Manufacturer, know thy competition
The manufacturing industry is growing and becoming more competitive all the time. If you want to stay in the game, you need to know your enemy: the competition. Competitive analysis can give you a leg up in the manufacturing industry, but you need to know how to do it effectively.
Begin by defining your competition. Think broadly: Include any company or industry that could pull customers away from you — even if it isn’t in direct competition. Paper goods manufacturers could, for example, negatively influence linens or pottery, while pay-per-view cable television could have an effect on DVD manufacturers’ sales.
Similarly, be attuned to the potential for new competition. What would you do if a national chain or regional competitor moved into your market?
Before you begin gathering information on your competitors, understand what you will do with it. Collecting data does little good if you can’t use it in making strategic or tactical decisions.
If you’re considering developing a new product, information on competing firms’ plans in that area will be valuable. And if you’re interested in how the industry will grow during the next 10 years, you won’t need the same information you’d need to assess a potential merger or acquisition.
Once you’ve narrowed down the type of information you’re seeking, begin to collect it. Dun & Bradstreet has a database of more than 30 million companies around the world, and Hoover’s has considerable information on public companies. A subscription may be required to access some information.
Your sales force also is an excellent source of information. They hear what the competition is doing from customers. And your research and development department may be the first to hear of new patents.
Watch what your competition is doing in the market, too. If a company lowers its prices, this may indicate it’s trying to expand its market share. A cost-cutting campaign may be an attempt to increase profits.
For more information about our services to inventory based businesses,
Contact: Mark Walker, Partner, Director of Inventory Based Businesses Practice at 817.882.7724.
The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.