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A meaningful review of a business’s sustainable and lasting competitive advantage should aim to pinpoint where and how value is created within the business. However, business performance can only improve if the competitive review is aligned with clear yardstick measurements of third-party business performance within the broader industry context.
Mapping the competitive nature of the established industry supply chain is a useful starting point. By examining the supply and demand dynamics between the key industry participants — such as consumers, suppliers and intermediaries — one can attain an objective view of the competitive interplay shaping comparative pricing power and margin build-up within the industry sector and its composite market segments.
The forces shaping the long-term development of the industry sector as a whole should also be assessed, namely: the Political, Economic, Social, Technological, and Environmental (PESTE) drivers of change within the broader market landscape.
The industry structure and spread of competitors matter because they reveal levels of direct and indirect competition. Market intelligence gained from knowledge about competitor strategy and comparative business direction is fundamental. This should include detail of the impact of new product launches, density of regional sales resource and knowledge of whether pricing competition is head-on or partial, for example.
Take up business references current and past customers in addition to suppliers and agents or distributors to get at the necessary information. Conversations with C-suite contacts and those in tier-II functional roles in sales, R&D and procurement, for example, may provide a picture of business confidence levels, supplier selection criteria and the attributes of varying vendors in the sector from which to build a comparative benchmark.
The final choice of a desired competitive position within a market should reflect a realistic assessment of the business’s core strengths and competencies, resources and sources of intellectual property, for example. Consider the following:
No business needs to be a slave to fortune. Forewarning is forearming!
CSA’s strategy and due diligence advisory services sit alongside and complement the day-to-day activities of company management. They provide an independent and objective evaluation of strategic direction and customer value creation, providing a road map for business performance improvement.
For information about how we can help you to assess business and market attractiveness please call: 0208 947 5108.