One of the phases of the strategic plan is the analysis of the competitive environment that your company may encounter in its business environment. This will enable us to develop a value proposition that our customers will clearly appreciate.
Working method for analysing the competitive environment
When conducting a competitive environment analysis, we use tools such as Porter’s five forces model or competitive core model. According to this model, a company’s competitive position depends on five variables or forces that can determine the success of the business and which, therefore, must be analysed in detail. These five forces are:
Threats from substitute products
A market or segment is not attractive if substitute products exist. And it is even worse if they are more technologically advanced or have lower prices. We will minimise this threat by improving product differentiation to make it more competitive, based on innovation management in accordance with ISO 56001, eco-design or the Environmental Product Declaration. We will also help you reduce costs so that you can set low prices.
Threats from new competitors
They enter the market with new resources and the capacity to capture a share of the market. This threat will be less significant if there are more barriers to market entry and exit for competitors considering entering the market.
Sometimes, entering a market requires being an AEO (Authorised Economic Operator) for supply chain security or demonstrating a commitment to sustainability through Ecovadis or SMETA.
Customer bargaining power
They impose conditions on the fundamental variables of sales (price, delivery times or payment terms, product quality). This power will be greater when customers have a greater capacity to organise themselves and exert more pressure, when one customer accounts for the majority of sales, when there are more substitute products, or when product differentiation is more difficult.
Suppliers' bargaining power:
The ability of suppliers to impose conditions on key purchasing variables (price, delivery times or payment terms, product quality, etc.). Here too, this power may be greater when suppliers are able to organise themselves and exert more pressure, or when a supplier is essential for the company’s purchases, including sustainable purchases.
Degree of rivalry among competitors:
It is more difficult to compete in a market where competitors are well positioned or numerous. It will involve price wars, aggressive advertising campaigns, promotions, and the introduction of new products. The four forces above are often considered to determine the degree of internal market rivalry (which is why they are at the centre of the graph on the right).
Competitive environment FAQs
Why are ISO standards important in a competitive environment?
ISO standards are essential in a competitive environment because they guarantee efficient processes, safe products and reliable services. They improve quality, reduce errors and strengthen customer satisfaction. In addition, they enable companies to differentiate themselves from the competition, facilitate access to new markets and demonstrate a commitment to continuous improvement, sustainability and business excellence.
What does implementing standards in a competitive environment entail?
Implementing quality standards in a competitive environment involves improving processes, ensuring reliable products and enhancing reputation. It also allows for the optimisation of resources, reduction of errors and demonstration of professionalism. ISO standards strengthen competitiveness, facilitate access to new markets and consolidate a culture of continuous improvement that drives business growth and efficiency.
How does sustainability relate to a competitive environment?
Sustainability is directly related to competitiveness because it drives efficiency, innovation and cost reduction. Sustainable companies improve their reputation, attract customers and better comply with regulations. Furthermore, integrating environmental and social criteria strengthens resilience, allows access to new markets and makes sustainability a key strategic advantage in highly competitive environments.
What is the relationship between competitiveness and social responsibility?
Social responsibility drives competitiveness because it improves reputation, strengthens trust and generates sustainable value for customers and stakeholders. Furthermore, integrating responsible practices reduces risks, attracts talent and encourages innovation. Socially committed companies achieve greater differentiation, access to new markets and a lasting strategic advantage in competitive environments.