Competitor analysis: Some practical approaches

Analysis of the intentions and capabilities of key competitors is an essential component of effective business strategy. This article places major emphasis on the often neglected area of competitive cost analysis. An overview of secondary and primary sources, including competitors themselves, is provided. Case examples illustrate the use of these sources in analyzing key strategic cost differentials between a company and its competitors. New approaches to competitor cost analysis are reviewed: 1) statistical techniques estimate fixed and variable components of cost; and 2) an analytical “force-out” technique estimates categorical costs (materials, wages, selling costs, etc.).