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The Competition
It is essential to know who the competition is and to understand their strengths and weaknesses. Factors to consider include:
Each of your competitor's experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.
Your Enterprise
An honest appraisal of the strength of your enterprise is a critical factor in the development of your strategy. Factors to consider include:
Enterprise capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The prominence of the enterprise.
The competence of the management team.
The adequacy of the enterprise's infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, creditors, investors and other outside influences.
Freedom from having to deal with legal problems.
Development
A review of the strength and viability of the product/service development program will heavily influence the direction of your strategy. Factors to consider include:
The strength of the development manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the development personnel.
Personnel who understand the relevant technologies and are able to perform the tasks necessary to meet the development objectives.
Adequacy and appropriateness of the development tools and equipment.
The necessary funding to achieve the development objectives.
Design specifications that are manageable.
Production
You should review your enterprise's production organization with respect to their ability to cost effectively produce products/services. The following factors are considered:
The strength of production manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the manufacturing personnel.
Economies of scale allowing the sharing of operations, sharing of production and the potential for vertical integration.
Technology and production experience
The necessary production personnel skill level and/or the enterprise's ability to hire or train qualified personnel.
The ability of the enterprise to limit suppliers bargaining power.
The ability of the enterprise to control the quality of raw materials and production.
Adequate access to raw materials and sub-assembly production.
Marketing/Sales
The marketing and sales organization is analyzed for its strengths and current activities. Factors to consider include:
Experience of Marketing/Sales manager including contacts in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.
The ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.
Sales promotion techniques such as trade allowances, special pricing and contests.
The effectiveness of your distribution channels as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.
Sales capabilities including availability of personnel, quality of personnel, location of sales outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.
The appropriateness of the pricing of your offering as it relates to competition, price sensitivity of the prospect, prospect's familiarity with the offering and the current market life cycle stage.
Customer Services
The strength of the customer service function has a strong influence on long term market success. Factors to consider include:
Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.
The availability of technical support to service your offering after it is purchased.
One or more factors that causes your customer support to stand out as unique in the eyes of the customer.
Accessibility of service outlets for the customer.
The reputation of the enterprise for customer service.
Conclusion
After defining your strategy you must use the information you have gathered to determine whether this strategy will achieve the objective of making your enterprise competitive in the marketplace. Two of the most important assessments are described below.
Cost To Enter Market
This is an analysis of the factors that will influence your costs to achieve significant market penetration. Factors to consider include:
Your marketing strength.
Access to low cost materials and effective production.
The experience of your enterprise.
The complexity of introduction problems such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
The effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
Distribution effectiveness as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Technological efforts likely to be successful as measured by the strength of the development organization.
The availability of adequate operating capital.
Profit Potential
This is an analysis of the factors that could influence the potential for generating and maintaining profits over an extended period. Factors to consider include:
Potential for competitive retaliation is based on the competitors resources, commitment to the industry, cash position and predictability as well as the status of the market.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The intensity of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth.
The ability of the enterprise to limit suppliers bargaining power.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The availability of substitute solutions to the prospect's need.
The prospect's bargaining power as measured by the ease of switching to an alternative, the cost to look at alternatives, the cost of the offering, the differentiation between your offering and the competition and the degree of the prospect's need.
Market potential for new products considering market growth, prospect's need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer's daily operations.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences.
The Competition
It is essential to know who the competition is and to understand their strengths and weaknesses. Factors to consider include:
Each of your competitor's experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.
Your Enterprise
An honest appraisal of the strength of your enterprise is a critical factor in the development of your strategy. Factors to consider include:
Enterprise capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The prominence of the enterprise.
The competence of the management team.
The adequacy of the enterprise's infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, creditors, investors and other outside influences.
Freedom from having to deal with legal problems.
Development
A review of the strength and viability of the product/service development program will heavily influence the direction of your strategy. Factors to consider include:
The strength of the development manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the development personnel.
Personnel who understand the relevant technologies and are able to perform the tasks necessary to meet the development objectives.
Adequacy and appropriateness of the development tools and equipment.
The necessary funding to achieve the development objectives.
Design specifications that are manageable.
Production
You should review your enterprise's production organization with respect to their ability to cost effectively produce products/services. The following factors are considered:
The strength of production manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the manufacturing personnel.
Economies of scale allowing the sharing of operations, sharing of production and the potential for vertical integration.
Technology and production experience
The necessary production personnel skill level and/or the enterprise's ability to hire or train qualified personnel.
The ability of the enterprise to limit suppliers bargaining power.
The ability of the enterprise to control the quality of raw materials and production.
Adequate access to raw materials and sub-assembly production.
Marketing/Sales
The marketing and sales organization is analyzed for its strengths and current activities. Factors to consider include:
Experience of Marketing/Sales manager including contacts in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.
The ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.
Sales promotion techniques such as trade allowances, special pricing and contests.
The effectiveness of your distribution channels as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.
Sales capabilities including availability of personnel, quality of personnel, location of sales outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.
The appropriateness of the pricing of your offering as it relates to competition, price sensitivity of the prospect, prospect's familiarity with the offering and the current market life cycle stage.
Customer Services
The strength of the customer service function has a strong influence on long term market success. Factors to consider include:
Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.
The availability of technical support to service your offering after it is purchased.
One or more factors that causes your customer support to stand out as unique in the eyes of the customer.
Accessibility of service outlets for the customer.
The reputation of the enterprise for customer service.
Conclusion
After defining your strategy you must use the information you have gathered to determine whether this strategy will achieve the objective of making your enterprise competitive in the marketplace. Two of the most important assessments are described below.
Cost To Enter Market
This is an analysis of the factors that will influence your costs to achieve significant market penetration. Factors to consider include:
Your marketing strength.
Access to low cost materials and effective production.
The experience of your enterprise.
The complexity of introduction problems such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
The effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
Distribution effectiveness as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Technological efforts likely to be successful as measured by the strength of the development organization.
The availability of adequate operating capital.
Profit Potential
This is an analysis of the factors that could influence the potential for generating and maintaining profits over an extended period. Factors to consider include:
Potential for competitive retaliation is based on the competitors resources, commitment to the industry, cash position and predictability as well as the status of the market.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The intensity of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth.
The ability of the enterprise to limit suppliers bargaining power.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The availability of substitute solutions to the prospect's need.
The prospect's bargaining power as measured by the ease of switching to an alternative, the cost to look at alternatives, the cost of the offering, the differentiation between your offering and the competition and the degree of the prospect's need.
Market potential for new products considering market growth, prospect's need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer's daily operations.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences.
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