Competitive Intelligence

Term Paper

Dr. Ahmed Nassar

Prepared by
Ahmed Ibrahim Ahmed El Mizayen

1. What is CI?

he process of collecting and analyzing information about competitors’ strengths and weaknesses in a legal and ethical manner to enhance business decision-making. Competitive intelligence activities can be basically grouped into two main types – 1) Tactical, which is shorter-term and seeks to provide input into issues such as capturing market share or increasing revenues; and 2) Strategic, which focuses on longer-term issues such as key risks and opportunities facing the enterprise. Competitive intelligence is different from corporate or industrial espionage, which use illegal and unethical methods to gain an unfair competitive advantage.

Competitive intelligence means different things to different people within an organization. For example, to a sales representative, it may mean tactical advice on how best to bid for a lucrative contract. To top management, it may mean unique marketing insights to gain market share against a formidable competitor. The ultimate end goal of competitive intelligence is to help make better decisions and enhance organizational performance. While most companies can find substantial information about their competitors online, competitive intelligence goes way beyond merely trawling the Internet, on the premise that the most valuable information is seldom – if ever – easily accessible online. A typical competitive intelligence study includes information and analysis from numerous sources. These include the news media, customer and competitor interviews, industry experts, trade shows and conferences, government records and public filings. In acknowledgement of the growing importance of competitive intelligence, the Society of Competitive Intelligence Professionals (SCIP) was founded in the U.S. in 1972. It underwent a name change to Strategic and Competitive Intelligence Professionals in 2010.

In a general, more broad sense, Competitive Intelligence is the action of defining a question, gathering data, analyzing the data into information, transforming it into actionable intelligence which is in turn used for strategic decision-making of an organization.
At a more technical level, CI is a systematic and ethical program consisting of the aforementioned series of processes; it is the legal assimilation (ie. through the use of open-source or ethical inquiry) of information regarding the capabilities, vulnerabilities and intentions of business competitors through the use of open-source and ethical inquiries.

• CI enables senior managers in companies of all sizes to make informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies. • Check all content of slide deck 2_What CI is And Is Not - could be used here
CI is forward thinking: the most recent information is the most relevant to give us insights into the future.

2. Why is CI important?

One of the obvious trends in business today is increased competition. One reason for so much competition is because the World is now one single marketplace. Additionally, distribution channels like the internet now make it possible for anyone to enter the global marketplace. As a result of increased competition, the rate of change taking place in business is increasing exponentially. For example, internet usage now doubles every 100 days. If you expect to keep-up and survive in this fast paced competitive environment, you must know what the competition is doing. So how do you monitor the competition in this age of information overload? The answer is with Competitive Intelligence .

Competitive Intelligence (CI) is a process whereby you collect, analyze, and transform information into intelligence so you can manage the future. Examples of CI include everything from collecting the Annual Reports of your competition to setting up automated search routines. The overall objective of CI is to identify events, trends, and other issues that will impact your organization.
The best way to implement CI is to focus on critical questions confronting your organization. For example, how will this regulation change our business or how will the introduction of a competing product impact our business? You must continually monitor critical issues if you expect to compete. If you fail to implement CI, than you run the risk of operating in a reactive mode. And nothing changes a company more than having to survive.

The pace of technological development and the growth of global trade mean that today's business environment changes more quickly than ever before. Executives can no longer afford to rely on instinct or intuition when making strategic business decisions. In many industries, the consequence of making one wrong decision may be to see the company go out of business. Research shows that competitive intelligence increases management's strategic planning "comfort level."

• The purpose of CI is to make the best decisions based on the best available knowledge on a given subject. • CI can reduce the risk of making a wrong business decision. • Knowing what is going on in the marketplace and how it will impact your company is the key to market leadership. • CI provides insight into future decisions such as: ◦ developing new marketing plans, ◦ counteracting competitors initiatives, ◦ considering a new product or line extension, ◦ entering new markets, ◦ repositioning an existing product, ◦ investigating a strategic alliance or acquisition, ◦ identifying new distribution channels, and ◦ counteracting imports.

3. Does CI really make a difference to the bottom line?

Yes, It pays off big time when you keep an eye on your competitors’ activities. How do I know this? Well, Tej Adidam at University of Nebraska at Omaha, Madhumita Banerjee – University of Warwick and I recently published a paper titled “Competitive intelligence and firm’s performance in emerging markets: an exploratory study in India” in the Journal of Business and Industrial Marketing.
It seems long time ago; Tej asked an interesting question in one of our interesting exchanges about is Competitive Intelligence (CI) really helpful? Looking through the literature, we saw lots of anecdotal evidence and it seemed that most of the CI papers discussed the questions such as how is CI conducted in various parts of the world? What are the players involved in CI activities? What type of firms conduct CI activities? There were several other such questions asked and answered including the usage and dissemination of CI within firms.

Let me first be clear about Competitive Intelligence. The word CI does not mean corporate espionage and such negative things. It means, a system of environmental scanning that integrates the knowledge of all organizational members and encompasses marketing, structural, strategic and other organizational elements. The concept of CI has strong underpinnings in military science and has a rich history dating back more than 5,000 years. In recent history, especially in the field of management, the concept has been studied for considerable time under different titles. For example, it has been called “environmental scanning”, which focused on how executives “scan” their organizations’ environment. Similarly, over time, other labels have been used in prior studies to describe competitive intelligence as “business intelligence”, “competitor analysis” and “market intelligence”. CI is used in tracking the activity of direct and indirect competitors including their general business activities, tactics and strategies relating to various important issues such as market penetration, product development, patent registrations and so on. Thus, if we were to compare environmental scanning and CI, we can conclude that the former is a method of gathering information. CI takes this information, and converts it into knowledge of one’s competitors or a group of competitors which is used by various departments within an organization to make strategic decisions. In other words, environmental scanning is considered as the first step in CI.

4. Is it true that CI is only important for big businesses?
Small business owners may have nightmares about reading an article about the product launch of your closest competitor only to realise it’s the same product you have been working on for months. However, rather than wasting time worrying about how you could miss that information, consider instead spending that energy on competitive intelligence to prevent any possible surprises.
The term competitive intelligence may conjure up images of espionage and James Bond movies, but it’s simply the honest practice of gathering and analysing public information on competitors. It ensures you to have a good sense of what is going on with your competitors and avoids surprises. It should be an integral aspect of any small business.
Know where to look:
A majority of information that you want to know about your competitors is freely available. Analyst reports, traditional media (newspaper, press releases), job search engines, business and academic sites and even trade shows. Thanks to the internet gathering competitive intelligence has never been easier. RSS Feeds deliver timely updates from your favourite websites and blogs and can help you keep abreast of what others are saying in your industry. Google Alerts are also a great source of information by providing email updates of the latest relevant Google results (news, web etc.) based on your choice of query or topic.
Know who to ask:
Often talking to the competition can lead to the most telling information. It may not be a matter of what they say but how they react. Body language always speaks volumes. For instance, if you spot a competitor at the bar after a trade show, ask if they’re launching that Amazing Widget. If her eyes go big and light up then you’re on to something!

Know what is useful:
Not everything you hear or read will be important or true. You may find that you’re collecting pieces of a puzzle. Consider the source of the information. Ask yourself is there any other information that supports that rumour? Does XYZ have enough cash to make that move?
Know how to use it
Analysing the information you gain about your competitors can be used in different ways depending on your needs. You may simply want a sense of your competitors profile or perhaps it will be used to benchmark your company performance.
Competitive intelligence is an ongoing job and by using the appropriate methods you can develop a good understanding of your competitors business and your competitors weaknesses can become your strengths!

Small business need CI for the following reasons:
• Reduce risk of making wrong decisions
• Get early warning of threats and challenges
• Uncover inaccurate assumptions
• Learn what they don’t know
• Understand market niches and differentiation
• Find potential alliances and partners
• Develop a strategic action plan

5. How is CI different than business espionage?

Espionage is the use of illegal means to gather information. It isn't necessary to use illegal or unethical methods in CI. In fact, doing so represents a failure of CI, since almost anything decision makers need to know about the competitive environment can be discovered using legal, ethical means. Most information that can't be found through open-source collection and ethical inquiry can be deduced by using a variety of analytical tools -- just one of the ways CI adds value to an organization. By joining SCIP, a member agrees to abide by the Society's Code of Ethics, which forbids breaching an employer's guidelines, breaking the law, or misrepresenting oneself.

6. What are the general uses of CI information?

• Benchmarking for Best Practices, • Product Pricing, • Merger & Acquisition Research, • Validate or Invalidate Rumors, • Expanding Markets, and • Identifying New Products Ideas.