Competitive Intelligence

Today's Business Environment of organisations is characterized by hypercompetition, where too many organisations are pursuing too little business. There is not enough demand to go around for all providers and services.
The knowledge base and capability to manage in this hyper- competitive world is called Competitive intelligence. It is the process of insight about future scenario and requires that we go from data to intelligence.

for example-
Data- Prices for our products have dropped by 5%
information - It is because of lower labor costs
intelligence- our key competitors is about to acquire new facility in India and that will increase the competition in next year/months.


Difference between data, information and intelligence


Data- Unrelated pieces of information and

Information- Increase knowledge derived by understanding the relation of data.

Intelligence- Organizing information to fully appreciate the implication and impact on the organisation.



Competitive intelligence has some basic forms such as market research and benchmarking. Good Competitive goes beyond simple research. It attempts to answer specific critical questions that can impact the organisations.

1. How is the competitor XYZ is able to to grow XYZ able to grow and capture market share.
2. What new products will competitor ABC develop and when will release this products.
3. What are the core competencies of competitor DEF?
4. Can we compete with new business lines or should we acquire another company to establish our market share.


Competitive Intelligence requires old fashioned analysis and filtering, somewhat like a detective who wants to solve a case- you can't automate the insights derived form C.I. It takes very intense and serious focus in a very short period of time.

Regardless of the tools businesses use, the single indispensable element to C.I is the human factor : the smart experience and instinct that can turn huge collection of dead facts into live intelligence that plays a central part in making business decisions

Competitive intelligence helps in decision making in the illusive and uncertain conditions. Strategy formulation process deals with incomplete options, ambiguous strategic options, difficult to evaluate . Competitive intelligence helps in this process.

Importance of Competitive intelligence

1. Sources of best practices
2. Strategy formulation and strategic analysis.
3. Isolates performance gaps in relation to competion.
4. Helps areas of improvement risks threats opportunities.

Tools of C.I
1.Environmental mapping - five forces model.
2.Organisational Appraisal
3. Wargames
4.Four Concerns analysis

5. Market Research 

6.Bench Marking- 

Imitating the industry leader, comparing resource, capabilities, processes strategy at the industry best practices

.

Goals and objectives in Strategic Management

Goals


Goals are what an organisation hopes to accomplish in a future period of time .Goals adress a broad category of financial and non-financial issues.Goals are general statements about overall growth, survival and profitability of business, for a longer period of time and do not describe specific targets. Goals may be of qualitative nature and difficult to measure and control.


Objectives

objectives are desired outcomes /targets in specific relevant areas that the organisation wants to achieve during a fixed time period.

Objectives are concrete and specific in contrast to goals that are generalized.Objectives make the goals Operational, while goals may be qualitative objectives are mainly quantitatively expressed and are measurable and comparable.

Objectives are statement of result, a firm seeks to achieve over a specific period of time.

Area-------------------------------------------------------> Target

                               Time Period


The areas in which objectives should be set may be focused to internal or external aspects of organisation
for example  an objective may look alike this-

Objective Example 1: Create new-to-the-world products that exceed the needs of the existing new market spaces and increase the revenue stream of such endeavors by $10 million by 2012.




Objective Example2 : Reduce the amount of toxic substances used in the production of products by 90% over next ten years.



PROCESS OF OBJECTIVE FORMULATION


Balanced Score Card (B.S.C) Approach to objective formulation

Developed by R.S Kaplan and David Norton of Harvard Business School, B.S.C is used as performance management system , also is a set of measures that are directly related with strategy to link it long term strategy with tangible goals and and actions.B.S..C allows a manager to evaluate the company from four Perspectives

financial Performance

Customer Knowledge

Internal Business Process

Learning and Growth

If objectives are to be set then it is necessary to understand and focus attention on financial, customer, Learning and Growth and Internal Business perspectives. This method gives a balanced view to objective setting.

Characteristics of Good Objectives
 Acceptable
flexible
Measurable
Motivating
Suitable
Achievable.

Strategic Decision Making

Strategic decision Making is the process of selecting a course of action from many alternatives.
steps in strategic decision making looks some what like us:-

1. Objectives to be achieved are determined.
2. Alternative ways of achieving these objectives are identified.
3. Each alternative is evaluated.
4. The best alternative is chosen

The Entrepreneur /honor or Top management always have to chose the vision. There  may be alternative visions of a company from which one best vision is chosen.

At second step a company has to chose its mission. To chose a mission means a company has to decide about what product it has to offer?.......................  A company may have ability to produce different products

whom to serve...........................................  A company have to decide the customer group 

which technology to use?... To chose from  different technologies of production and distribution of the product 

 Similarly when an organisation has to chose its objectives. Top  managers identify objectives, alternative ways , evaluate the feasibility to achieve the objectives.

Characteristics of Strategic Decisions:-

Popularized by Mintzberg et al. (1976), strategic decisions are seen as large, expensive, and precedent setting producing ambiguity about how to find a solution and uncertainty in the solution’s outcomes. Once implemented, a strategic decision stipulates premises that guide operational decisions that follow. A strategic decision is often difficult to reverse once human and financial resources have been committed to their cause. Furthermore,

strategic decisions have the following characteristics:

◆ They are elusive problems that are difficult to define precisely.

◆ They require an understanding of the problem to find a viable solution.

◆ They rarely have one best solution, but often a series of possible solutions.

◆ Questions about trade-offs and priorities appear in the solutions.

◆ Solution benefits are difficult to assess as to their effectiveness, in part because

they lack a clear final end point against which effectiveness can be judged.

◆ Other problems in the organization are connected to solutions for a focal

problem.

◆ High levels of ambiguity and uncertainty are associated with solutions.

◆ Realizing hoped for benefits has considerable risk.

◆ Strategic decisions have competing interests that prompt key players to use

political pressure to ensure that a choice aligns with their preferences.

A simple model of strategic decision making can be illustrated as following-

BUSINESS POLICY

  

Business policy as defined by Christensen and others as the study of the function and responsibility of Senior Management. The crucial problems that affect the success of the in the whole organisation and the decisions that determine the direction of the  organisation and shape its future.

Igor Ansoff (1987) makes a difference between strategy and policy.

"strategy is a rule for decision making"

"Policy is a general decision that is always made in the same way whenever the same circumstances arise"

"A strategy applies similar principles but allows different decisions as the circumstances differ"

Wikipedia defines Policy as -

A policy is typically described as a principle or rule to guide decisions and achieve rational outcome(s).Policies are generally adopted by the Board of or senior governance body within an organization where as procedures or protocols would be developed and adopted by senior executive officers. 

Ones a company sets the vision - the description of its future it wants to realize in future, the mission- the statement of its social reasoning, nature of business, product, customer target, technology and its role in society, it becomes necessary to visualize those problems which will come as impediments in accomplishing the mission of the company as a whole.

As a part of strategic management component, business policies are related with those concerns/problems/issues which affect the organisation as a whole and are of general nature. Since company has got a vision to aspire, a mission to pursue it needs to understand the problems which are normally to be recurring during the implementation of strategy.

Few examples of business policies are-

• A company will not consider any cost reduction options if it means

compromising quality.

• A company decides to grow only through retained earnings.

• A company will not consider adding new products with less than

10 percent return on investment.

• A company sells exclusively on cash terms.

• A rental company charges a deposit for rented material.

• A rental car company charges extra money for delivering the rented

car in another location.

• A company hires personnel with experience only.

• A company prepares guidelines on how to collect debts from its customers.

• A company will not question customers’ returns of items purchased

earlier.

• A company responds to 50 percent of customer inquiries within three

working days.

STEPS IN BUSINESS POLICY FORMULATION-More or less  business policy formulation is similar like decision making process. There are following steps in Policy formulation.

I) Environmental Analysis

The first step in the process of policy formulation is environmental analysis. There are basically two environmental factors: internal and external. The external environment of the company comprises of economic, technological, political and social forces operating outside the boundaries of the company. These influence the company indirectly and the company has no control over them. These have to be continuously analyzed and understood before the formulation of polices. The internal environment of the organization comprises of the firm’s employees, the organization structure, resources, value system, functional departments etc. These affect the organization’s activities directly as they are internal to the organization. Both internal and external forces interact and a change in one affects the other one. The two together provide for identification of problem areas with respect to which the policies could be made.

II) Identification of Policy Alternatives

Once the analysis has been done, the next step requires identification of policy alternatives. The environmental analysis helps to determine the opportunities and threats facing the company and also its strengths and weakness. When the organization is engaged in the matching of its strengths with the opportunities, various policy options emerge. The options or alternatives also arise with the help of past experience, past performance results and the practices followed by the management.

Identification of alternatives has to be done efficiently and then only can they be evaluated for one choice.

III) Evaluation of Policy Alternatives

After the various alternatives have been identified, they are to be evaluated so that the best one could be selected. The evaluation of policies is known as policy audit. The alternatives can be evaluated on the basis of their consequences in terms of their contribution to corporate goals. Several criteria could be used for evaluation like growth, unit, profitability, development, organizational goals, etc. The evaluation has to be done with care so that errors may not occur. Policy should not only be feasible but it should also be consistent with organization’s goals.

IV) Choice of Policy

The last step in the policy formulation process is the choice of the best alternative from among the various alternatives identified and evaluated. The evaluation helps in the selection of the best possible policy. If any of the alternatives are not acceptable and not consistent with company’s objectives then the process reverts back to the identification of alternatives where fresh alternatives are looked for. The search begins again.

The various alternatives are compared with each other and the most preferred option is selected. This selected policy has to be tested so that it could be known whether it fits in the organizational boundaries and meets the organizational goals. After being successfully tested, the policy becomes ready for implementation and the manner in which it would be implemented should be explained clearly. After the policy has been made, it becomes necessary to review it from time to time so that it does not become obsolete.

TYPE OF POLICIES:

Basically there are three main types of policies

1. Basic Policies:- These are framed by the top management and spell out the basic approach of a company to its activities and its environment.

 2.General Policies:- These are framed by the middle level management and are more specific. They apply to large segments of the organization.

3.Specific Policies:- These are framed by the foremen and supervisors and are very specific in nature. They are applicable to routine activities.

COCA-COLA policy document is displayed on its website:- :: www.thecoca-colacompany.com.