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Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. [1] This analysis provides both an offensive and defensive strategic context to identify opportunities and threats.
A graphical representation of Porter's five forces. Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack thereof) of an industry in terms of its profitability.
This can cause companies making low or negative returns to stay in the market leading to excess capacity meaning that healthy competitors' profitability will suffer. Competitors are competing on price. Price competition is particularly destructive to profitability as it is easy to identify price competition meaning other competitors can retaliate.
Anti-competitive behavior refers to actions taken by a business or organization to limit, restrict or eliminate competition in a market, usually in order to gain an unfair advantage or dominate the market. These practices are often considered illegal or unethical and can harm consumers, other businesses and the broader economy.
The breadth of its targeting refers to the competitive scope of the business. Porter defined two types of competitive advantage: lower cost or differentiation relative to its rivals. Achieving competitive advantage results from a firm's ability to cope with the five forces better than its rivals.
The following terms are in everyday use in financial regions, such as commercial business and the management of large organisations such as corporations. Noun phrases [ edit ]
Competitive intelligence is a legal business practice, as opposed to industrial espionage, which is illegal. [4]The focus is on the external business environment. [5]There is a process involved in gathering information, converting it into intelligence, and then using it in decision-making.
Market research is an organized effort to gather information about target markets and customers. It involves understanding who they are and what they need. [1] It is an important component of business strategy [2] and a major factor in maintaining competitiveness.