02 : Strategic plannings

Competitive Advantage and the Application of Porter's Model in Competitive Analysis

Strategic Approach to Competitive Advantage

  • Competitive advantage is one of the most important elements of a successful business strategy. It allows a company to stand out from competitors, achieve long-term sustainability in the market, and ensure profitability. To maintain or strengthen your competitive position, it is necessary to consistently analyze the market, identify key factors affecting your business, and apply strategic decisions.

Automated Competitor Data Collection and Analysis

  • Our advanced analytics systems enable the automatic collection, processing, and interpretation of key competitor performance indicators, providing comprehensive insights into your company's position in the market. The following aspects are analyzed: ✅ Financial indicators – company revenue, profitability, market share, and return on investment. ✅ Customer engagement – service popularity, brand loyalty, customer feedback, and behavior. ✅ Marketing and pricing strategies – advertising effectiveness, pricing policy, and sales channels. Collected data allows comparing your company with competitors, identifying strengths and weaknesses, and making effective strategic decisions.

Porter developed the Five Forces model:

1. Existing Market Competition

The intensity of competition depends on:

  • The number and size of competitors.
  • Product and service differentiation.
  • Production capacity can only be increased in large quantities.
  • There are high fixed costs in the industry.
  • There are high barriers to exiting the market.

Strategy:

  • Optimize operational efficiency.
  • Differentiate products or services.

2. New Market Entrants

  • Economies of Scale.
  • Brand Differentiation.
  • Capital Investment Requirements.
  • Access to Distribution Channels.
  • Switching Costs.
  • Cost Disadvantages Independent of Scale.
  • Regulatory and Legal Restrictions.

Strategy:

  • Strengthen the Brand.
  • Invest in Innovations.

3. Supplier Bargaining Power

  • Number of Suppliers and Market Alternatives.
  • There are few product substitutes in the market.
  • Slow Industry Growth Rate.
  • High Costs of Switching to Another Supplier.
  • The Supplier’s Product is a Key Component of the Buyer’s Business.
  • Suppliers Have Complete Information.
  • The Supplier Can Integrate Forward (Control More Supply Chain Stages).
  • The Supplier’s Product is Differentiated.
  • The Buyer’s Product is Not Strongly Affected by Supplier’s Product Quality.

Strategy:

  • Diversify Suppliers.
  • Seek Long-Term and Favorable Supply Terms.

4. Buyer Bargaining Power

  • Availability of Alternatives in the Market.
  • Buyers’ Price Sensitivity.
  • Buyers Have the Ability to Perform Reverse Integration.
  • Purchase Differentiation.
  • Buyers Earn Low Profits.
  • The Buyer’s Product is Not Strongly Affected by Supplier’s Product Quality.
  • Buyers Have Complete Information.

Strategy:

  • Build Strong Customer Loyalty.
  • Offer Unique Products.

5. Substitutes

  • Technological Innovations.
  • Price-Quality Ratio of Substitutes.
  • Consumer Behavior.

Strategy:

  • Invest in Innovations.
  • Strengthen Consumer Loyalty.

Benefits of Competitive Analysis for Your Business

  • Identify Key Market Challenges.
  • Make Data-Driven Decisions.
  • You create a strategy for long-term competitive advantage.