The growing competition in the business industry has made it necessary for any company to stay in competition or have a competitive advantage over its competitors, adequate and relevant information about the competitors need to be received or known at the right time in other to make a good strategic business decision.
Competitive intelligence is defined as a systematic process that transforms random bits and pieces of data into strategic knowledge. This information comprises about competitors, customers, technological, environmental, product and market in. other to make a good strategic decision. Competitive intelligence is described as those activities a company undertake in determining and understanding its industry as well as identifying and understanding the competitors, also determine and understand their weaknesses and strength and anticipate their next move(s). This definition of competitive intelligence tends to identify/determine, understand and anticipate industry and competitors. Furthermore competitive intelligence is a process of monitoring the competitive environment, with the aim of providing an actionable intelligence that will enhance a company competitive advantage over its competitors. Competitive intelligence propels the decision makers to smarter more successful decisions, thereby minimizing risk, avoiding being blind-sided and getting it right the first time.
Finally, competitive intelligence is a “process” because it involves gathering, analyzing and applying information about product, competitors and the entire environment which includes the supplier, regulatory body, partners and so on and it’s a “continuous activity” because the business environment changes as the world changes which usher in more competition. Also, its gather adequate “relevant” information at an appropriate “time” because it is vital a company gets its decisions and moves correctly at the first time.
Need of Competitive Intelligence
In today’s changing business environment, organizations need to implement competitive intelligence because;
- The pace of business is increasing rapidly – For example, customers expect businesses to deliver goods as quickly as possible as well as communicate with them with a faster means of communication. In order to meet this requirements organizations need an efficient management and CI.
- Information overload – Organizations are privileged to collect a lot of information, but organizations do not have the idea of which information is relevant. Competitive intelligence will assist in analyzing the collected information, filter it, learn what is relevant and use it to benefit various business decisions and strategies.
- Increased global competition from new competitors – Companies are now moving across their original borders into another country. For example, financial firms like HSBC can be found in several countries in which they constitute a threat and complete with the home companies.
- Existing competitor is becoming aggressive – Competitive intelligence will help organizations forecast competitor’s actions and allow organizations to be proactive because all companies want to acquire more market share and customers.
- Political changes affect anybody quickly and forcefully – Deregulation of business such as retail, insurance and aviation industry create more threat to organizations in other sectors because their sector can also be deregulated, but implementing CI the organizations will keep informed about the proposed political change that might affect the business.
- Rapid technological change – As organizations can all observe that technology is changing rapidly to the extent that something new happens in the computer industry like new breakthrough which tends to create new opportunities. For example, NOKIA held the highest market share as well as the highest customers but when the Iphone and Blackberry came into the picture, NOKIA’s market share and customer base starts to decline. However, if organizations implement competitive intelligence, it will keep track of technological changes in industry and other industry that is important to organizations survival.
Benefits of Competitive Intelligence
A formal competitive intelligence program can do the following;
- Anticipate change in the marketplace – Companies that observe the marketplace tends not to be caught unawares, but companies that fail to observe the market place tends to pay a high price for their mistake.
- Anticipate action of competitors – Competitive intelligence activity will create an opportunity to understand what competitors are trying to do in other to outsmart their competitors.
- Discover new or potential competitors – Competitive intelligence activity will provide an insight into new segment or market a competitor is entering.
- Learn from the success and failure of others – Competitive intelligence activity will investigate if customer are happy with competitors and use their findings as a yardstick for development.
- Increase the range and quality of acquisition target – Competitive intelligence activity will create an insight on target company for acquisition because not all company that posses as a threat are really worth acquiring because some companies are created on deception.
- Learn about new technology, products and processes that affect business – Competitive intelligence activity tends to reveal if the project being embarked upon by their company is worth investing in or needs additional resources or the project needs to be shut down because some project doesn’t worth any extra expense or resource.
- Learn about political, legislative or regulatory changes that can affect business – The competitive intelligence activity will help analyse the impact of a law or regulation proposed by the government because this government law affects everybody and forces all to change.
- Enter new business – Competitive intelligence activity will help organizations decide if they should enter a new business by observing the success and failure of the market competitor.
- Look at own business practice with an open mind – Competitive intelligence activity will expose organizations to new ideas and concepts because their method of business might be stale and outmoded. Also it will help organizations to be externally focused.
- Help implement the latest management tools – Competitive intelligence activity will provide organizations with relevant information that will assist organizations in re-engineering as well as enhancing customer satisfaction.