Republic of the Philippines

Department of Education
REGION I
SCHOOLS DIVISION OF CANDON CITY
Candon City, Ilocos Sur

Business Enterprise Simulation-12

Quarter 3 (Week 5) – Module 3
Prepared by: Sadiri Mat T. del Rosario

Lesson
Competitor Analysis
1
I. Objectives:
1. Identify the competitive environment of your proposed business;
2. List down the component of your competitor analysis; and,
3. Prepare a strategic plan for competition (ABM_BES12-Id-j-c-5).

II. Guide Questions:

1. How do you identify the competitive environment of your proposed business?
2. What are the essential components to consider in creating your competition strategy?
3. How do you construct a strategic plan for competition?

III. Discussion:
A. Identifying your competitive environment
1. Direct & Indirect Competitors
The first step to identify your proposed business’ competitors is to make a
list of its direct and indirect competitors. What is a direct competitor and an indirect
competitor?
A direct competitor is a business with similar products or services such as
yours. For example, if you’re a landscaping company, your direct competitors are
other landscapers. Information on your direct competitors will facilitate your ability
to stand out above them.
An indirect competitor is a different business with a different product or
service but meets or solves the same needs or problems of the same target market
that you are trying to cater to in an alternative way. In the landscaping example,
your indirect competitors would be businesses that facilitate do-it-yourself lawn
care.
2. Competitors’ goals and objectives
The second step in identifying the competitive environment of your would-
be business is to determine the goals and objectives of your competitors. Find out
what they are trying to achieve, and map out what can threaten your business in

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 the long run. Do they attempt to steal your clients? Do they attempt to copy your
product and slightly alter it? See your industry through their eyes.
3. Competitors’ strategies and tactics
Look at their advertising, campaign promotion, and PR strategies.
Advertising should help you quickly determine how a company positions itself,
who it markets to, and what strategies it employs to reach potential customers.
4. Assessing Competitors’ strengths and weaknesses
Your competitor’s strengths and weaknesses are usually based on the
presence of assets they used to be able to compete in the market. You can identify
the areas where they are most vulnerable.
5. Estimating Competitors’ reactivity or hostility
If you’re new in the game, find out how your competitor’s will respond
when you enter the market. Will it change the game for them in the future?
6. Determining what competitor to attack or avoid.
Research carefully and determine which competitor you should try to beat,
and which one you should just avoid. This research method will provide you with
a distinct advantage in the long run, so you can develop the barriers to prevent
competition from entering your market.
For further learning on how to identify your competitive environment, you
can read more about “Competitive Intelligence” or you may log on to:
https://www.mindtools.com/pages/article/newSTR_60.htm

B. Major Component of Your Competitor Analysis

It’s now time to put down into writing concrete or solid features of your competitors.
Much like the points given above in identifying your competitive environment, go through
the specifics of your descriptions. The following key point questions will help you
determine these features according to the major area of description:
1. Competitors revealed
a. Who sells what I want to sell?
b. Who does what I want to do? Do they do business that will eventually weaken my
business in the short run?
c. Where are they located? Are they on a strategic location that would attract my
potential customers?
d. What is their pricing strategies?
2. Target Customers (target demographics)
a. What age brackets do they target? What market gap have they neglected to fill up?
b. What gender do they focus on, men or women?
c. What income levels do they target? Are those income levels match with their
pricing strategies?
d. What purchase behavior does work best for their customers, online or a storefront?
3. Their Secret Potentials
a. Where are they successful?
b. What make their customers like them?

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 4. Your Edge from Theirs
a. How is my business (or product) be of an advantage than theirs?
b. How would I be more accessible or convenient to customers than them?
c. Note: you may have to go and experience yourself how to be your competitor’s
customer, pay for their services or buy their products, disassemble them and bit-
by-bit find a gap to fill in either through tangible and intangible ways.
5. Adding value to what they offer
a. What will be said of my business that hadn’t been said about them?
b. Note: Being better than your competitors at doing the same thing does not ensure
longevity of your market positioning. Instead, you should create a lasting imprint
that is uniquely identified with your business.

C. Summarizing Your Analysis and Verbalizing your Competitive Advantage

Try answering all the questions from the foregoing discussion, one for each
competitor that you have identified whether it is a direct or indirect competitor. Notice that
items 4 and 5 shifts the focus on you. After recognizing your competitor’s strengths and
weaknesses, you should establish what you have and what you are as a business that spells
the difference between you and them. This is referred to as your “competitive advantage.”
“A competitive advantage is a characteristic of an organization that allows it to
meet their customer’s need(s) better than their competition can. It answers the question
‘What are we best at in our market?’ ” (www.OnStrategyHQ.com).
Any required strengths that will keep you afloat in the market but also exist among
your top competitors are not your competitive advantage. They are referred to merely as
“tablestakes.” These tablestakes strengths may be in disguise and may often give you a
false security of competitive advantage.
“www.OnStrategyHQ.com” further gives us two traits of competitive advantages
that set them apart from a “tablestake.” They are:
(1) Competitive Advantages are organizational strengths unique to your organization.
These are the strengths that set you apart from your competition. It’s what you do well and
is distinctly unique in your market.
(2) Competitive Advantages are traits or strengths important to your clients. If the
strength you’ve identified is important to you but not important to your client, it’s not a
competitive advantage. A competitive advantage is a strength or reason your clients
choose you over your competition. It must have value to your customer!
Another way of summarizing your competitor analysis is through a chart or table
with these headings:

You can list down as many major competitors that you think will affect the operation
of your would-be business. For an example of this, look at the chart for a carwash business on
the succeeding section.

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IV. Examples
The following is an example of the foregoing discussions. Let us apply the same
outline of the concepts using a specific business idea as our example. You can use this
example to construct the write-up of your own Competitive Analysis.

COMPETITIVE ANALYSIS WRITE-UP

Illustrated Business Concept: BARANGAY MINI-GROCERY (& with a snack
bar as an add-on).

A. My Competitive Environment
1. Direct competitor: sari-sari stores.
2. Indirect competitor: Door-to-door delivery services.
3. Goals and objectives of competitors: to serve the basic emergency needs of
barangay residents and providing them easy access without them having to travel to
the Poblacion.
4. Competitors’ strategies and tactics: For sari-sari stores, the traditional
casualness of seller-customer interactions have always been a part of community
relations, not to mention the convenience of customers purchasing on credit.
For the door-to-door deliveries which is a new and innovative way of delivering
the exact need of customers, it provides a customer’s convenience of purchasing
without the need to go out of his/her abode and getting the assurance for quality
goods and services, and the freshness of “farm-to-market” agricultural items.
5. Assessing Competitors’ strengths and weaknesses: although the presence of sari-
sari stores have been part of the traditional community, it remained to be a
miniature version of a micro-enterprise. A sari-sari store has actually a very small
amount of rolling capital and the customer coverage is designed primarily just for
the neighboring houses within the vicinity. The luxury given to their clients to
purchase on credit and paying them after extended periods has been observed to be
the culprit for bankruptcy for these small enterprises and are obviously strength in
disguise.
In the case of door-to-door delivery services, the strength is on the convenience
of the customer but the weakness lies on the high cost of the purchases incurred by
the customer.
7. Estimating Competitors’ reactivity or hostility
Most of the strengths of a sari-sari store are in the mini-grocery. On the other
hand, most of its weaknesses are eliminated. Sari-sari stores may have to adjust to
the presence of the mini-grocery in their area through their early opening and late
closing time during the day. For the delivery services, they might shift to other
products/ items for delivery that are obviously not available from the mini-grocery.
8. Determining what competitor to attack or avoid.
The mini-grocery will directly attack the small sari-sari stores within the
vicinity of the proposed location. Door-to-door deliveries are indirect competitors

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 and if the business will do the same delivery services in order to directly compete
with them, it will be an added cost and may do the business more harm than good.
B. Major Component of My Competitor Analysis
1. Who sells what I want to sell? The sari-sari stores within my barangay especially
those that are nearby.
2. Who does what I want to do? “Pagatang”; other mini-groceries.
3. Do they do business that will eventually weaken my business in the short run? No.
4. Where are they located? “Pagatang” is accessible online. Sari-sari stores are just
nearby.
5. Are they on a strategic location that would attract my potential customers? No,
because my business site is more accessible to my potential customers.
What is their pricing strategies? For sari-sari stores, only a small marginal profit
is added to cost of merchandise. But for the “Pagatang”, the prices of the
commodities or their delivery cost is not commonly affordable by the poorer sector.
6. Target Customers (target demographics): housewives who does the budgeting.
What income levels do they target? Are those income levels match with their pricing
strategies? Average-earners with permanent jobs matches with sari-sari stores but
for delivery services, it often do not.
7. What purchase behavior does work best for their customers, online or a storefront?
During the dry season, a storefront work best. However, during the rainy season,
the “Pagatang” works so well because of the confinement of household members in
their own homes.
8. Their Secret Potentials
a. Where are they successful? Sari-sari stores are commonly successful where there
are no other stores around. For “Pagatang”, often successful for very busy and
rich people.
b. What make their customers like them? For sari-sari stores, the congeniality of
the store owner and his/her willingness to allow purchases on credit make
customer like it. For the delivery services, timely and quick delivery accounts most
for good customer service.
9. My Edge from Theirs
a. How is my business (or product) be of an advantage than theirs? Mini-groceries
will allow people to realize their need of something as soon as they see them from
the shelves as it provides a wider array of brands and commodities. Sari-sari
stores usually have crowded counter grills and customers will only see the item
after they have asked for it from the counter.
b. How would I be more accessible or convenient to customers than them? Strategic
location for the mini-grocery is utmost so that its accessibility will lessen the
appeal of door-to-door deliveries. Pricing can be reduced when the suppliers of
mini-groceries at the central business area (Poblacion) are willing to supply
directly also to my mini-grocery.
10. Adding value to what they offer

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 a. What will be said of my business that hadn’t been said about them? Comfortable
ambience of the mini-grocery and pricing that’s the same from town.
11. Competitive advantage: “I am your friendly neighborhood grocery with the amenity
of urban living and pricing that’s just right into your budget.

For companies with extensive nature of competition like Honda Cars, the competitive
advantage statement is shown below and the segmented diagram in Illustration 1.
Honda: “We are the best at developing precision engines and power trains
because our products are the leaders in reliability and technological
advancement.”

Another way of summarizing your competitors’ analysis is by way of a chart or a table

such as shown in Illustration 2.

Illustration 1. Anatomy of the Competitive Advantage of Honda

Illustration 2. Example of a Competitors Analysis chart

Illustration 2. A Competitor Analysis Chart of a Car washing Shop

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VI. Generalization
Competitor analysis begins by identifying your comparative environment listing your
direct and indirect competitors. Direct competitors are businesses with similar products or
nature of operations such as yours while indirect competitors are businesses with products or
services that are not the same with yours but aims to solve the same problems and demands
of your potential customers.
After you have identified your competitors, begin to know their goals, strategies and
tactics, strengths and weaknesses, reactivity or hostility towards your business, what among
these competitors will you attack or avoid. After these areas have been covered, construct
your competitive advantage. You may also plot the key points of your observation in a chart
so you can assess your competition strategies.

VII. Exercises
(Use a separate clean sheet of paper as an answer sheet)
A. Multiple Choice. Choose the letter of the correct answer and write on the blank before each
number.
____1. What is referred to as the strength of your business which is unique from among
competitors and is the reason why clients choose you instead of them?
a. Advertising edge c. Competitive advantage
b. Business tagline d. Value proposition
____2. What is referred to as a disguising advantage because this required strength just keeps
you afloat in the market but actually exist also among your top competitors?
a. Basic requirements c. Common strengths
b. Competitive advantage d. tablestakes
____3. Which is a different business with a different product or service but meets or solves
the same needs or problems of the same target market that you are trying to cater to in
an alternative way.
a. Alternative business c. Direct Competitor
b. Business with similar customers d. Indirect competitor
____4. If you are selling barbecue in front of your house and your lady neighbor also starts
selling fishball in front of her house, what type of competitor is she?
a. She is a direct competitor c. She is both a direct and indirect competitor
b. She is an indirect competitor d. She is neither a direct nor an indirect
competitor
____5. When you add value from what your competitors offer, what are you exactly doing?
a. being better at doing the same thing as they do
b. introducing an improved version of their products
c. increasing the price to make it more prestigious than theirs
d. creating a lasting imprint on your clients so that you have a uniqueness from others.

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B. MAP YOUR COMPETITIVE ADVANTAGE
Use a worksheet to synthesize your competition strategy through answering these four
questions:
1. What are the greatest strengths of my would-be business? List the top four.

2. What are my potential customers’ top four wants and needs?

3. When I start this business, who will be my top four competitors?

4. What do these competitors do best? List the top four.

5. Summarize answers above by writing your competitive advantage statement in a single

sentence.

Rubric for answering letter B:

Criteria Levels of Achievement
Highly Competent Competent Not Yet Competent
(5 points) (3 points) (1 point)

Quality Information is Information is Information is

accurate. Resource mostly accurate with unreliable and/ or
information is only a few minor inaccurate. Resource
legitimate errors. One are invalid.
information may be
questionable.
Coverage of Areas assigned are Majority of areas Areas assigned are
Content covered fully. Able assigned are fully incompletely
to draw conclusions, covered. Able to covered. Present
make connections, draw conclusions, other information
and provide make connections without analysis.
inferences but inferences are
completely. incomplete.

V. References
Websites:
McCormick, Kristen. 2016. thrivehive.com. December 22. Accessed April 15, 2021.
https://thrivehive.com/5-things-you-should-know-about-your-competitors/.
Needham, Kit. n.d. cmu.edu. Accessed April 15, 2021. chrome-
extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%
2Fwww.cmu.edu%2Fswartz-center-for-
entrepreneurship%2Fassets%2FOlympus%2520pdfs%2FCompetitive%2520Analysis.
pdf&clen=3968748&chunk=true.

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Inc, CFI Education. 2015-2022. corporatefinanceinstitute.com. Accessed February 18, 2022.
https://corporatefinanceinstitute.com/resources/knowledge/strategy/competitive-
advantage/.

VI. Answer Key

5. d
4. b
3. d
2. d
B. 1-5 Answers may vary and scored accdg. to rubrics A. 1. c

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