When defining business strategy, it is not enough to only understand one's own competencies as a business; it is also important to look very closely into the competencies of competitors to predict what their next moves might be and position one's business appropriately. Porter’s Four Corner's analysis provides a framework for achieving this.
Business analysts are often required to use analytical frameworks to generate new information and identify the main success factors for achieving competitive advantage in fast-changing markets. The four corner's analysis framework is one such tool used for recommending business strategy based on information that has been collected. Michael Porter introduced the four corner's analysis technique, which mainly focuses on understanding competitors’ strategies. It can also be used as a ‘self-analysis’ strategy for identifying where improvements can be made.
It is important for every organisation to profile its competitors. Competitor profiles drawn up arbitrarily without any frame of reference however, may fail to offer adequate information on how competitors would respond to a particular strategy initiated by the business.
Implementing the four corner's technique provides a more grounded approach to understanding your competitors and includes identifying the following:
- Drivers: What drives your competition and moves them forward? What makes them tick? What is the impact of this motivation on their strategy? If you understand what your competitors' goals are, you will know whether they are likely to change course or not in the future.
- Strategy: What is your competitor’s strategy? Are they succeeding with their current strategy or are they failing and are likely to change direction? If the benefits of their strategy are not realized, they are likely to change course. You can use this insight to prepare your business for impending changes that may happen.
- Capabilities: Understand the strengths and weaknesses of your competitor: What are their strengths? What is their competitive advantage?
- Management Assumptions: What does your competitor believe about themselves and others? What assumptions have they made about their environment and their strategy? These assumptions have an impact on the strategic direction they take. Analysing your competitor’s assumptions will help you identify their weaknesses and blind spots.
Four corner’s analysis is a framework for analyzing competitors to understand how they would react to strategic moves, industry shifts and environmental changes. Such insight can help you prepare your business for what is to come, should these predictions become reality.
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