An effective business strategy needs a competitive analysis. If an organization is going to position itself in a way that promotes sustainability as a competitive advantage it must ask at least these two questions:
- Who are the existing competitors and who else might enter the competitive field?
- How intense is this competition?
It may not be enough for some firms to offer environmentally friendly products that match competitors – firms may need to exceed the standards that others use to attract customers. Thus, firms that want to gain a competitive advantage are constantly looking for ways to exceed competitors’ offerings, attract customers and to use their knowledge to be unique in the market place.
Here’s a four part framework that many analysts use a four-part framework for predicting competitor behavior :
- Identify the competitor’s current strategy: How is the competitor competing at present? What is the company saying about its strategy, and what actions and commitments of resources can you identify that are indicative of their strategy?
- Competitor’s objectives: What is the company trying to achieve? Some companies are focusing on gaining market share; others to gain more profitability from their current operations. The more a company is satisfied with its current performance, the more likely it is to continue with its present strategy. With lower profitability, a firm is likely to adopt a new strategy.
- Competitor assumptions on the industry: Assumptions are guided by the beliefs that senior managers hold about their industry and the success factors within it. Evidence shows that not only do these systems of belief tend to be stable over time; they also tend to converge among the firms within an industry – what can be referred to as industry recipes. These recipes may cause blind spots and opportunities for other firms to compete with incumbents.
- Competitor’s resources and capabilities: If a rival has a massive investment in environmental sustainability, it would be unwise for a company to unleash a marketing campaign to show how their commitment to environmental sustainability exceeds their competitor’s. Identifying a competitor’s resources and capabilities may help us understand what that firm can defend if challenged.
1Daniel S. Fogel, CEO, SP3, email@example.com; 1-704-604-0085.