Globalization is a complex paradox that has made the business environment complex and difficult to handle. In these turbulent and uncertain times it is important for Organizations to remain aware of what is going to happen in future because many organizations avoid looking into the future and just concentrate in the present. For economies to remain self-reliant and growing our organizations should flourish too.
This paper attempts to foresee the future by studying the tool of Competitive Intelligence which in return becomes a critical part of policy making in any organization. Competitive Intelligence was developed in United States in 1986 by SCIP(Strategic Competitive Intelligence Professionals) but it came into India only after 1990's. The present stage is rather very disappointing as this concept is not known in India and practicing it is still to be explored by Indian Organizations. You find most of CI Practices happening in European countries which include France, Germany, Netherlands, Australia and also parts of Asia like Japan and China. The author has tried to bring out the relevance and benefits of what Competitive Intelligence (CI) can do, the research will provide its readers an insight on what CI is and why is it regarded as a catalyst to economic growth. This aspect presents a macro view of the economic development that I possibly see with an emerging economy like India if this practice is implemented. Competitive Intelligence is the ethical process of extraction of information about the competitors hence outmaneuvering and outwitting them.
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The main purpose of this tool is to address the discontinuity challenges and identify the threats or opportunities. Raw data which is collected through this technique can be transformed into actionable and usable intelligence. According to Larry Kahaner Competitive Intelligence can transform crude business data in Nano seconds to make it an innovative technique of foresight, decision making and a technique to deal with unsettling situations. Organizations need to have a scenario approach to predict plausible and alternative futures Competitive Intelligence is the right management tool that can help organizations generate an early warning in fearful times. This practice has to be driven by organizations who are application oriented and where intelligence can be used. In an environment engulfed by unforeseen situations the framework for Competitive Analysis can be drawn depending on the need for Competitive Intelligence which has a direct link with the organization's Competitive Strategy. The question that needs to be addressed is how CI is important for organizational growth and development.
It is important to note that every organization deals with one product or the other but to survive in this jungle of Competition where every organization is out into the market with various alternative solutions to a brand. The products uniqueness and seeking information on what competitors are doing is the initiative to be taken by organization. We all know that there is a constant change in the shape and structure of the business environment which constantly drives the organization to place its product differently and win business from players. This tactical tool can meet the challenges by means of new market initiatives, can win over the competitive landscape by helping the organization seek leadership in terms of technology, market share, innovation, service and price. Above all this tool helps organizations to secure competitive advantage by helping them know what the external actors are doing. CI practices follow the intelligence cycle by planning the sources whether primary or secondary to collect huge chunk of data after which this data is analyzed, organized and disseminated to various functional departments where this raw data is transverse to actionable intelligence by using different Business Intelligence software's alongside application based techniques of Data Mining and Data Warehousing.
Be it India or any other economy of the world in order to achieve rapid economic development which can be facilitated only when its organizations are in a healthy state and can beat any degree of Competition. Just like organizations take initiatives to set up cells or units to look after specialized functions like maintaining of MIS (Management Information System), KMS (Knowledge Management Systems), there should be an emphasis to establish tailored Competitive Intelligence Systems or Units. In India there are very few organizations practicing CI hence there no full blown CI units in India. As per SCIP only 5 % to 7% of organizations practice CI in India. CI is also taken as an activity related to Spying, Sabotage or Industrial Espionage (Competitive Intelligence by Larry Kahaner 1996, Simon and Cluster Inc).
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The premise of this research study is to advocate the prophecy of Competitive Intelligence which is the tool of the 21st century that transforms not only the organizations but also the economy as a whole. The main motive behind constructing this research paper is to bring about the linkage of Competitive Intelligence with Strategy and Economic Development of India and also advocating its formal training in Indian Organizations and introduction of it as a discipline at MBA level in Business Schools to build robust managers who would torch bearers of quality excellence leading to a transformational Economy.
Key words: Competitive Intelligence, Benchmarking, Future Studies, Scenario Planning, Transformational Leadership, Sustainable Development.
Introduction to Competitive Intelligence
A country`s economic development largely depends on the ability of the industries in the state to perform effectively to deliver growth. Industries play a vital role and act as the catalyst in a country`s growth path. Globalization has not just opened up opportunities to every part of the world, but it has made the environment more competitive than ever, and rests on the philosophy of `Survival of the fittest`.
Competition has stiffened up in the recent past, in every field making a challenging environment for the firms to compete and outwit each other. Analyzing the competitive environment has henceforth become not just a necessity but a compulsion. Many multinational companies have understood the importance of Competitive Intelligence in this 21st century, and have constructed a separate department functioning in analyzing the competitive environment of the firm.
Intelligence occurs, when the information is collected, analyzed and evaluated which suffices the need for critical knowledge. Competitive Intelligence is the process of monitoring the competitive environment of the firm, by gathering, analyzing and evaluating the information that can largely affect a firm`s operations, strategies and goals.
Competitive Intelligence is the process used to gather actionable information about an organization`s competitors and the competitive environment within which they function (Fleisher and Bensoussan 2002). CI has gained alarming interest and scope in the recent years, due to the vast amount of information available on the social media, which is being monitored by every firm in order to hold a competitive advantage in the market. It`s no surprise the battle for survival in the business world has become more fiercer than ever.
Benjamin Gilad has defined Competitive Intelligence as, "the information which tells us how competitive the firm is. It is understanding the competitive arena, being able to predict competitor`s moves, customer moves, government moves and so forth."
CI helps not just in analyzing the competition, but it also seeks to avoid the surprises, threats, and blindspots arising out of customer, industry, competition, regulators, and suppliers. Competitive intelligence is the collection of information and scrutinizing the information for critical decision making in the organization. Hence the importance of critical information is vital, since there is huge data infrastructure that is available in the social media platform.
CI is legal collection of information from various sources like active, semi-active and passive. There is thinking in the business world, that CI is spying and industrial espionage. A joke viral in CI discipline is, 50 percent of the largest American firms does CI, 60-80 percent of European firms do CI, and 150 percent of Japanese and Korean firms do CI, which isn't far from truth.
Objectives of study:
To avoid blindspots occurring in the industry, among competitors and the consumers
To learn and relearn the ever changing market dynamics and consumer needs
Risk identification and mitigation of threats in the market
Adopting to the ever changing regulatory compliances
Identifying the competitive threats from the existing rivals, and the emerging competitors in the market
Forecasting of the future possible events through scenario planning
Achieving strategic innovation to gain the competitive edge in the industry
Competitive Benchmarking to adopt the best practices and to strive for continuous improvements
The study is based on secondary data which are qualitative in nature. The source of the data used has their roots in several books and articles. The study also considered the latest research papers put up in several websites. The list of the sources is given in the end of this paper.
Sources of Information collection:
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Data infrastructure has become huge in today`s world, where a vast pool of data and information can be located in the social media. But filtering the relevant information has become quite challenging for the organizations. Hence intelligent information is the critical data, which has been extracted and analyzed, by the decision makers to gain knowledge about the competitive environment, in which the firm operates. Information can be collected from various sources; it can be passive intelligence, semi- active intelligence, or active intelligence.
1. Passive Intelligence: Published data
Annual reports of competitors
Collecting open source Â information Â such as articles and news on internet
Mapping competitors by Â finding their Â partners, vendors and customers by searching internet for pages with links to the competitor
Mapping competitor's products, customers on social media platforms.
2. Semi Active Intelligence
Pricing / pricing lists
3. Active Intelligence: Opportunistic data
Market surveys and consultants' reports
Financial reports, and brokers' research surveys
Trade fairs, exhibits, and competitors' brochures
Hiring competitors employees to acquire specific know how
Mapping competitors internal networks in connection with projects or consultancy
Meeting with suppliers
Tools of Competitive Intelligence
Five force analysis
Four corner analysis
It helps the firm to assess its position and performance in the industry with respect to its competitors. Competitor profiling enables and provides a firm an insight in to the strategies, drivers and capabilities of their competitors. It helps in the achieving the overall objectives of the firm, through strategic planning.
It is the tool to understand the strengths, weakness of the firm, and also the opportunities that a firm is endowed with, not forgetting the competitive threats and risks in the market. SWOT has been a powerful technique, as it can uncover the opportunities that lie ahead of the firm, and at the same time, it studies the threats in the market, which can be either mitigated or eliminated.
Five Forces Analysis
This is an exclusive tool to assess the competitive environment in which the firm operates. It assumes five important factors which will drive the competitive forces in the market. They are the supplier power, buyer power, existing rivalry in the market, threat of substitute products that are available in the industry, and the threat of new entrants in to the market.
No more the businesses environment is predictable, as major shifts are happening due to the ever changing needs, wants of the customer, trends in the market and highly competitive environment. Scenario planning is done to uncover the future possible happenings which are based on the assessment on evidence rather than mere predictions. It is aimed at strategic planning towards the future state, for the achieving the goals of the organization. It also helps in mitigation of risks.
Bengilad says, "Business war-games are the simulations of the competitive dynamics in the market with the goal of pressure-testing the plans". War-games are not about war, it is largely about managing the competition. It allows companies to test and identify the competitive vulnerabilities in the strategies that have been designed by them. War-gaming helps the firm to understand the current market position, opportunities and the threats that might arise once a plan is executed in the market.
Four Corner`s Analysis
It is the competitive analysis tool, which helps in identifying the plans and strategies that are most likely to be made by the competitors. It also determines how the competitors in the industry respond to the changes and shifts that take place in the market. The major drivers, current strategy, management assumptions and the capabilities of the competitors are analyzed for informed decision making in the organizations.
Jim Riley states that, "Benchmarking is the process of identifying best practices in relation towards both products and processes by which those products are created and delivered. The primary objective of benchmarking is to improve the overall performance of the firm to enhance the competitiveness in its operations.
CI in India
Multinational firms across nations have started to realize their need to hone competitive strategies to gain a competitive advantage in the market. Henceforth big companies have already established CI functions, while in many emerging countries, including Indian, CI is at its infancy stage.
India on its race to the economic supremacy is bestowed with strong growth rate, while USA and its European counterparts are still struggling to come out of the recession. Foreign investments are pouring across various sectors, and companies are targeting to enter the Indian market, more than ever, because of the cheap human resources available. This growth story is further going to intensify the competitiveness among the firms to gain an advantage in the market.
Competitive intelligence is evolving as a new discipline in the Indian market. Companies have started to understand the importance of CI as a separate function. The prospect for CI in India, for the future is promising, given the amount of companies that are present in this developing economy. CI should be fit in as a separate department for the process of strategic planning of the organization.
Varsha Chitale founder of Value Notes, a consulting and business research company in India states the enormous challenges that a CI professional will face, while involving in collection of intelligent information and doing market intelligence in India. They are,
Largely unorganized industries and sector
Inadequate financial reporting and standards
Lack of proper statistical machinery
Immaturity of the CI market
Deficiency in market research
Difficulty in mining information
The ease of doing CI in India for professionals is going to be challenging and difficult, because of variety of the reasons stated above. But still India and its Industries need CI more than ever. On the continuum towards economic supremacy, Indian firms should look in to CI as a necessary domain, in order to compete with the foreign rivals. The foreign investors are eying all the sectors ranging from IT, Engineering, Automobiles, Energy and Resources to Research and Consulting. In order to compete with the growing foreign players, Indian firms should adapt to the usage and tools of CI to gain competency in their functioning. Here is how CI could add strategic value to the organizations and also act as a catalyst towards Strategic Innovation.
Competitive Intelligence a tool for Strategic Innovation
Competitive intelligence is directly linked with the strategic planning process for an organization. CI provides insights about the external environment in which the firm is functioning, enabling them to adapt to strategies to gain the competitive edge. Hence the value and need for practicing CI has become vital in an era of cut throat competition.
Strategic value of CI
Innovation has become quite a necessity for every firm, and every industry to create value and sustain competitive advantage among the others in the highly competitive market. Survival has become tougher for companies, which does not either innovate or invest largely in research and development.
None of the companies can ever ignore the competitive threats that are present in the industry. Hence in order to be unique and different, it has become essential for firms to engage in innovative products and services for value creation among the customers. Apple has been the flagship company, which tirelessly work towards innovative products for the ever changing and dynamic customers in the market.
Strategic innovation is stimulated by the amount of information that is available in the social media platform. Eventually this data infrastructure has become larger, thereby pivoting the necessity of collecting the relevant information for decision making. Hence this has led the way for business intelligence to acquire the crucial and important information by filtering the large amount of data.
Business intelligence has been defined as an "active, model based and prospective approach to discover and explain hidden-relevant aspects in large amounts of business data to better inform business decision processes" (KMBI, 2005)
It is unlikely for a firm to succeed in the market, if it does not continuously track and adapt to changes that are happening in the industry. Identifying the opportunities, mitigating the threats and risk in the market is important to craft a strategy for the firm. So it's crystal clear that CI plays a crucial role in strategic innovation of the company.
Strategic Early Warning
A company has to adapt to the changing environment, in order to pursue an advantage over its rivals. Competitive intelligence is a major tool to address the risk of threats in the industry from all corners of its functioning. CI helps in identifying the threats and provides early warning to the firm. The threats may arise out of existing rivalry, new entrants in the markets, substitute products, cost advantage, supply chain, forward integration, industry growth, shifts and trends in consumer tastes and preferences. All these threats can be countered with the tools of competitive intelligence.
During the functioning of the business, a firm may encounter various risks, such as data theft, terrorism, frauds, supply chain failure, fire, counterfeit goods, litigation, currency fluctuations, and inflation. Identification of risks is imperative to understand the likelihood of occurrence of such risks and the impact it can have on the organization. Through scenario planning which is aimed at future projection of events, these risks could be averted, mitigated, or transferred.
Competitive benchmarking is comparing the company`s performance with that of the immediate competitor in the market. The comparison can entail the different spectrum of business, such as products, services, technology, supply chain and distribution, finance, research activities, organizational culture and operations. This purpose of benchmarking is not just to imitate the competitor's activities but also relatively to understand the consumer's preferences for a particular brand or service.
Many organizations fail to deliver and grow, due to their inability to adapt to changing business environment mainly due to innovative processes, products and services. Hence CI tools help firms, in understanding the constant changes that takes place in these competitive scenarios. Innovation has become the buzz word of the century and also for the organization to deliver new products, designs, features and ideas. A firm which fails to innovate in today`s world, fails to succeed in the industry. Competitive intelligence goes hand-in-hand with strategic planning and execution, hence CI would enable firms to move with the emerging trends and changes in the market.
CI as a catalyst towards Economic development
There is a greater reliance on other economies for the prospects of economic development in this globalized world. Globalization has enabled countries like India to exploit the comparative advantage they behold, like low cost of labor, land, technical know-how etc.
The foreign investments have been increasing to a greater extent across all sectors of business in India. Multinational companies are taking advantage of the growing markets, and are heavily investing in the Indian market. Tapping the Indian market to gain an advantage is going to be difficult for the MNC`s, as there are many challenges that lies ahead.
Indian firms have to stand across these MNC`s to be successful. Knowledge of the local conditions and markets, might give a slight advantage to the local players, but resisting their foreign counterparts is going to a big challenge for them. CI plays a vital role in today`s business world, and adapting and practicing CI would be the last swan song for any firms to outshine their rivalries.
Hence it's clear and obvious, that CI would play a vital role in organizations for aligning strategies to achieve the goals of the organization, which in turn would spur the economic development of the country. Companies have started to engage in joint-ventures, mergers, acquisitions for entering a new market. This provides Indian firms, a chance to improve the technological cognizant, research and development which is lacking across all the industries in India. Competitive Intelligence has a greater scope in Indian business environment; firms should start doing CI for their success in the competitive market. Thus CI aims to drive the businesses in a more reformed and aggressive manner, which further drives the development in the economy.
Peter Drucker has said, "It is meaningless to speak of short-long range plans. There are plans, that lead to action today- and there are true plans, true strategic decisions. And there are plans that talk about action tomorrow- they are dreams, if not pretexts for non-thinking, non-planning and non-doing."
In the ever changing paradigm of business environment, it has become essential for organization to know their product positioning, core competencies, new rivals, changing customer dynamics, and necessity of innovation in products and processes. There are various factors that drives innovation in today`s economy, such as technology, social media and internet.
Hence for all these elements CI has become a sophisticated tool, to stay ahead of the competition in the market. There is an imperative need for companies to create Intelligence distribution platform, which could pro-actively help the firm in the driving business changes. Competitive intelligence platform could help in effective analysis of the internal and external environment and provide the intelligent information for decision making to the top management.
Further competitive intelligence could drive the strategies of a firm, with efficient and effective planning and execution methods. CI also helps in giving early warning signals in the event of threats and risks. It also provides various tools, like scenario planning, benchmarking, value chain analysis, SWOT analysis for better functioning and to gain competitive advantage in the industry. It would be no wonder if CI emerges as the new buzz word in the globalized era sooner or later.
Winning in today`s competitive environment will be challenging for the Indian firms, given the rivalry they will face from the foreign organizations. Competitive intelligence can drive an organization towards a win-win situation, identifying the opportunities that lie ahead of the firm and reducing the threats and risks that arise in both the internal and external environment.