This report compares two journal articles highlighting competitor analysis, identifying the varying approaches to competitor analysis and key findings as to best practice for strategic management through competitor monitoring and assessment.
Identifying potential opportunities and threats associated with competitor activities is the fundamental purpose of competitor analysis in order to determine whether the business can maintain a competitive advantage and how best to go about doing this. Bergen & Peteraf (2002) describe the importance of competitor analysis as being a positive motivator to increase managerial awareness of external threats and risks, essentially creating a leader who does not take a rather myopic approach to business strategy. The authors suggests that once the competitor has been identified, it is a primary goal to define the market in which the business thrives and determine whether competitors have an edge in finance, product or marketing and look for avenues by which to close this edge through positive business changes. Through this method of competitor analysis, the business understands the overall relevance of competitive activities and prevents the company from being blindsided by surprise moves in similar market environments.
The authors propose a detailed, two step framework in competitor analysis in which the most important element is recognizing the level of threat stemming from each competitive entity. For instance, indirect competition is measured along with potential competition and direct competition (Bergen & Peteraf). By identifying competition in this fashion, business leadership creates a company profile based on the level of threat that each competitor maintains in any given business situation. This profile is then compared to long-term company strategy to determine which, if any, internal or external company resources should be allocated to