DSpace at Khazar University

captive clients. Or the product may be a commodity (e.g. concrete), and price at the
required quality is the only thing that matters in the buying transaction.
In a concentrated industry, however, competitor analysis is important, since the
competitive battle is essentially between a small number of relatively large companies,
normally with differentiated products, and often with strong brand names. In such cases,
relative market share becomes crucially important in order to be able to keep down costs
by taking advantage of the experience curve, of scale economies, and of scope
economies.
Competitor analysis is concerned with the following five basic attributes of the
competitor:
a. Its comparative market strength.
b. Its resources and core competences.
c. Its current and possible future strategy.
d. Its culture, and hence the assumptions it makes about itself and the industry.
e. Its objectives and goals, both at corporate level and at business-unit level.
Competitor analysis must carry out on a segment-by-segment basis. In this way,
the specific competences necessary to achieve competitive advantage in each segment
are compared firm by firm.
The current strategy of competitors is discernible partly from what each company
has to say, but more importantly from what it does. To
assess either factor, a positive effort will need to be made at competitor data collection,
in excess of the information that will easily come the company's way through a
conscientious reading of the press. Effective competitor analysis requires the creation of
a file on each competitor, which must be maintained in up-to-date condition by an
enthusiastic executive who can act as "champion" for the specific task. In the absence as
such conditions, the file is likely to become outdated after a few months.
The competitor's intended - or at least declared - strategy can usually be
discovered from the chairman's message to shareholders in annual reports, and by
interviews in the press given by senior executives. The competitor's realized strategy,
however, is the more important, and this can only be discovered by tracking the
competitor's actions over a period of time and by scanning it for consistency of purpose.
Such direct observation can be supplemented by deliberately seeking out comments
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