Competitor Analysis

The purpose of a competitor analysis is to provide managers with a complete picture of the competitive landscape confronting a firm. The core idea behind a competitor analysis is to use a systematic approach to (1) identify current and future rivals to a firm, (2) assess the strengths and weaknesses of current and future rivals, (3) determine a match between a competitor’s strategies and capabilities, (4) analyze the future plans and intentions of rivals, and (5) predict a competitor’s reaction to initiatives launched by a firm. The ability to anticipate the response by rivals provides a firm with a competitive advantage. This chapter discusses the underlying theory, core idea, depiction, process, insight or value created, and risks and limitations of competitor analysis. Finally, the chapter offers the illustration of Netflix and applies the steps of competitor analysis to this case.