Nowadays :: Business and Management Studies

NowadaysNowadays, analysing competition is crucial for managers in order tounderstand the environment in which the business evolves, itscompetitors (their goals, plans etc) as well as implement strategiesand position their companies. They can use a wide variety oftechniques, each having its strengths and weaknesses. According toPrescott and Grant (1988), to select the appropriate techniques,managers bring to know the different techniques available, how they arerelated to each other, the focus and scope of the area and theconstraints limiting the extent of analysis. To analyse competitionefficiently, they keep to combine about of the different techniquesavailable as they all have a specific aim. However, there arelimitations that managers have to take into consideration in order to depart a clear and effective work.This essay outlines and evaluates the main weaknesses whenunderstanding the business environment. They vary by nature. They cancome from the interpretation of the manage rs and from the modelsthemselves. However, they are in resemblance to each other, one flawleading to another one.When analysing competition, the starting point is to precisely definethe pains the firm belongs to and its boundaries. Managers mayfocus on the marketplace of their company, narrowing their definition ofthe industry. They then forget or less consider other segments thatcan change quickly and have impact on the consentaneous industry. According toZahra and Chaples( 1993) an effective definition of industryboundaries requires consideration of four interrelated issues domain(where does the industry begin and end), guest group (sector to beserved and their specific needs), customer functions (customer needand specific patterns) and critical technology (production, marketingand administrative system). Each point enables to define thecompetition more and more precisely. In addition to these issues,managers have to take time into consideration. Reviewing theirbusiness defin ition, the shape of the industry and the market overthe time is crucial as industries change. Prahalad (1995) states thatmany industries are undergoing massive transformation. Deregulation,global bare(a) capacity, global competition, mergers and acquisitions,changing customer expectations, technological discontinuities arechanging industries, creating new industries and opening up new andlarge growth markets for existing businesses. For instance, chemicalcompanies work out the pharmaceutical industry by making alliances withyoung biotechnology companies, not considered as a threat by thepharmaceutical companies. This change in the industry led thepharmaceutical companies to redefine the industry and its boundariesas well as their strategy.Managers need to be vigilant in identifying its competitors. A pooridentification leads to a wrong positioning and a possible long timeresponse to the different actions coming from those undetected rivals.This identification is dependent on the managers perceptions and how