Critical capabilities
Thinking about your competitor, what are their critical capabilities? That is, what functions are critical to their operation? And will you need to match these or can you compete another way? Some examples are:
- Personnel – they are able to hire the best people, or they are able to hire inexpensive people
- Information – they are able to conduct their own market research, or they are able to use business intelligence effectively to make decisions about their business
- Revenue – they are able to market and sell their product effectively and their market share is growing, or they are able to provide good customer service
- Operations – they are using a physical store to sell their product, or they are using a mobile truck or van or car to reach their customers, or they are selling online
- Logistics – they are able to source their supplies on time for production, or they are able to deliver the products to the customer themselves or through delivery services
- Finance – they are able to obtain investments or loans when they need to expand or survive a shortfall, or they are able to save profits in their own cash reserve
Don’t limit yourself to these — ask the questions that make sense for your industry. The critical capabilities help you identify things yours competitors can do (not things they have) that are required for their success.
Organization
Thinking about your competitor, how are they organized?
- Top-heavy, where all decisions are made at the top
- Middle-heavy, where they have a lot of layers of middle management
- Distributed, where their store managers or front-line managers have a lot of power and flexibility
Critical requirements
Thinking about your competitor, what tangible or intangible things do they require to conduct their business?
- Employee morale to keep people working vigorously and focused on their goals
- Access to market data or research
- Walkways leading to their stores, roads for their mobile units, mailbox to receive mail orders, telephone to receive telephone orders, or internet access to sell online
- Money to buy supplies, pay employees, or invest (marketing, sales, technology, logistics, operations, talent)
- Market perception (do they rely on a perception of being the best rather than actually being the best)
- Loyalty (do they rely on customer loyalty to keep people from switching, rather than having a better product? and if so, what is that loyalty based on — is it because they remember a customer’s name and preferences? because they give discounts for repeat purchases? because they do charity work in the community? because they support the local sports team?)
Critical vulnerabilities
Thinking about your competitor, what are the things that, if they were to change, would disrupt their critical requirements or critical capabilities?
- Scandal – would their employees quit if a moral or ethical scandal emerged about their executives? or would their employees stay? and if their employees stay is that due to economic conditions or loyalty or something else?
- Better pay – would their employees quit to take a better paying job elsewhere? if no, why not?
- Investors – are their operations sustainable or do they require additional investor money to continue? what would happen if they don’t get their next round of investment?
- Reputation – is their business based more on reputation or through substance? for example Boeing had an amazing reputation for reliability and then things shifted internally but the market didn’t notice so eventually they scandal after scandal related to safety which meant that at some point their business was running on reputation of reliability and safety even though the substance was no longer there; for example Intel had an amazing reputation for being a technological leader and things shifted internally but the market didn’t notice so eventually they started losing ground to competitors and got into a position where they were behind on the technology but some people continue to buy Intel assuming that they are still the best without checking their product’s actual performance and price against competitors; if the competitor were to be called out to do a challenge or compare stats, would that hurt or help their business? it would hurt if they are operating on reputation without substance; however if they have both reputation and substance it would help them
- Image – do their customers have a specific image in mind about their product or about themselves when using the product? what would happen if that image changes? would customers stay with the product and their new image or would they abandon the product? for example,
Compass
Return to competitive analysis.
Return to information activities.