IBIS - Competitive Intelligence - Sawis


OVERVIEW OF COMPETITIVE INTELLIGENCE Sawis Information Centre Open day 31 May 2011

Competitiveness defined

… the collection of factors, policies and institutions which determine the level of productivity of a country / industry / company and that therefore determine the level of prosperity that can be attained by an entity (IMD, 2005)

Competitiveness defined ‘(Wine) industries and firms are competitive when they are able to continue to deliver products at qualities and prices as good or better than their competitors; and they are able to attract sufficient sources of capital, land, labour, technology and management from other competing economic activities i.e. the ability to continue to trade wine in a competitive environment.’

South Africa’s Wine Industry’s competitiveness Certain realities impact: 1. Overall the global environment remains competitive – concentration is high 2. The exchange rate (current strong Rand) 3. Slowing / changing global supply and demand 4. High input costs…

What is CI?

Concepts and definitions

Origin and uses

Process and deliverables

Concepts and definitions • A systematic and ethical program for gathering, analysing, and managing external information that can affect your company's plans, decisions, and operations (SCIP) • A strategic tool that enables senior management to improve competitiveness by identifying key driving forces and anticipate future market directions (Larry Kahaner) • A continuous, systematic company-wide process that produces knowledge and insights about a company’s operating environment, to enable decision-makers to identify prevailing market trends and to anticipate opportunities and threats (J Calof)

Concepts and definitions Key words in all definitions of CI continuous company company-wide systematic process actionable legal and ethical knowledge and insight strategic management tool foreknowledge early warning

Concepts and definitions What CI is NOT • • • • • •

NOT spying, stealing or bugging NO easy activity, or magic wand to all answers NO substitute for normal business processes NO isolated activity conducted by a few NOT effective without a competitive culture NO sideshow to business planning and operational processes

Pepsi Alerted Coca-Cola to StolenCoke-Secrets Offer Thursday, July 06, 2006 Foxnews.com

Wall street Journal 7 July 2006

Trade secret plot pulls Coke, Pepsi together Friday, July 07, 2006 Post-Gazette.com A sting uncovered an alleged scheme to sell secret Coca-Cola information to rival Pepsi for $1.5 million.

Origin of CI

Origin of CI • In 1966 William Fair proposed formation of a corporate “Central Intelligence Agency” within firms that would focus on the activities of collecting and disseminating information • CI as a process has long been proposed as an effort to increase a firm’s competitiveness (various literatures) • Now CI has grown to become an established business construct, with delineated job functions directly responsible for collecting, analysing and disseminating information on more than just competitors

CI in SA • CI has been around some time – all companies of all sizes in all industries • In South Africa – Development coincided with SA’s re-entry into the global market – Companies could no longer just compete locally – Foreign competitors entered to change local competitive scene

CI globally • All industries – esp. fast-movers movers (technology, finance, manufacturing) • Global – esp. USA, Japan, Sweden, France, Germany, Australia, Canada, China, Israel • Companies large and small • Increasing use of CI - competition, open markets, trade regulations, global competitors • No single model - tailored approach • Organic growth – starting small

Stories of business failures • Think of Iscor and the meltdown of the Asian Tigers in the late 1990’s • Think of emerging China and the effect on the local textile industry • 1960’s car makers of Detroit famously said: "Let's not worry about it, those little cars aren't what Americans want to buy" • Eastman Kodak and Polaroid failed fail to adjust to the beginning of the consumer digital camera revolution

Betamax, the flying bank & Ford

Why CI?

Why CI Intelligence needed to reduce risks




Constantly scanning the greater picture in search of opportunities and threats

Why CI? • Need for faster and accurate decisions • An ever-increasing increasing availability of information but less intelligence • Competition fiercer than ever before • No time for business failures • Competitive environment full of opportunities and dangers (new competitors, M&A’s, technology, etc.) • Knowledge is the competitive advantage • What CI capacity do your competitors have?

Why CI?

“We need a better, more complete interpreted information picture. I believe companies that don’t do this, and don’t do this well, won’t succeed – this is a life and death issue.” President of Kellogg’s

Why CI ?

“The most meaningful way to differentiate your company from the your competitors, is to do an excellent job with information.” Bill Gates

Why CI? “What enables the wise sovereign and the good general to strike and conquer , and achieve things beyond the reach of ordinary men, is foreknowledge. This foreknowledge cannot be elicited from spirits nor from the gods; nor by inductive calculations. It can only be from men who have knowledge on the enemy’s situation. . . evaluate the enemy’s plans to determine which strategy will succeed and which will not.” Sun Tzu – 512 BC ( The Art of War)

Why CI? “I can’t imagine a more appropriate time to be talking about Competitive Intelligence than right now for I can't imagine a time in history when the competencies, the skills and the knowledge of men and women in CI are more needed and more relevant to a company being able to design a winning strategy and act on it.” John E Pepper, Chairman, Proctor & Gamble

Benefits of CI The benefits that a CI program may provide will depend most upon your needs. You may use CI to: • Understand your customers’ needs and their preferred solution • Provide a superior solution for the market • Anticipate changes in the marketplace • Anticipate actions and reactions of competitors • Discover emerging competitors • Learn from others' successes and failures • Improve acquisition activities • Learn about new technologies, products & processes that affect your business

Playing field CI resides in various elements of the Competitive Environment: 1. Industry 2. Market (customers, suppliers etc.) 3. Competitors Reliable CI must be considered in the context of the environment. Your company, customers, competitors, government and suppliers are all a part of the competitive environment.

Competitive environment • Each company’s CE differs • For a wine industry player priority attention would be given to: – Risk matters – Customers (changes, needs etc.) – Competitors (products, price, alliances etc.) – Heath and Safety issues – Technology

CI process and products

A process to turn data into wisdom

Wisdom Action Intelligence/ knowledge Interpreted information

Information Contextualised & organised Competitive data Intelligence


Data Bit and pieces of seemingly unrelated facts

CI process Strategic direction 1.Identify KIN

Planning & Direction Users & Decision Makers

Info.Processing & Storing

Users Collection

Dissemination 3/4. Making Intelligence Actionable & Understandable & Reporting

Analysis & Interpretation

2. Intelligence Collection & Reporting


• “You need to understand that I don’t have enough time to do my job. I don’t have time for academic stuff. My attention span is very short. Combine my lack of time and the feeling that I have a tough sales call to make • I like my intelligence fast and I like to understand the facts and hear an answer to the So What? question • Within a minute of your call, I am starting to form conclusions about whether I want to keep listening or not • I also want it actionable and integrated. integrated Don’t throw out a puzzle on my carpet and sit there guessing with me what sort of picture it will make. Put it together and then come and see me. You don’t need to make cosmic predictions • Rather say you have gone out and collected information, you’ve reflected and your view is we’re 95% on the right track, but need to make a few adjustments”

Critical success factors for CI Basic principles to develop intelligence within an organisation

• A TOP LEVEL CHAMPION / SPONSOR • Must be INTEGRATED COMPANY--WIDE – nervous system of a whole • Requires a PASSION / CULTURE OF COMPETITIVENESS • Needs appropriate STRUCTURES / PROCESS • Needs RIGHT PEOPLE e.g. CI Manager, Analyst, Researcher, Network, etc. • Requires TOP MANAGEMENT PARTICIPATION and UTILISATION • requires intelligence to be ROUTINE INPUT to strategic planning

Case studies in CI

How a multi national company conducts CI A case study…

Case Study SA

CI in Toyota SA Toyota SA in competitive perspective… • Toyota SA integral part of global Toyota (Japan) • Japanese traditionally global leaders in CI • Automotive industry in flux, highly competitive, shifting powers • CI not viewed as separate activity – it permeates whole company

Approach to CI • Previously Toyota, like many other companies and industries in SA was fairly protected from the forces of global business • Now part of bigger, largely unprotected environment requiring they look at a bigger environment and system • Therefore, Toyota approaches CI / its competitive position as being part of an open system - input – process - output and feedback within the CE • This systems approach is a way of thinking, a philosophy in Toyota

Approach to CI “Toyota is an integrated complex of interdependent parts that are capable of accurate interactions among themselves and within their respective environments. All these pieces are part of a large picture that should then be analysed and interpreted and possible outcomes derived on which counter measures and action is based.” (President, Dr Johan van Zyl)

Planning and focus • • • •

Strong marketing focus on SA market Close eye on competitor actions in SA of car makers Also monitor other competitive forces: Gautrain / taxi recap Close to dealer network (look at their finances but also used as sources of information) • Supplier focus – ‘one cannot exist without the other’ • Labour actions • Technological research into relevant technical tracking, innovation and predicting - alternative fuels (fossil fuels, hydro) and local market’s acceptance level for such vehicles

Process and structure Integrated process



Impact Analysis

Each subsidiary does own collection/analysis – Results fed to Japan for Impact analysis & planning

“Nariyoki Nariyoki” Highly centralised: Japan




Collection E co n om ic E n v iron m e n t S ca n In te rna l Sou rces Ex tern al S ou rces A n alysis Econ om ic Pu b lication s A verag e F orecast F in an cial M ag azin es B oard D iscu ssion s N ew sp ap ers Econ om ic N ew slette r B an ks D iscu ssion s P resen ta tion b y Econ om ists B i-ann u al B ER Sem in a rs Ind u stry D iscu ssion G rou p s Intern et F ocu s In fluen ce on th e m arket Econ om ic p aram eters

Internal Dealers Research dept. NAAMSA NAACAM Suppliers Customer surveys

Intern ational E nvironm ent Scan Internal Sources External Sources Analysis & discussions Publications & m agazines Research Governm ent Publications New spapers Consultants Internet Focus Influence on local econom y & m arket Trade agreem ents Exchange rates

Intern al analysis Marketing strategy Product strategy Dem and/sales plan Best product to satisfy m arket Marketing plan Product specifications D istribution network Pricing strategy Financial strategy Production strategy Capital expenditure Local vs. im ported Cost/profit Cost/quality

M ark et & E n v iro nm e n t an a ly s is In tern al S ou rces Extern al S ou rces M ark et resea rch N AA M S A In tern al exp e rts M ag a zin es & p u b licatio n s N ew sp ap ers In te rnet Focu s M ark et seg m en tation M ark et g row th

C u stom er seg m en tation C yclical ch an g es

Com petitors ana lysis Internal Sources External Sources M arket research NAAM SA Internal experts Magazines & publications New spapers Personal contacts Internet Focus Product strategies M arket shares Technology Business strategies

Pricing strategies Marketing strategies CSI Production strategies

Impact analysis “Nariyoki”

Actioning intelligence

• Top management commitment • Analysis inclusive and centrally done and constantly integrated with business planning process • Research emphasis – not just more information • Using advanced analysis techniques - simulation & modelling • Intelligence reports very concise, short, accurate

Lesson learnt • Top management commitment but more so, utilisation • Systematic thinking & future focus imperative • Allocating the right resources s is important • Using and implementing intelligence for strategies and counter strategies – it’s a need to have – not a nice to have • ‘Never take you eye off nay of the balls in the air – it’s a circus out there….’ • Competitiveness is our business

Discussion Contact: Marie-Luce Luce Kuhn (Muller) 0833777843 [email protected]


IBIS - Competitive Intelligence - Sawis

OVERVIEW OF COMPETITIVE INTELLIGENCE Sawis Information Centre Open day 31 May 2011 Competitiveness defined … the collection of factors, policies a...

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