Influence of industry and competitive analysis on business planning and strategy

Business planning could be described as part of an ongoing ongoing activity related to the direction of the entire organization. It contains the mission, objectives, strategies, tactics, and policies that will guide the organization to adapt to the environment for a specific period of time. Therefore, a business plan is considered the backbone of a business unit; an attempt to follow the vision to achieve the corporate goal. However, a business planning needs to be flexible and accommodating so that it can be changed from time to time if necessary to suit the general environment, not just the business environment. To obtain an effective business plan, a critical analysis of the industry and analysis of the competition is inevitable.

The strategy is the determination of the goals and basic long-term objectives of a company, the courses of action to follow and the allocation of resources that would be necessary to carry out these goals. Therefore, strategy is not an end in itself, but a means to an end. It is this that makes it a vital “must-have” ingredient in any business. It is typically included in organizations’ business and marketing plans.

It is also a process and is normally considered under three main aspects or stages, namely, strategy analysis, which is the stage in which, through the analysis, the strategist identifies the opportunities, strengths, weaknesses and threats in the environment; formulation of the strategy, which is the stage in which you choose between numerous and potentials; and implementation of the strategy, which is when the chosen strategy is translated into action by the organization.

The strategy is, therefore, to develop and shape the goals and objectives of the organization, providing the necessary response to the environment (for a competitive advantage) and providing good corporate governance. As already noted, strategy and business planning are somewhat linked.

The ‘strategy’ is normally part of the business planning and marketing processes.

Industry and competition analysis are part of the early stages of business planning and strategy. However, there is some distinction between the two.

Industry analysis is trying to identify the forces that affect the level of competition in an industry. Research has shown that industry analysis is very effective at the strategic business unit (SBU) level because, if done at a general level, it reduces its value.

Therefore, this analysis would be done at the SBU level still with the industry in mind, applying Porter’s five forces – entry threat, buyer power, supplier power and substitute threat, and competitive rivalry – to show the effect of the environment in the industry as a whole.

The Threat of Entry – This is the extent to which other stakeholders can enter the industry. It depends on the barriers or restrictions of entry to the industry. There are quite a few examples here, but few could be explained. Some of the examples are economies of scale, capital required in a company, access to distribution channels, expected retaliation (that is, if a competitor fears retaliation from the existing company), legislation or action, and government differentiation. When analyzing barriers, one takes into account which barriers prevail, the extent of prevention, the organization’s position, and gaps.

The Power of Buyers: This analysis looks at the influence buyers have on the industry in question. Based on the organization’s supply claim, the energy intensity is felt. For example, in grocery retailing in the UK, where there is a concentration of buyers, few retailers, particularly supermarkets, dominate the market.

Also, when the cost of switching suppliers is not high, buyers can manipulate the system. There is also the threat of backward integration if supplier prices and quality are deemed unsatisfactory. It contradicts the fact that a good understanding of these topics is a potential determinant of a company’s strategy. Also, when there is an (intense) price war between competitors, buyers can manipulate the system, for example, the low-cost airlines at Airbus and Boeing.

Somewhat related to the above is the power of providers: when the consumers of a particular provider are dispersed, the provider can exercise power in that industry. A brand image can also help a supplier become powerful. In Ghana, for example, the brand name “Graphic” has become a household name such that if someone wants to buy any brand of newspaper, the word “Graphic” is used. Like Gucci and Coca-Cola too, most retailers stock them so they can win over shoppers thanks to the brand.

A significant benefit that can be drawn from this when formulating any strategy is to attack the brand name or increase the cost of marketing based on the knowledge gained here.

The next force is the threat of substitutes entering the industry. These could come in one or more of these products per product (for example, fax for postal service and email for fax, substitution as necessary for a new product, generic substitution (that is, products that compete for need) and dispense , for example, from beer, tobacco, cannabis.

When planning a business or formulating a strategy, therefore, there is a need to find out how risky the substitute for the organization’s product or service is; Can the service or product withstand the threat posed by substitutes? or how easily consumers can switch to these substitutes.

Intensity of rivalry: refers to the possible entry of competitors into the industry; availability of substitutes and control of buyers and suppliers. When this position of the existing organization changes. How can you be affected by the competition? The following should also be noted. Competition is intense where competitors are the same size, for example, in the computer search engine industry until Google emerged. Market growth rates and global customers can increase competition. Also, when there is little or no differentiation, customers can easily be swayed; acquisitions and mergers also improve a company’s control in an industry and therefore give it a competitive advantage. High fixed costs in an industry due to high capital intensity result in lower prices from competitors, for example, Boeing and Airbus.

Like the other analysis, a good understanding of the information here is a starting point for successful strategy formulation and business planning.

While industry analysis addresses industry-specific issues affecting the industry, competitive analysis looks at financial and marketing metrics, mission statements, R&D, and product development to determine where competitors focus their priorities and resources.

Some of the marketing aspects to consider under competitive (competitor) analysis may include discovering how competitors are meeting customer needs in the range of goods or services being offered, affordable prices, and unique features. Consideration should also be sought about the quality and reliability of the services and goods provided by competitors. For example, Toyota recently cut the engineering cost of the Camry by 30% and was able to launch a new, wider and longer Sienna Mivan that has a folding rear seat and is priced $ 1,000 less than its predecessor. Others may include obtaining information either by intelligence or through annual reports, as information is not easily disclosed (for fear that competitors will capitalize it) on the entire market share, whether it is growing in decline. or stable, specific market share, for example UK or US market; Launch of new brands or products: Toyota launched a new brand in the US in 2003; ‘Scion’ aimed at younger buyers, other aspects that could provide relevant marketing information on competitor analysis are changes in promotional tactics, distribution channels and not the slightest addition of new production or service facilities to improve efficiency and reduce costs. A good recent example is Asda’s installation of radio frequency identification (RFID), a device that would be used to scan incoming product barcodes, which could save Asda $ 8.35 billion annually. Fortune, ‘Wal-Mart Keeps the Change,’ Nov. 10, 2003, 23.

The financial analysis should consider the performance of competitors. The investment program of competitors in relation to R&D, diversification (mergers and acquisitions, as well as training and staff development must also be evaluated and analyzed. R&D is especially vital in large companies; is key to its survival despite its Microsoft, for example, is spending billions to develop its own search engine that will be incorporated into both its MSN online service and its new operating system, which is scheduled for 2006, to Combating Google’s Dominance in the Search Engine Industry, Fortune, Dec 22, 2003, pp.

To facilitate analysis, Porter developed a model, a matrix, that compares the five forces with three intensity levels, low, medium, and high (see Figure 1 below). Based on the experience of a well-known UK retail group, the illustration shows intense competition from rivals and a great need to keep your customer base in front of them. In business planning and strategy, industry analysis helps in positioning the company and in the right environment (that is, adapting to the environment and formulating strategy. On the other hand, competitor analysis influences the business planning and strategy by providing and other key information about competitors that will aid in business planning and strategy formulation that will give the organization the necessary competitive advantage.

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