1. Competitive Analysis Writing and Presenting a Business Plan Chapter 2

2. Objectives 1. To show that you are fully aware of the competitive forces at work in your marketplace. 2. To explain your strengths over the competition and how you will counteract their advantages and overcome or compensate for your weaknesses.

3. Who are Your Nearest and Largest Major Competitors? Is their business steady, increasing, or decreasing? Why? What are the similarities/ dissimilarities between your business and your competitors?

4. How Does Your Business Compare to Your Competitors’ (strengths & weaknesses of each)? q In length of time in business? q In sales volume (units and dollars)? q In size and number of employees, suppliers, and support personnel? q In number of customers? Share of market? Product niche?

5. On What Basis Will You Compete? q Product Superiority q Price q Advertising q Technology/Innovation q Other

6. How is Your Business Better? q Operations q Management q Product q Price q Service q Delivery q Other

7. What Have You Learned by Observing Your Competition? If you have no competition, what kind might you create by being successful in the marketplace? Do you threaten the major strategic objectives or self- image of the competition? Will you seriously affect their profits? (Will they attempt to destroy you at any cost?)

8. Writing the Competitive Analysis Subheadings to Include: Competitors’ Profile Product/Service Comparison Market Niche and Share Comparison of Strengths and Weaknesses

9. What to Accomplish Give a brief rundown on the other industry participants. Highlight your particular competitive edge. The following is a suggested sequence of presentation.

10. Competitor’s Profile 1. Discuss the competition: size, age, locations, sales volume, management, mode of operation, and other characteristics. 2. Discuss potential competitors who may enter your market.

11. Product/Service Comparison 1. Discuss the similarities and differences between your product/service and that of the competition. 2. Compare your operations and management style with those of your various competitors. 3. Highlight whatever it is that makes your product/service and company more attractive in the marketplace.

12. Market Niche and Share 1. State the approximate percentage each of your competitors holds in the market. 2. Discuss those that hold the large percentages and why they have an edge. 3. Discuss the competitors who have come or are coming on strong and are making (or expected to make) bigger gains in the market.

13. Market Niche and Share 6. Discuss the particular segments of the market that each of your competitors addresses. 7. Discuss your niche in relation to these and what percent of the total market it makes up. 8. Describe where the market is headed and how each competitor’s niche and share may change over the next three to five years.

14. Comparison of Strengths and Weaknesses Discuss your strengths and weaknesses in relation to your major competitors. Focus on: product superiority, price advantages, market advantages (large contracts with customers or suppliers, proximity to larger market, proximity of labor supplies, raw materials, energy, transportation, land, or other resources), and management strengths and weaknesses (experience and track record, skills, etc.).

15. Common Mistakes to Avoid Not identifying known major competitors Underestimating competitive strength and potential Failing to demonstrate your competitive edge -- what makes you unique or better Having no strategy for counteracting current competition or emerging competition Assuming you have no competition Failing to show an awareness of competitors’ plans in the market and their business cycles.