Competitive Forces

External Analysis

Competitive Forces

All industries are affected by context of the country, city or town. By the people and the entities. But, beyond this, industries are also affected by the relations created inside them, of the companies that form the industry between them to the ones with suppliers and clients. And these relations are really important to consider in order maintaining a company in certain industry, successful. But how to study them is the deal that most managers ask. Well, it comes from thinking about all the data of the context and personal data (our and others) and being capable of seeing it from others perspective in order of knowing how are they going to act or why did they act that way. Consequently this helps the company to develop without surprises, taking advantages from other’s flaws or distraction and minimizing damages from other’s strategies. This is roughly what competitive intelligence is about, what being competitive and a leader in a market requires. But is definitely a great step ahead of running good strategic management.

As the market of accessories in Colombia and in the world in general has so many brands, and most of them are really big and developed, we considered that for our study to be capable of giving us real options of action it is needed to consider the companies that we perceive as our direct competition rather than companies which probably we do not stand a chance with. Therefore we chose the companies that have similar products and services as ours and which scale is not extremely different from ours. One of them is Cyclus, that we chose because of their interestingly similar kind of product and business scheme. The other one is Dafiti, a company that is bigger than our by much but that can give us really important information about critical factors to succeed.

What are the major competitors strengths?

Dafiti: They have a huge impact in clients through a lot of marketing campaigns that include television broadcast, billboards and radio ads between others. Also they have a really well done platform for costumers to buy their products.
Cyclus: They have a great innovative product, which has very good quality and highlights thanks to the ecological factor. They also have a great platform that anyone can access and understand.

2. What are the major competitors weaknesses?

Dafiti: One of its weaknesses is that, even though it differentiates thanks to the services provided by them, which helps the costumer to easily get the product, it does not have an especially interesting product compared to any other in the market. Also, it has the disadvantage of not trading with luxury brands, something important in this industry.
Cyclus: Presents one similar weakness of our company that is the lack of capital and other resources. Because of this, they lack of strong marketing campaigns and the possibility of developing their firm.

3. What are the major competitors objectives and strategies?

Dafiti: As it can be inferred their interest is turning into the main online retailer of accessories and clothes. Their strategy has been investing a good amount of resources in developing marketing strategies to get to potential costumers and persuade costumers from other firms.
Cyclus: It is in the process of becoming a well-known brand, generating the trend of eco-friendly products.

4. How will the major competitors most likely respond to current economic, social, cultural, demographic, environmental, political, governmental, legal technological, and competitive trends affecting our industry?

Dafiti: Is probable that as the economy in Colombia is facing a slowdown, it will be necessary for big firms to improve deals with clients so they keep the demand constant.
Cyclus: As this company is still growing, it will have to face by anyway the economic slowdown of the country. Surely it will have to create innovative strategies to improve sales while facing clients with less disposable income.

5. How vulnerable are the major competitors to our alternative company strategies?

Dafiti: As Dafiti is a very big company they do not have the same capacity of answering personally to clients for sales or complaints. There is one of our advantages to beat them in the market, by giving an extra value in every attention given so clients start to prefer treatment over other deal breakers that we do not have as price or promotion. Nevertheless it is important to consider that because of scale it is probable that our actions will not affect the firm.
Cyclus: Even though Cyclus is not a huge company, it is evidently a strong and developed one compared to our company. Therefore it is necessary to persuade clients to buy from us instead from them even when products are really similar, there it enters the fact of how we reach potential clients, it is necessary for us to beat Cyclus in promotion aspect, so we can have the possibility to generate and maintain costumer relationships before them. In this way, if executed correctly we can generate a very big impact in the market by making us to be known because of being eco-friendly, even though when Cyclus started first in this trend.

6. How vulnerable are our alternative strategies to successful counterattack by our major competitors?

Dafiti: As this firm has a clear advantage from us respecting resources availability, it is possible that if Dafiti realizes that we are looking after getting clients to stay and start a relationship with us trough costumer service, they are going to invest in theirs the necessary to get us out of possibilities or simply will streak through dominant variables such as price or promotion.
Cyclus: Cyclus, because of being such a similar firm, has the same possibilities of persuading clients because of the same features. Therefore, if they recognize their need to develop their promotion element, they could in fact streak our entry into the market and leave us without any argument to give to clients so they can prefer us.