distribution and Product innovation. Competition 2 is excellent at Customer experience does a good job in product distribution. In the same way you can analysis Competition 3 and 4 as well.

For more detailed results, you can also include below shared points.

Product Portfolio Size
What are customers really buying from them? Are they going for price? Experience?
Startup or Enterprise?
Financials. Raised funding, In process for funding, don’t need funding.
What is current market share
Team size (manpower)
Online presence

After doing this you should be a fair understanding of your visible competition.

Invisible Competition:

You can use the same chart used in visible competition analysis, however you need to replace the Key Industry Success Factor to key Industry Entry Barrier. But you need to do one more exercise before using the matrix. You have to analyse the most expected industries from where its easiest to come in your industry. Mostly it’s the support industry of your business who comes directly as competition, like HTC which was a mobile manufacturing company later on came into direct sales with its own brand. Once you have fixed with all top support industry or other industry which can come in then use the below shared chart to find out who Is the most likely to join the race.

Industry Entry BarrierweightageIndustries
Support Industry 1Support Industry 2Support Industry 3Support Industry 4
Startup Capital107644
Technical Knowledge Base106654
Product Research Capability106866
Access to Materials107768
Distribution Capacity107578
Government Regulation105586

You can add or remove industry barrier as per your area of business.  At the end, after understanding the basics of Competition Analysis, you can become the wise king who knows that the competition is there, it’s just the matter of time when they will come.

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