Competitive Analysis is the third part of the Competitive Intelligence Cycle which converts competitor information into insights that can be applied in the business. This involves organising, collating, digesting, analysing and interpreting the information about competitors.
There is a tendency to think that good competitive analysis depends upon using the numerous competitive analysis techniques. In fact it depends more on the analyst's judgement, which is shaped by experience, knowledge and intellect.
Common failings are: the analyst is insufficiently objective, or fails to explain the rationale for a competitor's strategy, or does not interpret the significance of the strategy for their own organisation. Competitive analysis is a skilled and challenging job which requires a good understanding of the organisation and the competition.
Companies use various outsourcing models to strengthen their competitive analysis capabilities. A practical division of labour is a client- consultancy partnership, whereby the external consultancy produces the competitor analysis, the competitive intelligence unit and the consultancy jointly interpret the implications of the analysis for the client's business.