Rajeev Karki

What is Competitive Intelligence?

Competitive Intelligence (CI) is the ethical process of collecting, analyzing and applying information about the capabilities, vulnerabilities, and intentions of competitors in competitive arena (Miller, 2001, p. xi). Competition in any market is inevitable. Having already assembled the information about the market and your potential competitors gives you the advantage to succeed.

Competition comes in various forms and it is not possible to fend off all competition at the same time. A company should use CI strategically, and decide which competitors to target. Sometimes, it may be wise for a company to take a step back, and not compete at all (Robert, 1997, p. 143).

Gathering Intelligence:

As long as the process is ethical, there is no single correct way of gathering CI. The competitor’s website, prospectus, or annual report is usually the best place to start. Web search engines can also be a good resource as long as the authenticity of the source can be verified. There are also pay for use services like Lexis Nexis, Dow Jones, Hoover’s, Standards & Poor’s, and NEWSEDGE that provide intelligence for various disciplines (Breeding, 2001, p. 53). Before a report is produced from this information, it is vital that the researcher know who his audience is. The CEO of the company may use CI differently than a salesman. Knowing who the user is and how the information is going to be used will provide the most accurate information.

In order to offer maximum benefits, the CI department needs to operate proactively instead of reacting only to individual requests. Having the information on hand saves time and resources.

Once a piece of intelligence is gathered, it must be stored for easy access by all authorized parties. This is where Knowledge Management comes into play. The key to successful implementation of Knowledge Management Systems are “information reusability and self-access features. Once the information is compiled, it is sent to a central place (where it is constantly updated) and is ready to be accessed a second, third, fourth….time. Each additional time it’s accessed, the cost to assemble the information is virtually nothing” (Breeding, 2001, p. 55). The Knowledge Management system can be setup as an intranet/internet portal that is protected and available only to authorized company personnel.

The CI information must be continually updated. Outdated and incorrect CI information is worse than having no intelligence at all. A significant amount of a CI analyst’s time should be spent on reading news articles and news alerts, and keeping the CI knowledge system up to date.

CI in global economy:

In today’s world, competition comes from domestic as well as international players. In order to gather intelligence on a foreign company, the CI analyst must overcome several challenges, cultural differences being one of the biggest factors. In order to accurately evaluate a piece of data, the CI analyst needs to understand the cultural norms and local rules and regulations. An action that is that is acceptable in United States may be against the law in other countries or vice versa. “For example, unless it is authorized by a court order, intercepting a competitor’s faxes or cell phone calls is viewed to be both illegal and un-ethical in the United States – a practice sometimes associated with CI that remains above the law in variety of other countries (Blenkhorn & Fleisher, 2005, p. 7).

The CI analyst must also be aware of the political situation and stability of the country when doing business globally. The United States has enjoyed a stable government for a long time. However, in countries like Nepal, Pakistan, Sri Lanka, Kenya, and Nigeria, the political situation has historically been unstable, causing violence and unexpected business closures. Having critical CI like this can help the company decide whether it should try to penetrate these markets or not.

Strategic use of Information:

Having a good CI of the marketplace does not necessarily make a company successful. The strategists of the company need to review the CI carefully and make decisions about how to play the game of competition. A natural business move might be to find all the flaws and weaknesses of the competitor and attack them in those areas. This may prove to be effective in the short run, but according to Michael Robert, this strategy only makes the competitor recognize those weaknesses and come back stronger (Robert, 1997, p. 153). A better strategy, according to Robert, is to find the strengths of the company and try to excel in those areas. “Attacking a competitor’s weakness only leads to marginal changes in the market position. Significant gains can only be made by attacking the heartbeat of that competitor’s strategy (Robert, 1997, p. 153).

Even in the same industry, for example, the automobile industry, the manufacturers are competing against each other on various grounds. Although they are all after the market share, not all companies are in direct competition. “To understand the competitor’s strategy for being there, one needs to identify each competitor’s driving force and business concept” (Robert, 1997, p. 152) Toyota is out there to beat GM in the market share and become the world’s largest car company. On the other hand, Honda’s driving force is its engine technology. Volvo’s target markets are families with children that are looking for safe cars whereas BMW caters to drivers that demand performance.

A new entrant in the car business might strategically choose to avoid direct competition by manufacturing small electric vehicles that give very good gas mileage. The Smart car has done just that. By differentiating themselves from the rest, Smart cars are gaining popularity in urban areas where commuting and parking are major issues. Subaru, on the other hand, has taken up the challenge to go head to head with Volvo in offering safer cars. Instead of building on the weaknesses of Volvo, Subaru decided to offer only all wheel drive technology in all their models. Subaru targeted Volvo in one of their advertising campaigns by showing a Volvo car crashed into the wall and the passengers walking away uninjured. On the bottom of the ad was a Subaru stopped one yard from the wall. The caption read “If you want to be in an accident, buy a Volvo. If you want to prevent an accident, buy a Subaru” (Robert, 1997, p. 156). By directly attacking the strength of its competitor, Subaru has gained a lot of trust with consumers as being one of the safest cars available.

Conclusion:

There are lots of different ways to gather CI and manage it using Knowledge Management Systems. But, the success of the company relies on how effectively they are able to use this CI. In certain cases, it makes sense to back out of the competition and choose a different market. In other cases, one needs to attack the strength of the competitor directly to make significant gains. In either case, one needs to target a single competitor at a time. Starting a war on two fronts is never a good strategy.

References

Blenkhorn, D. L., & Fleisher, C. S. (2005). The State of Our Understanding of Research and Practice in Competitive Intelligence and Global Business. In D. L. Blenkhorn, & C. S. Fleisher, Competitive Intelligence and Global Business (pp. 3-16). Westport, Connecticut: Praeger.

Breeding, B. (2001). CI and KM Convergence: A Case Study at Shell Services International. In J. E. Prescott, & S. H. Miller, Proven Strategies in Competitive Intelligence : Lessons from the Trenches (pp. 45-68). New York: John Wiley & Sons, INC.

Miller, S. H. (2001). Corporations Get Smart. In J. E. Prescott, & S. H. Miller, Proven Strategies in Competitive Intelligence: Lessons from the Trenches (pp. xi-xv). New York: John Wiley & Sons, INC.

Robert, M. (1997). Strategy Pure and Simple II: How Winning Companies Dominate their Competitors . New York: McGraw-Hill.