Business Strategy: Know your competition

There are many articles online (LinkedIn, independent blogs, etc.) and in informative magazines and publications (Entrepreneur, WSJ, Harvard Business Review, Fast Company, Text Books, etc.), which will tell you how to run a business, manage a start-up, what to do, what not to do, etc.; however, I'm going to tell you, it is just as important to know and understand your competitors.  It amazes me that in this day and age, where the global economy is fully entrenched in all industries, information is readily available and accessible to all - many companies still choose to operate as if they were the only firm in that industry.  You can have the best business plan in the world, but, if you are unaware of the competitive landscape (who your competitors are and what they are doing), that amazing business plan may be all for not.  You may even risk the possibility of a savvy (established, innovative) competitor, who is aware of you and your business model, to copy and implement it before your business even has a chance to get off the ground.  

I would like to introduce and explain some realizations that have come to my attention along my professional career and as I was perusing my MBA from Northeastern University.  

Global Economy:

The first of which is obvious but should not be ignored or discredited, the fact that we are now in a global economy, every industry is experiencing increased competition, and as the years go bye it is increasing exponentially due to third world countries, namely the BRICS nations; all of which are experiencing emerging economies as their access to resources and technology grows.  Many of these countries operate under their own proprietary laws and, maybe more importantly, have access to cheap labor – enabling companies to make products which are similar for much cheaper than in established 1^st world countries. 

Access to Technology & Lower Barriers of Entry:

Access to technology and lower barriers of entry go hand-in-hand as the former enables the latter.  The access to technology has essentially leveled the playing field when it comes to competition.  A small independent start-up now has the potential and access to the same technology as a major firm, which was not the case 10 or 20 years ago.  For one, technology (computers, internet, marketing channels, etc.) came at a much higher cost in the past.  Now the majority of people/businesses are able to purchase a computer and the internet, build a website, and market their product all with minimal capital investment.  A first-hand example of this would be the music industry.  The music industry was really the first to feel the effects of this in the early 2000s with Napster and other file sharing platforms, which essentially destroyed the major record labels.  I’m not saying whether this is or is not a good or bad thing, as the record labels failed to adapt and innovate quickly to the changing landscape; therefore it was of their own doing.  Fast-forward to today, where now every artist, composer, band and record label (large and small) has access to the same technology and clients for that matter, making for a highly competitive market place.  Furthermore, lower barriers of entry (affordable hardware and software) have been a major factor as well in regards to increased competition. Although the music industry was the first to be hit by this phenomena, it is a reality for all industries, and business owners must take notice.

Access to Information:

Access to information coincides with the above as it is technology based, however, it deserves its own explanation due to the fact that it is still fairly new and very important when analyzing and understanding your industry's competitive landscape.  In the past companies would have to rely on “insider” data or having to wait for a particular competitor’s TV/Print Ad to air, well that is no longer the case.  Now everyone has instant access to all the vital information they need – including websites, financial data, marketing techniques/strategies, operational methods, personnel, territories, etc.  Everything can now be accessed via the internet by searching company names, industry related keywords, social media, etc., so there’s no excuse not to “do your homework” (you may actually come up with an innovative idea along the way) and research as much as you can about what the competition is doing – smart companies are doing it everyday so don’t wait!  

Conclusion:

All of the above factors have led to increased competition and, in many cases, market saturation.  This trend will only continue as more and more countries and small innovative start-ups enter the global economy.  This does not mean that starting and/or running a business is not a good idea – quite the contrary, as it is a great idea (for certain people)!  The costs to start and run a global business is at all time lows, at least for those that know and understand how to leverage the above factors to their benefit.  Those that do not, and are stuck operating in an outdated business model will not survive in today’s world where you are either in the lead or falling behind.  And when you fall behind it can drain capital quick as you try and catch up - and when you do catch up, the competition may have already moved on to some other innovative business model or product/service.  Everything moves fast, including your competitors, so don't assume you are the only one out there, or implementing these techniques.  Remember, always try and stay in the lead or at least a close second.

PS - If you are in need of any Business and Marketing consultation for your small to mid-sized business/start-up feel free to shoot me an email at: modernbizstrategy@gmail.com.

Enjoy the ride!

ModernManTellsAll

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