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The question of what Competitive Intelligence--CI consists of is not as necessary to understanding its importance in business than understanding a bigger and more important question--why do some firms in an industry win and achieve hegemony where others, often with superior resources, fail. CI is the collection and analysis of information to anticipate competitor activity, see past market disruptions and dispassionately interpret events. It is an essential component to developing a business strategy. CI analysis provides insight into marketplace dynamics and challenges in a structured, disciplined, and ethical manner using published and non-published sources. CI is the purposeful and coordinated monitoring of your competitor(s), wherever and whoever they may be, within a specific marketplace... Your "competitors" are those firms which you consider rivals in business, and with whom you compete for market share. CI also has to do with determining what your business rivals WILL DO before they do it. Strategically, to gain foreknowledge of your competitor's plans and to plan your business strategy to countervail their plans. As you might expect, this will involve many methods at the tactical collection level, but it will also require integration into your existing information infrastructure, analysis and distribution of the information, and finally, the calculation of business decisions on the grounds of that information and the analysis of same. This is the "intelligence" part of the formula. Most of the value-added in manufacturing or product companies is created by knowledge-based service activities such as research and development, marketing research, product design, customer service, advertising, or distribution. Winning firms are organizations that most successfully master the business issues critical to their performance, and develop the most precise understanding of definitions of value and creation of value. Advantage in competitiveness has a lot to do with leveraging the knowledge assets of the firm, while at the same time determining how competitors are likely to leverage theirs. The goals of this explanation are many: Adopt a strategic approach to the use of CI; to see the intelligence function as an integral part of strategy formulation; Show how CI is used by firms to achieve advantage in competitiveness; Examine the process, the tools, and the output of CI. A Fortune 500 company survey showed 55 percent make use of competitor information in composing business strategy. Each firm is a leader in its industry and each firm knows its enemies. Companies and industries prosper through improvements in competitiveness, leveraging core competencies, and CI is at the core of the objective of improving advantage in competitiveness. CI is the core of competitiveness 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 information 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 diseconomies of scale - overhead, inflexibility -- are becoming increasingly powerful. Here are just a few of the questions firms ask themselves when implementing a CI program: 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 competitiveness strategy? Whatever strategic framework the firm chooses to embrace for the management of its business, no one element remains more fundamental to competitiveness strategy than CI. CI is more concerned with doing the right thing, than doing the thing right. The goal of a competitor analysis is to develop a profile of the nature of strategy changes each competitor might make, each competitor's possible response to the range of likely strategic moves other firms could make, and each competitor's likely reaction to industry changes and environmental shifts that might take place. CI should have a single-minded objective -- to develop the strategies and tactics necessary to transfer market share profitably and consistently from specific competitors to the company. A firm which does not rigorously monitor and analyze key competitors is poorly-equipped to compose and deploy effective competitiveness strategy and this approach leaves the firm and its markets vulnerable to attack. The basis for CI revolves around decisions made by managers about the positioning of a business to maximize the value of the capabilities that distinguish it from its competitors. Failure to collect, analyze and act upon competitor information in an organized fashion can lead to the failure of the firm itself.
What then is CI? How do we define it? In what ways does it differ from market research? How is it used to make companies to have more competitiveness? Who needs CI? How is it managed? How is it produced? How should CI be used? By whom? What are its costs? Where does CI fit within the strategic management system of the firm? What are the measurable "bottom line" benefits for managers and their organizations? The Chinese military strategist, Sun Tzu, emphasized the need for CI: "Now the reason the enlightened prince and the wise general conquer the enemy whenever they move, and their achievements surpass those of ordinary men, is foreknowledge". The upside of successfully predicting a competitor's future plans are apparent; as are the consequences of making business decisions based on information that is faulty.CI 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. 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 -- 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. Tactical intelligence is generally operational and on a smaller-scale, not so centered on being predictive. Tactical issues include competitors' terms of sale, their price policies and the plans they have for changing the way in which they differentiate one or more of their products from yours. Middle-level marketing and sales managers number among some of the main users of tactical intelligence. They want to know how to win the day, today. Counter intelligence is defending company secrets. Every firm has competitors as interested in knowing your plans as you are in knowing theirs, maybe even more so. Often, this area of endeavor will involve security and information technology, but others are often overlooked, such as hiring and firing strategies, to contain competitor opportunities within the firm. CI is the determination of solutions to these principle factors and determinants of ongoing advantage in competitiveness: What is the basis of competition, Where the firm competes, Who does the competitor compete against, How does the firm compete. 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 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.
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