Business planning could be described as part of an ongoing ongoing activity related to the direction of the entire organization. It contains the mission, goals, strategies, tactics and policies that will guide the organization to adapt to the environment during a specific period of time. Therefore, a business plan is considered as the backbone of a business unit; an attempt to follow the vision to achieve the corporate goal. However, a business plan should be flexible and accommodating so that it can be changed from time to time if necessary to suit the general environment, not just the business environment. To obtain an effective business plan, a critical analysis of the industry and the competitors is inevitable.
Strategy is the determination of the basic long-term goals and objectives of a company, the courses of action to be taken, and the allocation of resources that would be necessary to carry out these goals. Therefore, the strategy is not an end in itself but a means to an end. This is what makes it a must-have ingredient in any business. It is normally included in the business and marketing plans of organizations.
It is also a process and is normally considered under three general aspects or stages, namely, strategy analysis, which is the stage where, through analysis, the strategist identifies opportunities, strengths, weaknesses, and weaknesses. threats in the environment; strategy formulation, which is the stage in which a choice is made between numerous and potential ones; and the implementation of the strategy, which is when the chosen strategy is translated into action by the organization.
Strategy is therefore to develop and shape the organization’s goals and objectives by providing the necessary response to the environment (for competitive advantage) and by providing good corporate governance. As already noted, strategy and business planning are linked in some way.
‘Strategy’ is normally part of the marketing and business planning processes.
Industry and competitor analysis are part of the early stages of business planning and strategy. However, there is some distinction between the two.
Industry analysis tries to identify the forces that affect the level of competition in an industry. Research has shown that industry analysis is very effective at the strategic business unit (SBU) level because doing it at the pervasive level reduces its value.
Therefore, this analysis would be done at the SBU level still with the industry in mind applying Porter’s five forces (threat of entry, power of buyers, power of suppliers and threat of substitutes and competitive rivalry) to show the effect of the environment in the industry as a whole.
The Threat of Entry – This is the extent to which other interested parties can enter the industry. It depends on the barriers or restrictions of entry to the industry. There are quite a few examples here, but few can be explained. Some of the examples are economies of scale, capital required in a business, access to distribution channels, expected retaliation (i.e. if a competitor fears retaliation from the existing company), legislation or government action. governance and differentiation. When analyzing the barriers, it is considered which barriers prevail, the scope of prevention, the position of the organization and any gaps.
The power of buyers: This analysis looks at the influence that buyers have in the industry in question. Depending on the organization’s supply claim, the intensity of power is felt. For example, in UK grocery retailing, where there is a concentration of buyers, few retailers, particularly supermarkets, dominate the market.
Also when the cost of switching suppliers does not imply a high cost, buyers can manipulate the system. There is also the threat of backward integration if the prices and quality of suppliers are considered unsatisfactory. The fact is being gained that a good understanding of these issues is a potential determinant of a company’s strategy. Also, when there is an (intense) price war between competitors, buyers can manipulate the system, for example low-cost airlines in Airbus and Boeing.
Related to the above is the power of providers: when the consumers of a particular provider are dispersed, the provider can exert power in that industry. A brand image can also help a supplier become powerful. In Ghana, for example, the ”Graphic” brand has become a household name, so if someone wants to buy any brand of newspaper, the word ”Graphic” is used. Like Gucci and Coca-Cola, most retailers stock them so they can win over shoppers with the brand.
An important benefit to be drawn from this when formulating any strategy is to attack the brand name or increase marketing costs based on the insight gained here.
The next force is the threat of substitutes entering the industry. These could come in one or more of these on a product-by-product basis (for example, fax-to-postal and email-to-fax, substitution as needed by a new product, generic substitution (i.e., products that compete by necessity), and dispensing, for example). example, beer, tobacco, cannabis.
When planning a business or formulating a strategy, therefore, there is a need to find out how risky the substitute is over the organization’s product or service; Can the service or product withstand the threat posed by substitutes? or how easily consumers can switch to these substitutes.
Intensity of rivalry: It refers to the possible entry of competitors to the industry; availability of substitutes and control of buyers and suppliers. When this position of the existing organization changes. How can you be affected by the competition? The following should also be considered. Competition is intense where competitors are of the same size, for example, the computer search engine industry until Google came along. Market growth rates and global customers may increase competition. Also where there is little or no differentiation, customers can be easily swayed; Acquisitions and mergers also improve a company’s control in an industry and thus give it a competitive advantage. High fixed costs in an industry through high capital intensity result in competitors cutting prices, for example Boeing and Airbus.
Like the other analysis, a good understanding of the information here is a starting point for successful strategy formulation and business planning.
While industry analysis deals with industry-related issues affecting the industry, competitive analysis looks at financial and marketing metrics, mission statements, research and development, and product development to determine where competitors are focusing their priorities and resources.
Some of the marketing aspects to consider under competitive (competitor) analysis may include finding out how competitors meet customer needs in range of goods or services offered, affordable prices, unique features. Consideration of the quality and reliability of services and goods provided by competitors should also be sought. For example, Toyota recently slashed the engineering cost of the Camry by 30% and was able to launch a new longer and wider Sienna Mivan that has a folding rear seat and is priced $1,000 less than its predecessor. Others may include obtaining information either by intelligence or through annual reports, as information is not easily disclosed (for fear of being capitalized on by competitors) on the entire market share, whether it is growing, shrinking or stable, share of specific markets, for example, the UK or US market; Launch of new brands or products: Toyota launched a new brand in the US in 2003; ‘Scion’ targeting younger buyers, other aspects that may provide relevant marketing insights into competitive analysis are changes in promotional tactics, distribution channels, and the addition of new production or service facilities to improve efficiency and reduce costs. A good recent example is Asda’s Radio Frequency Identification (RFID) installation, a device that would be used to scan barcodes on incoming goods and could save Asda $8.35 billion a year. Fortune, ‘Wal-Mart Keeps the Change’, November 10, 2003, pgs. 23.
The financial analysis should consider the performance of competitors. The investment program of competitors in relation to R&D, diversification (mergers and acquisitions, as well as staff training and development) should also be evaluated and analyzed. R&D is especially vital in large companies; it is key to their survival. despite its Microsoft, for example, is spending billions to develop its own search engine that will be incorporated into both its MSN online service and its new operating system due in 2006 to combat Google’s dominance of the search industry. search engines, Fortune, December 22, 2003, pp.
To facilitate analysis, Porter developed a model, a matrix, that compares the five forces with three intensity levels, low, medium, and high (see Figure 1 below). Based on the experience of a well-known UK retail group, the illustration shows intense competition from rivals and a strong need to keep their customer base in front of them. In business planning and strategy, industry analysis helps in positioning the business and the right environment (ie adapting to the environment and formulating strategy). Competitive analysis, on the other hand, influences business planning and strategy by providing marketing, financial, and other key information about competitors that will aid in business planning and formulating a strategy that will give the organization the necessary competitive advantage.
