Assessing The Competition

After you have examined the external and internal environments of your business, it is time to specifically address the competitive environment. By this time, issues surrounding your competition have already arisen. Unless you have a monopoly in an industry (which is extremely rare) or have developed an entirely new niche (also rare), you will likely face intense competition. Even monopolies have to fear the potential entry of competitors.

Thinking in terms of market size and share set the stage for thinking about the competitive environment. The market for your product or service has a set size. Every percentage of market share that you obtain is taken away from existing companies. Many small businesses do not feel that they operate in a highly competitive environment, but this is probably because they are in a larger industry where even a small market share can fulfill their sales goals, however any significant growth on the part of their company would lead to a realization of the market limitations.

Of course, the nature of every industry is unique, and some will be more competitive than others. If we look at corporations such as Coke and Pepsi, who have been famous competitors for decades, we can see just how important capturing 1% of the billion-dollar cola industry is. Knowing the competitive nature of your industry will aid you in surviving and thriving among those who are trying to do the same at your expense.

The first step in assessing the competition is to make a list of potential competitors. Start with the largest companies in your industry and those that are the closest to your business in terms of what they offer and who their customer base is. Just as you did for your own business, perform a TOWS analysis on these companies. This time, change it slightly and make it a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, focusing on what the competition has going in its favour.

After you have done SWOT analyses on the major competitors in your industry, assess the alternative/substitute products/services on the market and compare them with what you are offering.

Case Study - Competitive Analysis: G.V. Snowshoes Case Study - Competition: GLAM

SWOT your competition