Strategic planners consider external factors, such as the competitive environment, in addition to internal factors when crafting strategic plans. Competitive analysis involves taking stock of the number and nature of competitors presenting a direct or indirect threat to a business.
Competitive analysis can provide aspiring entrepreneurs with a clearer understanding of the marketplace conditions in an industry they are considering breaking into, or help established businesses refine their strategic directions. Understanding the advantages and disadvantages of competitor analysis in strategic planning can take your strategic plans to the next level.
One of the benefits of competitor analysis is that is allows strategic planners to develop matrixes for spotting unserved or underserved gaps in the market. A competitor map is a strategic planning tool that lays out competitors in terms of their unique service models – identifying where they fit on a matrix with extremes ranging from high price to low price, high quality to low quality and high customization to low customization.
Competitor analysis tools like a competitor map may reveal, for example, that most competitors in the local area charge premium prices for higher quality products, while the bargain segment of the market remains underserved.
Geographic competitor maps can be helpful when looking for market gaps for businesses like restaurants, retail stores or other brick-and-mortar establishments. A geographic map of restaurant competitors, for example, may reveal that several square miles of the city do not have local casual dining establishments but are well-stocked with fast-food outlets.
Direct competitors in rapidly developing industries, especially technology, engage in a continual race to develop new blockbuster products. In these highly competitive industries, companies can gain a tremendous advantage by learning what their competitors are developing or improving for future product releases.
Knowing the directions competitors plan to take for their product lines can help a company develop products that trump competitors in terms of price, functionality or quality. Be careful not to cross legal boundaries into the world of industrial espionage; there are legal and safe ways to stay alerted to competitors' new product developments without prying into private information.
Competitive analysis can reveal broad trends in the marketplace, again providing the advantage of being able to spot opportunities for differentiating your products and services. Sometimes going against the grain in an industry can attract a small but highly loyal counter-culture market segment.
A small record label, for example, may discover that every single one of its competitors has switched to exclusively releasing music digitally and on CDs, which could open up a small unserved market for vinyl LPs.
Marketers in the 21st century focus on selling “benefits and value” rather than “products and services.” Because of this, staying on top of competitors' marketing strategies can provide the same advantages as analyzing their product development initiatives. What consumers think they are buying can be more important than what they are actually buying, and it is advantageous to know what consumers think about your competitors' brands.
Consider the case of a software developer. A software developer may know what products his competitors are selling, but it would be useful for him to know that one competitor is marketing products touted as the “easiest to use” in the market. The developer could counter this marketing tactic by revamping his own software's user interfaces and giving out free trials to prove his products are actually more user-friendly.
Medical practices that consistently apply a disciplined approach to strategic planning are better prepared to evolve as the local market changes and as the healthcare industry undergoes reform. The benefit of the discipline that develops from the process of strategic planning, leads to improved communication. It facilitates effective decision-making, better selection of tactical options, and leads to a higher probability of achieving the physician owners’ goals and objectives.
When undertaking strategic planning for your practice, one of the key areas is to define or review the organization’s values, community vision, and mission. Be sure there is consensus on why the practice exists, what goals or outcomes it seeks to achieve, what it stands for, and whom it serves. Consider beginning your strategic planning by agreeing on the following:
Agreeing on values, vision, and mission is usually best accomplished as a part of a planning retreat or at a special meeting and can take several hours. Often, you will draft the values and mission statement and describe the vision as part of your strategic planning session.
Develop a series of goals or organizational status statements, which describe the practice in a specified number of years — assuming it is successful in addressing its mission. It is usually a short step from the vision to goals — sometimes the statements describing the vision are essentially goal statements. It is extremely valuable to transform the vision into a series of key goals for the practice, preferably in the form of status statements describing the practice.
Agree upon key strategies to reach the goals and address key issues identified through an environmental scan. The major emphasis should be on broad strategies, including current and new programs, advocacy, collaborative, or other approaches. These strategies should be related to specific goals or address several goals. The process requires looking at where the practice is now and where its vision and goals indicate it wants to be and identifying strategies to get there. Approaches might include the following:
Whatever the specific approach used, specific criteria for evaluating and choosing among strategies should be agreed upon. They might include such criteria as the following:
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Based on these or other agreed-upon criteria, strategies can be evaluated and selected, or prioritized. In agreeing upon strategies, the planning group should always consider the need to clearly define responsibilities for their implementation. There must be a coordinated effort, from both physicians and the practice manager, to take responsibility for implementing this strategy.
Strategic planning can be a challenging process, particularly the first time it is undertaken ina medical practice. With patience and perseverance, as well as a strong team effort, the strategic plan can be the beginning of improved and predictable results for the business. At times when the practice gets off track, a strategic plan can help direct the recovery process. When strategic planning is treated as an ongoing process, it becomes a competitive advantage and an offensive assurance of improved day to day execution of the business practices.
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Nick Hernandez, MBA, FACHE is the CEO and founder of ABISA, a consultancy specializing in strategic healthcare initiatives.
Since founding ABISA in 2007, his emphasis has been on developing and maintaining a strong relationship with physicians and identifying areas for business opportunity and support. The company’s client list includes physician groups, hospital systems, healthcare IT organizations, venture capitalists, private equity firms, and hedge fund managers.
Nick is a graduate of the United States Naval Academy and a former Captain in the U.S. Marine Corps. He holds MBA degrees in both Operations Management and Information Technology & E-Business Management from Wake Forest University. He is Board Certified in Healthcare Management and has been named a Fellow of the American College of Healthcare Executives.
He is a frequent guest lecturer and is often quoted in the national media. He has consulted with clients in multiple countries and has over 20 years of leadership and operations experience. Nick is a Subject Matter Expert in business strategy, practice management, telemedicine, health IT, and oncology.