Importance of Competitor Analysis

In any business operation strategy, it is wise to keep into account the strategies of the company’s competitors. Strategic management is all about being able to gain and maintain competitive advantage over any other company. Competitive analysis is an exceptional process of analytically comparing a company, products and services against the substantial competitors within an industry.

Through competitive analysis, it becomes easy to establish a company’s goals, tactics and strategies that will make it stand out among competitors. There are notable elements that make up a competitive analysis. Firstly, you have to define the core competitors. Some companies will offer products and services that similar to what you entirely offer while others will only dispense one or two of your core products and services. Secondly, analyze competitor’s strengths and weaknesses.

To enjoy a great competitive advantage in the market, look at the reasons behind the success of a company and areas that it has failed. Thirdly, analyze the main customer’s needs and requirements. Learning about the central wants of clients in an imperative part of competitive analysis. This makes customers’ priorities company’s main concerns. At last, an entrepreneur should build a strategic plan to improve the position of the company.

These strategic plans should cover areas of business operation from production, distribution, pricing to marketing of goods and services. With the key elements that make up a competitive analysis in mind, it is a brilliant idea to look at the key reasons as to why competition analysis is an important tool. Here are the core benefits of conducting a competitive analysis;

• It makes it easy to develop matrixes for ascertaining unserved and underserved gaps in the competitive markets. It reveals more on where a company fits in terms of prices, quality and customization.
• Provides a strategy to undertake towards product development. With great technology, direct competitors are able to engage in a persistent rivalry to develop new products and gain advantage by also learning what their probable competitors are offering. It also becomes easy to know what main competitors are up to or improving for future release.
• Offers a better way to understand the market trends and gain a competitive edge over any other company. Coming up with a new business idea offers a better way lure a number of loyal clients and build a new market. Customers will also be attracted to new business ideas.
• Todays, make is all about placing a lot of energy on benefits and value rather than selling products and services. Competitive analysis reveals more on what customers think they are buying than what they may be really buying. Hence, for an entrepreneur it becomes easy to know what clients thing of competitors brands.

It is not easy to stand out in an overcrowded marketplace. Success in a given market is all about good timing and following the best strategies. An improved ability to predict your competitors’ behaviors and influence offers a better way to know how to move your company to another competitive level.  Do not just get on with your business plans and ignore competition. It is a great strategy to analysis competition, but do not get obsessed.

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Defining Important Socio Economic Factors Affecting Businesses Today

Socio economic factors are important characteristics which mostly influence consumers. These factors are associated with the quality of life and determine the behaviors, tastes, preferences, attitudes and lifestyles of people living within a society.

Socio economic factors have a high impact on businesses, whether big or small. This is because the consumers are often at the heart of businesses and tend to affect growth of all ventures. There are many socio economic factors that business persons need to look out for in order to excel and compete effectively in an ever changing market.

Income capacity

Income capacity of consumers determines how much they can spend on certain products. If citizens in a country have access to high incomes from employment and personal business ventures, then they are more likely to spend on luxurious products. This is because they can easily afford the products and also have a taste for good things. On the other hand, low income earners may not be able to afford basic commodities, let alone the luxurious products. The struggle to meet their basic needs may blind these consumers from purchasing luxurious products.

It is thus essential for a business person to consider the income capacities of the consumers before setting up the business. This factor should affect where the entrepreneur sets up shop and the target clients he chooses. For high end products, an entrepreneur should look for a shop in an up market area with access to high income earners. For basic commodities, an entrepreneur should look for cheap suppliers and set up shop near the low income earners.

Occupation

The occupation of consumers is largely related to the income they earn. Low skilled laborers who work in menial jobs cannot earn the same as corporate managers. The differences in occupations more often than not determine the income gaps of the consumers.

As an entrepreneur you must carry out research on the occupations of your consumers. This should influence your decision to venture into certain businesses with a specific target at consumers who have good occupations or lowly jobs.

Education levels

Education levels influence the type of occupation a person can get and ultimately their income level. Consumers with higher education tend to be skilled and also have better jobs and incomes as compared to those without education. Education is determined by the opportunities presented to the consumers and can influence how much a consumer can afford.

In addition to this, the educated consumers have different tastes for products as compared to the uneducated ones. The educated consumers are not only more conscious about the contents of products but may also come off as demanding as compared to the less educated ones. An entrepreneur may have to work harder to fulfill the demands of these consumers as compared to when dealing with less educated folk who are less demanding.

Economic growth

Economic growth and development of a country can also have an impact on the social status of its citizens. Emerging economies such as China and India have proved that if a country experiences high economic growth then the citizens may have better access to incomes and also the middle class and upper class may grow. This may also attract more investors into the country and increase employment rates. Inevitably positive economic growth rates will increase spending and help businesses to grow.

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Transition Economies

Transition economies refer to economies which are changing from a centrally planned economy to one of market economy. Since communism collapse in the late 1980s countries of former Soviet Union as well as all satellite states such as Hungary, Bulgaria and Poland sought to embrace capitalism and they abandoned central planning.

Transition economies often undergo structural transformations which are intended to assist in the development of institutions that are market based. Some of these include economic liberation where market forces are used to set prices rather than by central planning organizations.

Trade barriers are also removed in transition economies as there is a push to:

• Privatize resources and enterprises that are privately owned
• Restructure collectively and state run enterprises as businesses
• Create a financial sector to facilitate macroeconomic stabilization as well as movement of private capital.

Transition economies have been applied in China, Eastern bloc countries of Europe, some Third World countries, and former Soviet Union. There is also detailed work which has been undertaken on the social and economic effects of such transition.

Transition is often characterized by change and creation of institutions especially private enterprises, change in state role which fundamentally create different government institutions and promote enterprises that are privately owned.

Main ingredients needed in transition economies include the following:

• Institutional and legal reforms-There should be a redefining of state role in such economies in order to establish rule of law and also introduce appropriate competition policies.
• Privatization and restructuring- Creation of a financial sector that is viable and reforming enterprises that already exist in the economies undergoing a transition in order to render them capable of production of goods that can be sold in free markets. This also aids in transferring ownership into private hands.
• Liberalization-Transition process allows most of the prices to be established in free markets and lowers trade barriers that shut off contacts
• Macroeconomic stabilization- Brings inflation under control and lowers it over certain duration especially after the initial burst of inflation which is followed by liberalization and pent up demand.

There are certain problems which arise as a result of transition economies and some of these include increasing unemployment, rising inflation, lack of infrastructure, corruption, lack of entrepreneurship, moral hazards, inequality and lack of sophisticated legal systems. It is ideal to note that most of the transition economies often face severe short term difficulties as well as long term constraints especially on development.

There are different transition processes that are characterized by creating and changing of institutions especially private enterprises. Because of the different initial conditions that need to be followed during the emerging transition process, it has to be planned and different countries use varying transition models.

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