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Competitive Intelligence: Definition & Examples

Instructor: Savannah Samoszuk

Savannah has over eight years of hotel management experience and has a master's degree in leadership.

How do companies stay ahead in an ever changing business world? Competitive intelligence is how companies keep their finger on the pulse of their industry. This lesson will define competitive intelligence and provide examples of how companies use it.

Competitive Intelligence (CI) Defined

Harry is a hotelier who is getting ready to open a new brand of hotels. He wants to make sure that he is able to launch his new concept before any of his competitors come up with the idea. How does he make sure he is keeping up with his competitors in the industry?

Competitive intelligence (CI) is the process of gathering and analyzing information on your competitive environment to help you make business decisions. In order for Harry to make sure that he is competitive and that the launch of his new brand is successful, he needs to know what is going on in the market around him - CI can help him do this. Using CI helps business owners anticipate challenges and face any potential obstacles immediately.

Depending on your industry, your CI information can look different. Here are some general examples of information that CI can include:

  • Industry cost curves: Find out about changes to product costs.
  • New products: What new products are your competitors coming out with?
  • Evaluation & estimation of market size: Learn how big the market is for your product and the competitors already in your market.
  • Supply and demand curves: Is there demand for your new product? Understanding the supply and demand relationship for your product is essential for all businesses.
  • Competitor news: What is going on with your competitors? It is important to follow your competitors on social media and check their press releases frequently so that you are aware of any new developments.

CI Methods

The whole idea behind CI is that you are gathering and analyzing information that will help you to be better prepared and make sound business decisions. There are different ways that companies can go about CI.

First, there are many websites that provide valuable CI information. For example, sites like Yahoo Finance can give keep you up to date on stock market changes and finance news. This is important to follow so that you can see how other companies are doing. Harry should follow other hotel owners on these websites to learn about their stocks, profits and any major, relevant news. Say Harry finds out that ABC Hotels is planning to open a new brand of hotels. Using online sources to learn about this development will help him see right away if ABC's new hotels are going to be competition for his new brand.

Next, companies can conduct a SWOT analysis to compare their own company to competitors. A SWOT analysis is a way to analyze both internal and external forces that can affect a company's success. SWOT stands for 'strengths, weaknesses, opportunities, and threats'; to do a SWOT analysis you list all the factors that might fall under each of these categories. This is a great way to gain intelligence about areas in which you are doing well, and areas that you can improve on. For example, Harry might do a SWOT on both his hotel and ABC Hotels and discover that ABC has more of the luxury market than he does. This can help him see that he needs to make business plans to improve in this area.

Use of CI

Once you've gathered your information, the next part of CI involves analyzing that info and taking action based on it. After all, the purpose of CI is to be able to make business decisions knowing what is going on in the market.

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