CA_HomeworkIII - Homework III I. Professor: ANDREA...

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Homework III Professor: ANDREA STOCCHETTI I. PREREQUISITES OF MODELS USED IN COMPETITIVE ANALYSIS Competitive analysis is a critical component of strategy formulation and implementation. It helps practitioners to identify their competitors and to understand, interpret and predict their actions. Analysis done well will help an organization to reduce its risk level in dealing with its external environment. Understanding and addressing the root causes behind flaws in the analysis process is a positive step toward building an effective system for competitive analysis. This system should form an integral part of the organization’s decision-making processes, stimulating creative thinking about the competition. Prescott & Grant (1988) propose that practitioners follow a three-phase process of “awareness and choice” when they attempt to select their techniques. First, practitioners need to determine what relevant techniques are available and how they relate to one another. Second, practitioners need to determine what the focus and scope of the “competitive arena of interest” is. Third, what constraints in terms of time and other resources will limit the extent of the analyses that are undertaken? Fleisher & Bensoussan (2003) builds on this process with their FAROUT-system. With this system they aim to create an easy-to-use framework that will help analysts to “determine the optimal methods or techniques for managing their particular analytical challenges”. By using this framework, the output from the analysis process will be f uture oriented, a ccurate, r esource efficient, o bjective, u seful and t imely. Still, these proposals are not universal. A better check-list for picking a tool is represented in the table below. It is much more universal and easy to use. It offers a quick sharp answer to the competition analysts and also to managers. PREREQUISITE WHY IT IS IMPORTANT AND RELEVANT Comparison No competitive analysis makes sense without comparison/ranking of a firm’s goods/services relative to its competitors’ products. This is why it is a good point to start with when selecting/building a model. Obviously, ranking is a necessary prerequisite, but not sufficient. Hypotheses on relationship between variables and phenomena The firm must be able to explain its positioning. Otherwise it cannot improve its performance relative to its competitors. The assumptions on variables that explain competitiveness must be carefully elaborated and the inter-variable relationships must be highlighted. Relationship between variables and phenomena Any good tool of competitive analysis must be able to test the capability of the chosen variables to explain the phenomenon under study (competitiveness). Strategies
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CA_HomeworkIII - Homework III I. Professor: ANDREA...

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