Introduction

 

Every business operates in unique market conditions. To compete successfully, managers need to collect detailed information about the market and the competition. Only then can they plan strategies that they hope will increase profits or sales levels perhaps by reducing costs, by entering new market segments, or by increasing their share of their existing market.

The first section of this module looks at the different market structures that exist, from a perfectly competitive market to a perfect monopoly. We then look at what is likely to happen if a business takes a particular action in each of the types of market. For example, what would happen if a business in a perfectly competitive market reduced its prices? What would customers do? What would the competitors do?  And what long-term outcomes would be likely for the business?

The section continues by looking at how governments react to different types of markets. How will the existence of a monopoly affect their citizens? What can governments do? How can they support their own companies if a market is rapidly developing or if it is declining?

The second section then considers the individual company. What are its strengths and weaknesses? How do customers view its products or services? Is it possible to identify a unique selling point that makes a specific product particularly attractive to customers? Only once managers have analysed their own company’s current performance can they usefully compare that with the performance, products and services of its competitors.

Section three looks at ways of analysing the company’s competitors. Based on this analysis of the company and its competitors, managers can then go on to select a suitable positioning strategy that will create competitive advantage. 

The final section briefly surveys the various tools that can help managers to analyse the strengths and weaknesses of their competitors, and then assess their own company’s performance. You’ll see that there is an enormous amount of information publicly available, and that businesses can also purchase specific research findings. You will also find descriptions of the many research methods that can be carried out by the organisation itself.

This module emphasises three key messages. First, managers must collect information about their own company and their competitors if they are to plan a successful strategy for the future. Second, there are many ways of collecting relevant information. Third, managers need to carefully select ways of collecting the most relevant information, and so avoid the problem of information overload.