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How to Predict Your Competitors' Next Move?

How to Predict Your Competitors' Next Move?

Many companies do competitive intelligence, but where they fall down is in turning that intelligence and data into insights about what the competitor will do. Many say that their competitors are irrational, but this is because they are not taking the time to look at the world from their competitors’ point of view. Once they do, those competitive actions start to make sense. 

 

Figuring out the competitor’s reasons for their moves is about breaking out of your own mindset and forcing yourself to look at the world from competitors’ points of view. If I had their assets, what would I do with them? If I decrease my prices and the competitor matches that decrease, I won’t gain any market share. Any time you plan to build a new plant or acquire a company or change your pricing, you should think, as in any game, “If I make this move, what will my opponent do in response?” The minute you say, “They’re irrational,” you stop trying to understand them.

 

A four-stage framework for understanding competitors would include:

1.     To pay attention to what competitors say by downloading earnings calls or annual reports and scanning media releases. 

2.     To find out what assets, resources, and capabilities they have. They may have a supply chain in markets or geographies that you don’t have or upgraded facilities. That’s where you start to differentiate the competitor - “If I had their toys to play with, what would I do?”

3.     To consider the person making the decisions. What do you know about them? When someone with a marketing background becomes the CEO, they won’t suddenly start optimizing the footprint of factories. That person will likely focus on marketing to help the company grow, partly because they will think, “My background is why the board hired me.”

4.     To make a prediction and then tracking it to see how it lines up with what happens. If you paid attention to what the competitor said and did, considered all its assets, and understood the leaders’ backgrounds, you can say, “I think they will do this in the next three to six months.” If what they do is in line with what you expected, you know you are on the right track. If you’re off, then go back and ask, “What did I miss? Maybe they used a certain partner or hired a new person to make decisions.” That updates what you pay attention to going forward to help you make better predictions. The objective is never to be 100% accurate, but it’s a lot better to be 30% accurate than to be 0% accurate in predicting what your competitor will do.

Find out more in this article from McKinsey’s article.

0 COMMENTS | 25 October 2023
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