INTRODUCTION

COMPETITIVE INTELLIGENCE

INTRODUCTION
Today's competitive and quickly moving markets require executives
to carefully consider available alternatives before making a decision.
This is especially true for decisions with long-term impact, which
are often referred to as strategic decisions.
Its the process of ethically collecting, analysing, and disseminating
accurate, relevant, specific, timely, foresighted and actionable
intelligence regarding the implications of business environment,
competitors, and the organization itself -Society of Competitive
Intelligence Professionals.

COMPETITIVE INTELLIGENCE DEFINITIONS

The discipline of collecting and analyzing competitive information to
create actions to benefit your company. This business technique can
be applied by large or small business. Strategic intelligence is
concerned

mainly

with

competitor

analysis

or

gaining

an

understanding of a competitor's future goals, current strategy,

assumptions held about itself and the industry, and capabilities -2

diagnostic

components.

Intelligence

about

the

firm's

major

customers, suppliers and partners (in marketing or research and

development alliances) is often also of strategic value.
Some common goals of Competitive Intelligence:

Detecting competitive threats.

Eliminating or lessening surprises.
Enhancing competitive advantage by lessening reaction time.
Finding new opportunities

Historic Development
The literature associated with the field of competitive intelligence is
best exemplified by the detailed bibliographies that were published
in the Society of Competitive Intelligence Professionals' refereed
academic journal called The Journal of Competitive Intelligence and
Management.
Although elements of organizational intelligence collection have
been a part of business for many years, the history of competitive
intelligence arguably began in the U.S. in the 1970s, although the
literature on the field pre-dates this time by at least several
decades. In 1980, Michael Porter published the study CompetitiveStrategy: Techniques for Analyzing Industries and Competitors which
is

widely

viewed

as

the

foundation

of

modern

competitive

intelligence. This has since been extended most notably by the pair
3

of Craig Fleisher and Babette Bensoussan, who through several

popular books on competitive analysis have added 48 commonly
applied

competitive

intelligence

analysis

techniques

to

the

practitioner's tool box. In 1985, Leonard Fuld published his best

selling book dedicated to competitor intelligence. However, the
institutionalization of CI as a formal activity among American
corporations can be traced to 1988, when Ben and Tamar Gilad
published the first organizational model of a formal corporate CI
function, which was then adopted widely by US companies. The first
professional certification program (CIP) was created in 1996 with
the

establishment

of

The Fuld-Gilad-Herring

Academy

of

Competitive Intelligence in Cambridge, Massachusetts.

In 1986 the Society of Competitive Intelligence Professionals (SCIP)
was founded in the United States and grew in the late 1990s to
around 6,000 members worldwide, mainly in the United States and
Canada, but with large numbers especially in the UK and Australia.
Due to financial difficulties in 2009, the organization merged with
Frost & Sullivan under the Frost & Sullivan Institute. SCIP has
since

been

renamed

"Strategic

&

Competitive

Intelligence

Professionals" to emphasize the strategic nature of the subject, and

also to refocus the organisation's general approach, while keeping
the existing SCIP brand name and logo.

A number of efforts have been made to discuss the field's advances

in post-secondary (university) education, covered by several authors
including

Blenkhorn

&

Fleisher, Fleisher, Fuld, Prescott, and

McGonagle. Although the general view would be that competitive

intelligence concepts can be readily found and taught in many
business schools around the globe, there are still relatively few
dedicated academic programs, majors, or degrees in the field, a
concern to academics in the field who would like to see it further
researched. These issues were widely discussed by over a dozen
knowledgeable individuals in a special edition of the Competitive
Intelligence Magazine that was dedicated to this topic. In France, a
Specialized

Master

in

Economic

Intelligence

and

Knowledge

Management was created in 1995 within the CERAM Business

School, now SKEMA Business School, in Paris, with the objective of
delivering a full and professional training in Economic Intelligence.
A Centre for Global Intelligence and Influence was created in
September 2011 in the same School.
On the other hand, practitioners and companies regard professional
accreditation as especially important in this field. In 2011, SCIP
recognized

the Fuld-Gilad-Herring

Academy

of

Competitive

Intelligence's CIP certification process as its global, dual-level (CIP-I

and CIP-II) certification program.

Global

developments

have

also

been

uneven

in

competitive

intelligence. Several academic journals, particularly the Journal of

Competitive Intelligence and Management in its third volume,
provided coverage of the field's global development. In Germany,
competitive intelligence was unattended until the early 1990s. The
term "competitive intelligence" first appeared in German literature
in 1997. In 1995 a German SCIP chapter was founded, which is now
second in terms of membership in Europe. In summer 2004
the Institute for Competitive Intelligence was founded, which provides
a postgraduate certification program for Competitive Intelligence
Professionals. Japan is currently the only country that officially
maintains an economic intelligence agency (JETRO). It was founded
by the Ministry of International Trade and Industry (MITI) in 1958.
Accepting

the

importance

of

competitive

intelligence,

major

multinational corporations, such as ExxonMobil, Procter & Gamble,

and Johnson

and

Johnson,

have

created

formal

CI

units. Importantly, organizations execute competitive intelligence

activities not only as a safeguard to protect against market threats
and changes, but also as a method for finding new opportunities
and trends.
Organizations use competitive intelligence to compare themselves to
other organizations ("competitive benchmarking"), to identify risks
6

and opportunities in their markets, and to pressure-test their plans

against market response (war gaming), which enable them to make
informed decisions. Most firms today realize the importance of
knowing what their competitors are doing and how the industry is
changing, and the information gathered allows organizations to
understand their strengths and weaknesses.
One of the major activities involved in corporate competitive
intelligence is use of ratio analysis, using key performance
indicators (KPI). Organizations compare annual reports of their
competitors on certain KPI and ratios, which are intrinsic to their
industry. This helps them track their performance, vis-a-vis their
competitors.
The actual importance of these categories of information to an
organization depends on the contestability of its markets, the
organizational culture, the personality and biases of its top decision
makers, and the reporting structure of competitive intelligence
within the company.
Strategic Intelligence (SI) focuses on the longer term, looking at
issues affecting a company's competitiveness over the course of a
couple of years. The actual time horizon for SI ultimately depends
on the industry and how quickly it's changing.

The general questions that SI answers are, Where should we as a

company be in X years?' and 'What are the strategic risks and
opportunities facing us?' This type of intelligence work involves
among others the identification of weak signals and application of
methodology and process called Strategic Early Warning (SEW), first
introduced by Gilad, followed by Steven Shaker and Victor
Richardson, Alessandro Comai and Joaquin Tena, and others.
According to Gilad, 20% of the work of competitive intelligence
practitioners should be dedicated to strategic early identification of
weak signals within a SEW framework.
Tactical Intelligence: the focus is on providing information designed
to improve shorter-term decisions, most often related with the
intent of growing market share or revenues. Generally, it is the type
of information that you would need to support the sales process in
an organization.

It investigates various aspects of a product/product line marketing:

Product what are people selling?

Price what price are they charging?

Promotion what activities are they conducting for promoting

this product?

Place where are they selling this product?

Other sales force structure, clinical trial design, technical

issues, etc.

With the right amount of information, organizations can avoid

unpleasant surprises by anticipating competitors' moves and
decreasing response time. Examples of competitive intelligence
research are evident in daily newspapers, such as the Wall Street
Journal, Business

Week,

and Fortune.

Major

airlines

change

hundreds of fares daily in response to competitors' tactics. They use

information to plan their own marketing, pricing, and production
strategies.

Resources, such as the Internet, have made gathering information

on competitors easy. With a click of a button, analysts can discover
future trends and market requirements. However competitive
intelligence is much more than this, as the ultimate aim is to lead
to competitive advantage. As the Internet is mostly public domain
material, information gathered is less likely to result in insights that
will be unique to the company. In fact there is a risk that
information gathered from the Internet will be misinformation and
mislead users, so competitive intelligence researchers are often wary
of using such information.
As a result, although the Internet is viewed as a key source, most CI
professionals should spend their time and budget gathering
intelligence using primary researchnetworking with industry
experts,

from trade

shows and

conferences,

from

their

own

customers and suppliers, and so on. Where the Internet is used, it

is to gather sources for primary research as well as information on
what the company says about itself and its online presence (in the
form of links to other companies, its strategy regarding search
engines and online advertising, mentions in discussion forums and
on blogs, etc.). Also, important are online subscription databases
and news aggregation sources which have simplified the secondary
source collection process. Social media sources are also becoming

10

importantproviding potential interviewee names, as well as

opinions and attitudes, and sometimes breaking news (e.g.,
via Twitter).
Organizations must be careful not to spend too much time and
effort on old competitors without realizing the existence of any new
competitors. Knowing more about your competitors will allow your
business to grow and succeed. The practice of competitive
intelligence is growing every year, and most companies and
business students now realize the importance of knowing their
competitors.
According to Arjan Singh and Andrew Beurschgens in their 2006
article in the Competitive Intelligence Review, there are four stages of
development of a competitive intelligence capability with a firm. It
starts with "stick fetching", where a CI department is very reactive,
up to "world class", where it is completely integrated in the decisionmaking process.

Why Intelligence?

11

Intelligence is usually ahead of its time, and exploits analytics

pertaining to past behavior for provision of much required insight
into course of events.
Competitive Intelligence as a Product
Competitive Intelligence is ethical, timely and useful value-added
information on customers, competitors, others take holders in the
competitive environment and the within the firm.
Competitive Intelligence as a Process
In this case, it involves establishing intelligence needs, generating
information, analysing and disseminating actionable intelligence to
key decision makers, for building competitive advantage and
boosting profitability.
Function of Intelligence
7Ps of CI, People, Porism, Plan, Processes, Prod Pathfinder,
Performance
Reasons for Monitoring Competitors
Predict their next action
Exploit their weaknesses o Undermine their strength o Blow
up threats against them o Undercut their opportunities

12

Partner Intelligence
This involves keeping tabs on every individual and organization that
has a form of value network with the value chain of a particular
firm.
Customer/Prospect Intelligence
This

embraces

continuous

identification

and

analysis

of

demographic factors, budget cycles, key internal influences and key

focus areas of customers/prospects.
Technical Intelligence
It entails examining every accessible research and development
report and allied technical application in order to keep track of
competitive technical know-how, make out business alternatives,
and generate appropriate and well-timed warning signal to decision
makers.

13

Three Types of Intelligence

Recurrent Intelligence: Its done to be abreast with activities and
is not connected to a specific strategic or tactical decision.
Reference Intelligence: Its used as groundwork for specific
strategic or tactical decision and regularly demanded.
Strategic Intelligence: This encompasses broad spectrum of issues
and is classically structured to a specific strategic decision.
Counter Intelligence
Its a process of securing business secrets, plans, techniques,
programmes and projects in order to ward-off adversary.
How does CI improve Business Performance?

Lessens costs
Boosts sales
Captures alliance opportunities
Discover gainful acquisition prospect
Clamps down on competitors profits and sales
Enhances defensive strategies
Improves organizational agility
Achieve first-class status for higher prices
Provides leverage for outwitting performance barrier

14

Overview of CI Process Models Ashton and Stacey Business

Intelligence Process Model 4Cs Process Model SCIP CI Process
Model
Requirements for Starting a CI Programme
Well-trained and empowered staff
Access to resources
Properly structured unit or department
Roles in the Intelligence Process Core Roles

Primary Researchers
Secondary Researchers
Integrators

Recent Trends
The technical advances in massive parallel processing offered by
the Hadoop "big data" architecture has allowed the creation of
multiple platforms for named-entity recognition such as the Apache
Projects OpenNLP and Apache Stanbol. The former includes pretrained statistical parsers that can discern elements key to
establishing

trends

and

evaluating

competitive

position

and

responding appropriately. Public information mining from SEC.gov,

Federal Contract Awards, social media (Twitter, Reddit, Facebook,
15

and others), vendors, and competitor websites now permit real-time

counterintelligence as a strategy for horizontal and vertical market
expansion and product positioning. This occurs in an automated
fashion on massive marketplaces such as Amazon.com and their
classification and prediction of product associations and purchase
probability.
Similar Fields
Competitive intelligence has been influenced by national strategic
intelligence. Although national intelligence was researched 50 years
ago, competitive intelligence was introduced during the 1990s.
Competitive-intelligence professionals can learn from nationalintelligence

experts,

especially

in

the

analysis

of

complex

situations. Competitive intelligence may be confused with (or seen

to overlap) environmental scanning, business intelligence and
market research. Questions the appropriateness of the term,
comparing it to business intelligence, competitor intelligence,
knowledge management, market intelligence, marketing research
and strategic intelligence.
Fleisher suggests that business intelligence has two forms. Its
narrow (contemporary) form is more focused on information
technology and internal focus than CI, while its broader (historical)
16

definition is more inclusive than CI. Knowledge management (KM),

when improperly achieved, is seen as an information-technology
driven organizational practice relying on data mining, corporate
intranets and mapping organizational assets to make it accessible to
organization members for decision-making. CI shares some aspects
of KM; they are human-intelligence- and experience-based for a
more-sophisticated qualitative analysis. km is essential for effective
change. A key effective factor is a powerful, dedicated IT system
executing the full intelligence cycle.
Market intelligence (MI) is industry-targeted intelligence developed
in real-time aspects of competitive events taking place among the
four Ps of the marketing mix (pricing, place, promotion and product)
in the product (or service) marketplace to better understand the
market's attractiveness. A time-based competitive tactic, MI is used
by marketing and sales managers to respond to consumers more
quickly in the marketplace. Fleisher suggests it is not distributed as
widely as some forms of CI, which are also distributed to nonmarketing decision-makers. Market intelligence has a shorter time
horizon than other intelligence areas, and is measured in days,
weeks, or (in slower-moving industries) months.
Market research is a tactical, method-driven field consisting of
neutral, primary research of customer data (beliefs and perceptions)
17

gathered in surveys or focus groups, and is analyzed with

statistical-research techniques.CI draws on a wider variety (primary
and secondary) of sources from a wider range of stakeholders
(suppliers, competitors, distributors, substitutes and media) to
answer existing questions, raise new ones and guide action.
Ben Gilad and Jan Herring lay down a set of prerequisites defining
CI, distinguishing it from other information-rich disciplines such as
market research or business development. They show that a
common body of knowledge and a unique set of tools (key
intelligence topics, business war games and blind spots analysis)
distinguish CI; while other sensory activities in a commercial firm
focus on one segment of the market (customers, suppliers or
acquisition targets), CI synthesizes data from all high-impact
players (HIP).
Gilad later focused his delineation of CI on the difference between
information and intelligence. According to him, the common
denominator among organizational sensory functions (whether they
are called market research, business intelligence or market
intelligence) is that they deliver information rather than intelligence.
Intelligence, says Gilad, is a perspective on facts rather than the
facts themselves. Unique among corporate functions, competitive
intelligence has a perspective of risks and opportunities for a firm's
18

performance; as such, it (not information activities) is part of an

organization's risk-management activity.

Ethics
Ethics has been a long-held issue of discussion among CI
practitioners. Essentially, the questions revolve around what is and
is not allowable in terms of CI practitioners' activity. A number of
excellent scholarly treatments have been generated on this topic,
most

prominently

Intelligence

addressed

Professionals

through

Society

publications. The

of

Competitive

book Competitive

Intelligence Ethics: Navigating the Gray Zone provides nearly twenty

separate views about ethics in CI, as well as another 10 codes used
by various individuals or organizations. Combining that with the
over two dozen scholarly articles or studies found within the various
CI bibliographic entries, it is clear that no shortage of study has
gone into better classifying, understanding and addressing CI
ethics.
Competitive

information

may

be

obtained

from

public

or

subscription sources, from networking with competitor staff or

customers, disassembly of competitor products or from field
research

interviews.

Competitive

19

intelligence

research

is

distinguishable

from industrial

espionage,

as

CI

practitioners

generally abide by local legal guidelines and ethical business norms.

20

A CASE STUDY
Aardvark had a problem, perhaps many problems. The market for
widgets seemed to be changing, revenue and premiums were under
pressure in their key market segments. New market entrants and
Aardvark's main competitor were eroding market shares. New
business models fuelled by information and telco technology and
movements in the exchange rate also seemed to be complicating the
picture. What was going on, what was driving this turbulence? How
would Aardvark respond? How could they improve their competitive
advantage? MindShifts worked with Aardvark to define the key
intelligence topics and refine the key questions which would drive a
situational analysis. Internal sources of information, expertise and
networks across the organisation were mined. At the same time
MindShifts carried out a targeted search for publicly available
information which would add input to the analysis. We also talked
to industry commentators and associations, suppliers, competitors
and employees in search of information and knowledge. Through
careful analysis, the strategic drivers were now becoming clear, the
market and competitive terrain had fundamentally shifted and
Aardvark now appeared to be positioned in the wrong place to take
optimal advantage from this powerful set of trends. On the basis of
this analysis MindShifts proposed strategies that would move

21

Aardvark to take advantage of the emerging opportunities. Working

with MindShifts, Aardvark was able to move quickly to modify its
capability and move into emerging market segments through a new
distribution channel with the right sort of product and service offer.
Within 12 months, Aardvark had reversed the erosion in market
share and was also experiencing strong growth in the new market
segments

they

had

entered.

Aardvark

obtained

first

mover

advantage and its major competitor is now playing catch-up. Mind

Shifts continues to supply key intelligence and analysis to Aardvark
and has now assisted them to develop their own competitive
intelligence capability.
Other examples of the types of work we have done for other clients
are outlined below:
Competitor Profile A typical assignment would encompass profiling
one or more aspects of a particular competitor, including: strategies,
market positioning / sales / advertising, operations, personnel,
management, logistics / distribution, financial, manufacturing or
information technology components. A detailed report is delivered
outlining the competition's current and projected future activities,
as well as recommendations for our client to maintain or improve
market positioning.

22

 Organizational Charts A firm wanted to gain an understanding of

the organizational structure and dynamics of a potential acquisition
before making the final decision to purchase. The MindShifts Group
was asked to identify all departments, structure, staffing and head
count. This information was used to develop an understanding of
the duplication that would exist between the two firms in the event
of a merger.
Industry Profile A client approached The MindShifts Group to
identify companies within their industry sector, and provide brief
profiles on the major players. A report was delivered identifying new
competitive threats and possible counter strategies for our client.
Some Common Questions How do you initiate a CI program for an
emerging company? Especially in a rapid growth environment. The
best way to say this is 'start small'. As a small company your
competitive sensors are already finely tuned. Moving from using the
Internet for your basic research, you will get the most from
gathering information at tradeshows and conferences. Don't go
without a plan though. Attend with a small group and assign
individuals to monitor certain booths and seek answers to specific
lists of questions. Leonard M Fuld offers more detail on intelligence
gathering at tradeshows in his book, 'The New Competitor
Intelligence'. Again, these shows or conferences are where the latest
news or development activity bubbles to the surface - way before
23

you read it in the press. Don't forget to share information across the
company. You will be surprised what colleagues will pick up from
customers and suppliers. The subject of Business and Competitive
Intelligence is getting a lot of air time and people often switch
between BI and CI. Are they the same thing? What is the
difference? Over the past year or so, Business Intelligence has come
to mean data warehousing. Software companies use this "new" term
to address database management and so it has moved from its
original

meaning

of

business

competitiveness.

Competitive

Intelligence however is not just about your competitors, but about

your own competitiveness. It is the organizational process that
guards a company's competitive advantage. Competitive Intelligence
is used to identify what it is that you need to know about your
environment and organization that will enable you to compete more
effectively as well as how competitive you are and how you can
compete more efficiently and effectively in the future. The
Competitive Intelligence process involves the gathering, analyzing
and interpreting of publicly available information to serve as the
basis of strategic decisions and as input into the development of
competitive

strategy. To

put

it

more

succinctly,

Competitive

Intelligence considers the potential effects of, and opportunities

created by, all external elements of the competitive environment
(regulatory, technical, economic, etc.) Competitive Analysis is an
24

element of CI that focuses primarily on current and potential

competitor-created forces. Remember that CI is not market research,
abstracts or news articles, thick reports of facts, nor found. CI is
processed, actionable information used for minimizing strategic
decision risk. It is created for a specific purpose.
There is a great deal of business intelligence software available now.
What software would you recommend for setting up a CI system in
our company? There are a number of software programs and SCIP
has published a study on software (see Fuld & Co "Intelligence
Software Report 2000"), however, the appropriate software will
depend on your organizational requirements and existing IT
systems. Sounding like a broken record - Software will NOT produce
intelligence. Software cannot read and understand your questions.
Software cannot read and understand supporting materials - NOT
NOW ... and may I suggest, not ever! The human brain is still the
only software and hardware that can make sense of and analyze
information to produce meaningful intelligence for decision makers.
However, having said the above, CI software and/or IT is an enabler
in the CI process. As a tool it can play a number of roles - it can
become a data collector, filter, and repository; it can move the
information to the right customers; and it can make the whole
intelligence process more user friendly allowing more people to
participate in sharing vital knowledge. Just remember, without the
25

analysis and understanding, and using only a software system, all

you are doing is moving information around your organization. No
intelligence has been created. How can I begin a CI project in my
company? CI can be started in a small way. The key is
understanding who your client user will be and key issues that they
will be addressing over the coming months. Without a key
intelligence topic (KIT) or key intelligence questions (KIQ) you have
no project. Once you have understood your clients requirements
and the strategic issues involved you can start your CI project. The
first step in establishing any CI program in a company is to ensure
that you are able to deliver some value at the end. By starting with
a small project and working with your client, your chances of
success increase.

26

OBJECTIVE

27

OBJECTIVE OF COMPETITOR INTELLIGENCE

The objective of competitor intelligence is not to steal a
competitors trade secrets or other proprietary property, but
rather to gather in a systematic, overt (i.e., legal) manner a
wide range of information that when collated and analyzed
provides

fuller

understanding

of

competitor

firm's

structure, culture, behavior, capabilities and weaknesses.

Today's competitive and quickly moving markets require
executives to carefully consider available alternatives before
making a decision. This is especially true for decisions with
long-term impact, which are often referred to as strategic
decisions.
There are two main strategies for firms to maintain their
profits at a higher level than the rest of the industry.
A firm could try to outperform its competitors, for
example,

providing

cost-

or

product

differentiation

advantages to its customers.

The second approach is to find an industry segment
where these forces are less severe.

28

COMPETITIVE INTELLIGENCE PROCESS

The Competitive Intelligence (CI) process transforms disaggregated
competitor data into relevant, accurate and usable strategic
knowledge about competitor's position, performance, capabilities
and intentions.

The primary objective of CI is to provide users and decision-makers

with useful and actionable information to make informed decisions.
29

The basic operations in conducting CI are illustrated below and

described briefly in the following sections.

THE CYCLE OF COMPETITIVE INTELLIGENCE

The CIA describes the intelligence cycle as "the process by which
raw information is acquired, gathered, transmitted, evaluated,
analyzed

and

made

available

as

finished

policymakers to use in decision-making and action.

"There are five steps which constitute this cycle:
Planning and direction
Collection and research
30

intelligence

for

 Processing and storage

Analysis and production
Dissemination and delivery
Failure to frequently analyze your competition can cause your
organization to target the wrong customers, incorrectly price your
products, launch a product that does not fill a specific need or
waste time and monies on ineffective marketing campaigns. By
effectively analyzing your competition, you will always stay one step
ahead.

Planning and Direction Phase

The planning and direction phase is a cooperative activity whereby
intelligence users and CI professionals define management's actual
intelligence needs. To facilitate this activity, key topics are used to
create an interactive and efficient dialog with the company's key
decision-makers. The better management can articulate their needs,
the more likely they will receive intelligence they can use.

Market Structure and Competition

31

The structure of a market refers to the number and size of firms in

it. Many markets are dominated by a few large firms. Take for
example, the market for soft drinks and airframe manufacturing.
Other markets have many sellers, such as the markets for TV-sets
and stationery. In some markets the products are homogeneous
(metals, chemicals), that means sellers can meet the needs of
customers equally well. In this case price will be a major factor
influencing

the

buying

decision.

Whereas,

in

markets

with

heterogeneous products (PC, soft drinks) customers will have

preferences for different sellers and price will be less important.
Market Definition George Stigler (1985) and Robert Sherwin have
described a market as "that set of suppliers and demanders whose
trading establishes the price of a good.
" In other words two sellers are in the same market, if one seller's
pricing and production decision materially affects the price that the
other seller may charge. The economic literature provides several
concepts of defining markets. We shall attempt to detail these
concepts, which can be categorized as qualitative and quantitative
approaches. A market with perfect competition is constituted by
many sellers providing homogeneous goods and well informed
customers, who can shop around for the best price without extra
cost. The interaction between all sellers and all buyers will
determine a single price that clears the market. All companies face
32

infinitely large elasticity of demand. Since prices cannot be

controlled, firms decide only about the amount of output they want
to produce and sell. In order to maximize profits, firms will choose
their output such, that marginal cost of production equals marginal
revenue. The higher the number of sellers in the market, the lower
the market price will be and firms will make less profit. Naturally
firms could make higher profits, if they colluded in setting a higher
price for their products. Fortunately legal provisions in the USA and
the European Union prohibit such policies to protect customers.
Monopolistic Competition Edward Chamberlin (1933) introduced
the term monopolistic competition in order to describe markets with
two features:
There are many sellers in the market. If only one lowers its price,
no one would follow, because there are just too many competitors to
keep track of.
The sellers are differentiated and thus offer heterogeneous
products. As a result customers will choose on factors other than
price alone.
Focus on the level of products that are offered, and to whom the
operation seeks out as its customers (or targeted audience). Once
you can define what the company is about, and who they target -

33

use the search engines to your advantage and help them select their
most poised online competitors.
Who is a competitor in business?
Business competitors are:
Other organizations offering the same product or service now.
Other organizations offering similar products or services now.
Organizations that could offer the same or similar products or
services in the future.
Organizations that could remove the need for a product or
service.

34

Why monitor Competitors?

By knowing our Competitors we may be able to predict their
next moves, exploit their weaknesses and undermine their
strengths.
Collecting competitor information
Sales representatives deal on a daily basis with customers and will hear what the competitors have been doing. They are
the business foot soldiers - with the ear to the ground who can
forewarn management about impending enemy campaigns.
Research & Development may come across new patents.
Purchasing may find out that a supplier is now also supplying
a competitor.
Market research

can

give

feedback

on

the

customer's

perspective
Competitor Profiling
Another common technique is to create detailed profiles on
each of your major competitors. These profiles give an in-depth
description

of

the

competitor's

background,

finances,

products, markets, facilities, personnel, and strategies.

35

This involves:
Background
location of offices, plants, and online presences
History - key personalities, dates, events, and trends
ownership, corporate governance, and organizational
structure.
Financials
P-E ratios, dividend policy, and profitability
Various financial ratios, liquidity, and cash flow
Products
Products offered, depth and breadth of product line, and
product portfolio balance
New products developed, new product success rate, and
R&D strengths
Patents and licenses
Quality control conformance
Reverse engineering
Marketing
Segments served, market shares, customer base, growth
rate, and customer loyalty
Promotional mix, promotional

budgets,

advertising

themes, ad agency used, and sales force success rate

distribution channels used, exclusivity agreements,
alliances, and geographical coverage
Pricing, discounts, and allowances
36

 Facilities
Plant capacity, capacity utilization rate, age of plant,
plant efficiency, capital investment
location, shipping logistics, and product mix by plant
Personnel
Number of employees, key employees, and skill sets
strength of management, and management style
compensation, benefits, and employee morale
Corporate and marketing strategies
Objectives, mission statement, growth plans, acquisitions, and
divestitures
Marketing strategies
Now, we want to investigate the situation of a market that has only a
few sellers. In this case the theory predicts that the price and
output decision by one firm will indeed have influence on the overall
price and output in this particular market.

37

Collection and Compilation Phase Internal:

Frequently, the best intelligence is located right in your own
organization.
Sales/Marketing

Operations staff

Accounting/Financial staff

staff could have

could have

could have information on:

information on:
Sales practices
Distribution

information on:
Nature of processes
Production facilities
Employee mix
Cost trends
Productivity
Capacity utilization

channels
Training programs
Compensation

Historical performance
Financial projections
Comparative key indicators

methods
Product
differentiation
Pricing practices and
trends
Promotion mix
Market and
customer base

Engineering

staff Human

could

have staff

Resource Several
could

have obtain

methods

information

information on:
information on:
internally:

Technological Organization Mgmt

1. Develop
leadership Product Devel. Recruiting

internal

development

Training

Patents Production Unionization

38

to

Create

an
network
who

knows who list

process

Develop a call list

Encourage

swaps/exchanges
Provide valueadded feedback

External Resources: Information can be collected from a wide

variety of sources. The following is a partial list of external
sources for data collection:
Suppliers
Customers
Industry Analysts/Experts
Competitors
Internet
Web Sites
Databases
Scanning (Magazines, trade journals, etc.)
Exhibitions and trade associations
Government sources (embassies, government agencies, etc.)

39

Analysis

&

Production

Phase

Information

without

interpretation is most often useless.

Quantifiable information is the easier part of the analysis
process because it usually entails comparing data such as
revenues, market share, product performance, features and
benefits, employee turnover, etc. The real art is to interpret
non-quantifiable data and provide an intelligence product that
is actionable.

The production phase is the activity related to preparing the

information in a format that is easy-to-use and actionable.
Formats and tools vary from company-tocompany, but the
following simple steps can be applied to facilitate use and
appreciation of the information:
Identify the essential elements of information
Use bullet-point format
Use graphs and charts to compare quantifiable data
State conclusions and recommendations
Produce new bulletins and competitor profiles

40

41

Dissemination Phase
CI information, such as News Bulletins and Company Profiles,
should be stored in a company-wide database (intranet-based) so
that all employees have access to basic, publicly-obtainable
information on competitors, team partners and suppliers in a
concise format. Intelligence reports, however, should be closely held
since

they

provide

comparative

data,

tactical

strategies

or

recommendations which are company sensitive. This information

should remain in the hands of decision-makers such as senior
management, product lines managers or marketing managers. CI
information can be diluted as required in the event of a proposal
exercise so that volume managers can ensure that key tactical
issues (strengths and weaknesses, technical performance, product
features and benefits) are addressed, directly or indirectly, in the
proposal response. Ask any business manager how they define
Competitive Intelligence (CI) and you'll hear responses ranging from,
"that spy stuff" to "industrial espionage" to "systematic collection
and analysis of competitor information", from those slightly better
informed. But, CI has priorities that range a lot more broadly than
understanding competitor behavior; although that's a key part - its
influence and usefulness shows up in many firms in other areas

42

more traditionally served by existing "silos" of functionality that

sometimes take offense at CI playing in their sandbox.

43

THE TOP 12 PRIORITIES FOR

COMPETITIVE INTELLIGENCE
1. Current Competitor Activities & Strategy Monitoring
The standard "meat" of the CI program, it's important to remember
that, above all, customers expect the CI team to be aware and
helpful in understanding competitors' current activities and plans.
Usual sources for this kind of research come from public
announcements (Web, news, PR, etc.) and follow-up interviews
conducted against the competitor to ascertain their commitment to
current

initiatives.

This

is

standard,

old-school

"competitor

intelligence", the constant striving towards knowing how to

successfully transfer marketshare from the competitor's company to
one's own.
2. Customer & Vendor Monitoring
Threats of backwards- and forwards integration by customers and
vendors is a possibility often discounted, but a fact most often
realized, by firms every day - even described as two of the drivers of
competitive strategy within the classic (Michael) Porter's Five Forces
Model - these threats are known as "latent competitors", or those
which could relatively easily move back and forth in the value chain

44

to exclude the firm as a preferred source in the open market. As

customers and vendors move up and down the value-added-ladder,
healthy profits at different stages within the value chain create
sometimes-irresistible opportunities for such traditional allies to
move quickly into a "cannibalization" mode against the firm.
Likewise, an understanding of customer-share, or "wallet", can be
revealing in terms of unexploited opportunities to sell more
products/services within existing customer relationships thereby
minimizing selling and marketing costs, while maximizing impact
within a customer's value chain, and excluding competitors from
those self-same opportunities.
3. Operational / Performance Benchmarking
Benchmarking initiatives are traditionally conducted against direct
competitors, but can also prove beneficial in studying latent
competitors,

"parallel

competitors"

(or,

substitutes

for

your

products/services), as well as best-in-class or best-in-world firms

that can easily move into diversified businesses based on their core
competence to take advantage of market opportunities perceived by
their own intelligence team. Most often, such benchmarking
studies begin by isolating the operational deficiencies present in
the firm, identifying practices at firms that excel in those areas,
then conducting research to determine why they excel and transfer
45

that

knowledge

to

the

firm

to

increase

tactical

efficiency.

Sometimes a company can catch-up to a competitor or develop

their own differentia compared to other supplier options that will
create a level of market dominance based on operational efficiency.
This is especially true for those firms who cannot seem to achieve
cost-competitiveness but instead compete in spite of their selling
price, rather than because of it... with obvious implications for
cash-flow and financial solvency.
4. Strategic Probabilities & Possible Futures
The future is the battleground for all business, and, as we try to
predict that future, "scenario planning" has been a tool used by
many competitive strategists to understand the sum-total of all
possible futures and assign probabilistic likelihood to each of those
possibilities - thereby, gaining an understanding of what is likely to
happen moving forward. Closely tied to war-gaming, in that,
business war games try to predict how companies will make
decisions and the comparative outcomes of those decisions, across
a number of financial quarters - where they will invest, what
markets they will attack, which ones they'll abandon, etc. - the most
common method of scenario planning is characterized by "decisiontrees" or the "implications-wheel" models that have been used to
comprehensively and statistically weight all possible outcomes and

46

then craft decisions based on the least harmful or most helpful

series of outcomes probabilistically predicted.
5. Product/Service Sales & Marketing Support
One of the highest-impact areas that the intelligence team can
assist in, a solid understanding of strengths and weaknesses, not
only of competitors but of the firm's own customer and market
perceptions, helping sales force win new customers or maximize
share of existing ones can be the make-or-break metric of success
or failure. While the ability to contribute recommendations to sales
force for ensuring "FUDFactor" (fear, uncertainty and doubt) in the
minds of customers about competitors' products and services is
important, it's also critical to understand the marketing messages
relayed to this customer-base by competitors that can help the firm
to mitigate threats to existing customers and win more profitable
revenues from new ones. This is closely related to value-chain,
channel

and

customer

intelligence,

but

usually

conducted

anonymously in order to ensure truthful discussion by customers

and distributors of the relative perceptions of their buying options.
6. Internal Knowledge Management
Knowledge management and its connection with CI has often been
talked about, but my own opinion on the subject is that, CI
presents what is perhaps the most solid business case for KM
initiatives the firm can get its arms around. Some 80-percent of

47

what a company needs to know about its market and competitors

already exists within the firm and, when directed towards a specific
business problem or objective, KM can be of great assistance to the
CI team in exploiting these internal sources - in the form of more
tacit "communities of practice" as well as for customized searchandretrieve of subject-matter experts and identifying sources of explicit
documentation for market awareness.
7. Intellectual Property Exploitation/Protection
For companies like IBM (who once provided a "free service" to the
general public to search patent records, which in reality was used to
scan for companies interested in licensing technologies), intellectual
property (IP) has become a multi-billion-dollar business. Likewise,
as what might often become the cornerstone of a firm's core
competence and competitive differentia, IP can determine who wins
and ultimately loses the competitive battle in the hearts and minds
of customers. In certain markets, IP is the single greatest influencer
of wins and losses - pharmaceuticals, for example, are guaranteed a
period

of

protected

recapitalization

on

their

investment

in

developing new drugs, and defer the problems faced later on, when
these "cash cows" are overcome by generic copycats. Lately, these
forces have been lessened by shrewd manipulation of product
features as points-of-patent to perpetuate historic monopoly
protection of secure markets - from the design and form of the pill

48

itself to the application effectiveness timeframe, pharma companies

are developing new ways to protect and exploit old products.
8. M&A-Alliance-Investment Support
Buying, investing-in and allying with companies that have
something to offer - either in the form of marketing channels or
production capabilities, if not raw cash-in-hand - provide many
firms the engine of growth for their future expansion plans.
However, statistically speaking, most deals fail to produce the highly
touted and endlessly promised shareholder value they purport to
deliver. This is most often due to a lack of due-diligence in the
qualification process - and a source of tremendous validation value
for the intelligence team. Recent efforts to include pre-deal due
diligence by intelligence teams have had substantial effects on postdeal success - beginning with selection of candidates and ending
with final consummation of the deal and integration of enterprises.
9. Long-Term Market Prospects
Are you in the right business... today? Tomorrow? That's what an
understanding of long-term market prospects can produce for the
firm. Every business is locked into the devilish "product life cycle"
that

includes

not

only

the

most

profitable

periods

of

product/service lifespan, but also eventual decline and death. Most

commonly directed towards understanding which markets will be
fastest growing (a traditional market research activity) and then
making recommendations to decision-makers on the means by
49

which the firm can come to dominate those markets, a solid

understanding of core competence is also important here. A firm
like Corning, which began in the tableware business and came to
dominate the fiber-optics business, is such an example; likewise, a
company like Enron, a giant in the energy business, has transferred
its core competence to the Internet and even the steel-selling
business (although, of course, there are more significant lessons
there...).
10.
Counter-Intelligence & Information Security
CI is conducted by every company, against all competitors,
although I would qualify that by saying it is most often an informal
process, rather than one with an official staff and specific mission.
One really must assume that their organization is under the
scrutiny of one's rivals, at least periodically, and that, traditional
(and some very non-traditional) methods will be used to extract
sensitive information from the firm to enable the competitor to
better succeed in the marketplace. While most often deployed
against "industrial espionage" activities, counter-intelligence is often
a very highly developed process - sometimes even designed
specifically to dis-inform one's competitors as to the firm's future
plans. The legal and security teams are most often considered the
liaisons to counter-attack these specific initiatives - despite the fact
that legal and security tend to be better at minimizing the impact of

50

breaches after they've occurred rather than preventing against such

actions beforehand. The intelligence team has an important role to
play as a point of contact for these defenders of the firm's
proprietary information in that, CI personnel are best-suited to
countervail the same strategies they are actively engaged in with
competitors. Likewise, former employees, contractors, and other
individuals privy to the nature of the firm's proprietary information
can be significant sources of CI for competitors.
11.
Legislative/Regulatory Impact on Business Issues
In certain industries, more than others, government activities - in
both legislative and regulatory realms - can be disproportionately
influential in enabling or hobbling a firm's competitive strategy.
Typically most influential in industries for the public interest such
as telecom, finance, energy, healthcare and transportation, this is
also important in understanding the implications of strategic
initiatives such as merger and acquisition approval - if a
government or trade bloc denies approval for a certain merger - as
we saw happen with MCI/WorldCom and Sprint as well as GE and
Honeywell - the competitive benefits of the deal will certainly be
compromised. Likewise, if a certain drug or market strategy (witness
the recent energy-availability concerns in the USA) meets with
regulatory scrutiny, legal issues can and often do ensue, effectively
scuttling the competitive strategies of the market players involved.

51

This activity is closely tied to strategic futures as the key impact is

uncertain, yet must still be planned for, despite the relatively small
likelihood of outcome.
12.

Decision-Support & Consultative Briefings

The (admittedly) catch-all final category, intelligence teams will be

required to assist both tactical and strategic decision-makers in
becoming aware of all options available to them in each of those
decisions. The real value-add that most managers ask for when they
request

better

information

is

really

more

thorough

understanding of the options available to them - simply, so that

they don't miss any options that they might not have thought of on
their own. These "trusted-advisor" missions are diverse and require
the most highly developed understanding of one's own intelligence
mission and resources - but also provide the greatest opportunity
for the intelligence team to make an impact on the company's longterm competitiveness. Likewise, the penultimate objective of every
intelligence function should be to become this trusted advisor. and
maintaining a competitive advantage.

Business takes place in a highly competitive, volatile environment,

so it is important to understand the competition.

52

Questions like these can help:

1. Who are your five nearest Direct Competitors?
2. Who are your Indirect Competitors?
3. Is their business growing, steady, or declining?
4. What can you learn from their operations or from their
advertising?
5. What are their strengths and weaknesses?
6. How does their product or service differ from yours?
Who are your competitors?
Starting simply is the best way! If you are working on behalf of an
online retailer, do not let your clients get away with comparing
themselves to large online retail portals or commerce centers like
areas of Yahoo! and eBay - unless they are of that size and stature.
Focus on the level of products that are offered, and to whom the
operation seeks out as its customers (or targeted audience). Once
you can define what the company is about, and who they target use the search engines to your advantage and help them select their
most poised online competitors.

53

Who is a competitor in business?

Business competitors are:
Other organizations offering the same product or service now.
Other organizations offering similar products or services now.
Organizations that could offer the same or similar products or
services in the future.
Organizations that could remove the need for a product or service.
Why monitor competitors?
By knowing our Competitors we may be able to predict their next
moves, exploit their weaknesses and undermine their strengths.
Collecting competitor information
Sales representatives deal on a daily basis with customers - and
will hear what the competitors have been doing. They are the
business foot soldiers - with the ear to the ground who can
forewarn management about impending enemy campaigns.
Research & Development may come across new patents.
Purchasing may find out that a supplier is now also supplying a
competitor. Market research can give feedback on the customer's
perspective Competitor profiling Another common technique is to
54

create detailed profiles on each of your major competitors. These

profiles give an in-depth description of the competitor's background,
finances, products, markets, facilities, personnel, and strategies.
This Involves:

Background
location of offices, plants, and online presences
History - key personalities, dates, events, and trends
ownership, corporate governance, and organizational structure
Financials
P-E ratios, dividend policy, and profitability
various financial ratios, liquidity, and cash flow
Products
Products offered, depth and breadth of product line, and

product portfolio balance

New products developed, new product success rate, and R&D
strengths
Patents and licenses
Quality control conformance o reverse engineering
Marketing o segments served, market shares, customer base,
growth rate, and customer loyalty
Promotional mix, promotional budgets, advertising themes, ad
agency used, and sales force success rate
Distribution channels used, exclusivity agreements, alliances,
and geographical coverage
Pricing, discounts, and allowances
Facilities

55

 Plant capacity, capacity utilization rate, age of plant, plant

efficiency, capital investment o location, shipping logistics, and

product mix by plant

Personnel
Number of employees, key employees, and skill sets
Strength of management, and management style
compensation, benefits, and employee morale
Corporate and marketing strategies
objectives, mission statement, growth plans, acquisitions, and

divestitures
Marketing strategies
Market Intelligence (MI) Information relevant to a companys
markets, gathered and analyzed specifically for the purpose of
accurate and confident decision making in determining market
opportunity, market penetration strategy, and new market
development metrics.
The Importance of Competitive Analysis
Why should competitive analysis be important to company?
Because a good competitive analysis will allow the company to
identify its competitors and evaluate their respective strengths
and weaknesses. For your business to succeed, you need to
know almost as much about your competitors as you do about
your own company and customers - a competitive analysis can
provide you with this information. Unfortunately, many small
business owners make the mistake of waiting until a

56

competitor has opened up shop across the street and is cutting

into profits to pursue a competitive analysis and find out who
and what they're up against. From information to intelligence
All this information needs to be collated - with any links and
commonalities highlighted.
The information will need to be indexed and catalogued - so
that when new information comes along, it can be quickly
linked to similar information that had previously been found.
It may be stored in a custom-built or dedicated competitor
database accessible via the company Intranet - although it can
also be stored in much less sophisticated forms. Finally, the
relevance and importance of each piece of information needs to
be interpreted and analyzed - on its own and in conjunction
with other information, the other pieces in the jigsaw. This is
where

information

starts

to

become

intelligence.

What

customer needs and preferences are you competing with? The

list may go on and on, but select those that are most
prominently touted by the competitors in both online and
offline documents. Guarantees, price breaks, exclusive offers,
are all commonplace in order to help make visitors customers.
Beyond that, the audience that is targeted may in fact have
very specific demands in order to be pleased as a client of any
57

online operation. Research those needs, analyze how the other

online competitors of your client meet such needs - and
recommend steps in order to give your client the upper hand.
What are the similarities and differences between their
products/services and yours? While it may be good to offer the
same products and services as others - it is also critical within
the online marketplace to obtain a distinct advantage over
others.
How do their prices compare to yours?
If the product (or service) demand exists, competitive pricing
could be the makeor-break point for any online operation. If
your client features a more extensive inventory, with better
shipping procedures and timeframes - but the pricing is
noticeably higher than others - expect that to be reflected once
the traffic starts coming into the site. How does your client
plan to compete? Search engine optimization will in fact
generate more visitors to any online web site, and if done
properly, will gain a significant amount of continuous attention
from the targeted visitors of your client's market. Once those
targeted visitors begin coming in, make sure that your client
has a progressive (and aggressive) plan in place to better suit
the demands of such users. Simple things like FAQ's,
automated support systems, and a knowledgeable sales staff

58

will make things flow much more smoothly. Offer advice to

your client as needed within this department. Often, those
looking for SEO are ready to establish a flat-lined level of sales
or product support, but not one that is scaleable over time.

59

Who Does Competitive Intelligence?

Those working in CI range from public, legal or corporate librarians
and

information

center

analysts

to

management

personnel,

specialists in financial data, business-development people and

strategic planners to ex-CIA operatives and retired military
intelligence personnel, information specialists and academicians.
(One of the authors of this book, John Moorhead, is a former U.S.
Naval Intelligence Officer.) Many corporate practitioners, according
to a survey done by the Conference Board, are marketing directors
or marketing research managers. It seems that at this point in CI's
evolutionary progress, to quote Lawrence of Arabia, "nothing is
written." Competitive intelligence is the core of competitive
strategy Why do evidently great organizations with great products,
wise managers, and other successful strengths, go out of business?
Economies of scale, the foundation on which big companies have
based their dominance in the Industrial Era, is no longer an
advantage.
Changes in technology, in the financial system, in just-in-time
production techniques, and in the rise of companies offering
distribution and support systems which previously only the largest
companies could afford -- removing the advantages of being big. The

60

diseconomies of scale - overhead, inflexibility -- are becoming

increasingly powerful.
Value of Competitive Intelligence here is just a few of the questions
firms ask themselves when implementing a CI program:

61

 How do we most usefully define the company's mission, its

strategic intentions, its objectives and its strategic choices?
What do we need to know to develop and to select strategies
which are not only successful, but sustainable?
What new products should we build and which markets should
we enter and how?
How do we implement our competitive strategy?
Competitive intelligence is usually composed of five major areas of
endeavor, and is performed under three main approaches in the CI
framework:
assessment of strategies
competitor perceptions
effectiveness of current operations
competitor capabilities
long-term market prospects

CI is focused on decision making Seldom do people realize that

business, just like life is merely a series of decisions. And global
firms have a growing need for the necessary information on which
62

to base decisions concerning the conduct and development of each

of their firm's strategic objectives, and the protection of their
organizations against threats from their competitors. Purpose &
Role of Intelligence in Business Intelligence is both, a process and a
product -- an analytical process that transforms tumultuously
gathered

competitor

and

market

information

into

actionable

knowledge about competitors' capabilities, intentions, performance,

and position; as well as the final product of that process.
The focus of market research tends to be on the problems
associated with the profitable marketing of a firm's products and
services. The scope of competitive intelligence is far broader.
Competitive intelligence is a value-added concept that layers over
the top of business development, market research and strategic
planning. The research objectives of a competitive intelligence
project will often involve issues such as: the manufacturing
capabilities of the competitor; analysis of alliances and/or joint
ventures entered into by competitors; the competitor's future plans
and strategies for specific markets, or product lines; reasons behind
changes in the corporate or business unit strategy, et cetera.
Do customers know the difference?

63

How do your products compare with others on the market? While

companies often make claims of superior performance, how many
can back them up with objective, quantifiable data?

64

RESEARCH
AND
METHODOLOGY

65

METHODOLOGY OF RESEARCH

I have collected data from various sources like:

Primary Data; and
Secondary Data
Primary Data: Data collected by the investigator himself/ herself
for a specific purpose.
Example: Data collected by a student for his/her thesis or research
project.
Secondary Data: Data collected by someone else for some other
purpose (but being utilized by the investigator for another purpose).
Example: Census data being used to analyze the impact of
education on career choice and earning.
I have used secondary data to get information about Competitive
Intelligence from internet and other related websites.

66

BIBLIOGRAPHY

67

BIBLIOGRAPHY
Competitive Intelligence: How To Gather Analyze And Use
Information To Move By Larry Kahaner

Competitive Intelligence for Information Professionals

By

Margareta Nelke, Charlotte Hkansson

Competitive Intelligence Advantage: How to Minimize Risk,

Avoid Surprises By Seena Sharp

Competitive Intelligence by Hasanali

Competitive Intelligence and Global Business

By David L. Blenkhorn
Controversies

in

Competitive

Intelligence:

Issues By Craig S. Fleisher, David L. Blenkhor

68

The

Enduring

Competitive Intelligence: Gathering, Analysing and Putting it to

Work By Mr Christopher Murph

69