EKONOMIKA A MANAGEMENT COMPETITIVE INTELLIGENCE AND COMPETITIVE ABILITIES Of ENTERPRISES
Miroslava Brazdilova
Abstract: This contribution deals with a method used for increasing competitive abilities of enterprises. It is called competitive intelligence and is used in western countries for quite a long time. Competitive intelligence (CI) is based on acquisition of open information sources, their analysis and using its conclusions to planning and to support decision making. A big emphasize is on mining public information sources which have to be collected only by legal ways. Final/y, contribution points out to problems connected with CI implementation. Reasons leading to unsuccessful practising this method could be inappropriate specification of information needs, reluctance to communicate information and inefficient information flows.
Key words: competitive intelligence, CI cycle, competition, competitive ability, information sources
1. Introduction meaning. However, the definition of competitive intelligence implies that information becomes In the age of fundamental and accelerated competitive intelligence once it is analyzed and changes characterized by globalization, turbu provides implications for strategic planning and lence and complexity are companies forced to decision-making. To many executives, competitive face increasing number of competitors entering intelligence seems to be nothing more than what new markets. Boundaries that once separated marketing or market research departments have competitors are evaporating and the companies been doing for years [9]. don't hesitate to cross industrial or geographic According to Hoffman [6] GI has two meanings: borders [5]. Many firms are finding that the only it's both a process and a product. The process is way to grow is by taking market share from the the methodical acquisition, analysis, and evaluati competition. Pressures from competitors, chan on of information about competitors, both known ging customer needs, and the macroeconomy and potential. The product is useful information - continuously confront businesses, requIring information that enables managers to make infor them to constantly evaluate and change their stra med decisions about everything from marketing tegic goals [4]. Competitive intelligence is a key and R&D to long-term business strategies. Good subarea of knowledge management, which could CI doesn't just provide data; it suggests a course lead these companies to successful acquisition of action or warns of a potential problem. of relevant information and transform them into The expression "Competitive Intelligence" is strategic knowledge. not the only one and it is not accepted automati cally into other languages [12]: 2. What Is CI • instead of using "Competitive Intelligence" it Competitive intelligence (CI), as formally de is often used "Business Intelligence" (81) in fined by the Society of Competitive Intelligence the USA, but Business Intelligence in a larger Professionals (SCIP), is a systematic and ethical sense involves also Knowledge Management process for gathering and analyzing information (KM); about the competition's activities and general bu • the French use only "Intelligence Economi siness trends to further business' own goals. que". Many people have the misconception that infor mation equates to intelligence. Information in its Barson [1] says it concisely: competitive in purest form is raw data that is free of context and telligence at work is having your finger on the EKONOMIKA A MANAGEMENT pulse of the marketplace and knowing what your The major focus of strategic intelligence is on competitors are doing so you can prepare a coun the future. Its goal is to give a company a view ter-move. of its total environment - competitive, regulatory, and political. 3. CI and its Variations It was and sometimes still is variously called com 3.2 Competitor Intelligence petitive intelligence, business intelligence, corpora Competitor intelligence is the use of public te intelligence, competitive information, commercial sources to locate and develop data that are then intelligence, etc. Most practitioners have settled on transformed into information about competitors, one term: competitive intelligence. their capabilities, current activities, plans, and Under whatever name, CI consists of two overall intentions. facets. First is the use of public sources to deve Competitor intelligence is most often found lop data on competition, competitors, and the mar providing assistance to strategic planning opera ket environment. Second is the transformation, by tions or to the operating managers within strate analysis, of those data into information. gic business units. Today, however, there are at least four separate Competitor intelligence usually helps answer types of intelligence which are all related to CI and a wide variety of key business questions, inclu which we view as subsets (subarea) of CI. They ding ones such as these: are strategic intelligence, competitor intelligence, • Who are our competitors right now? Who are technical intelligence, and market intelligence [8]. our potential competitors? • How do our competitors see themselves? 3.1 Strategic Intelligence How do they see us? Are they right? Strategic intelligence is competitive intelligence • What are the short-term and long-term trends provided in support of strategic, as distinguished in our industry? How have our competitors from tactical, decision making. This means provi responded to them in the past: How are they ding the highest levels of management informa likely to respond to them in the future? tion on the competitive, economic, and political • What patents or technology have our compe environment in which companies operate now titors or potential competitors recently obtai and in which they will operate in the future. ned? What do those innovations mean to us? Strategic intelligence typically supports those in • How and where are our competitors marke senior management, that is, those who make and ting their products and services? What is then execute overall strategy. Its most common ap their rate of success? What new directions plications are in the development of the following: will they probably take? • Strategic (3-5 year) plans; • What markets or geographic areas will (or • Capital investment plans; will not) be tapped by our competitors in the • Political risk assessment; future? • Merger and acquisition, joint venture, and cor • Can our market and geographic sectors re porate alliance policies and plans; spond to changes in pricing, delivery terms, • Long-term research and development (R&D) or warranties? Will they? planning. • What are our competitors' overall plans and goals for the next two to five years in the Strategic intelligence usually focuses on the companies where currently compete with us? overall strategic environment. To develop the What are their plans and goals for their other appropriate strategic intelligence, analysts must companies and how will those affect the way focus on many critical factors, such as techno they run competing companies? logy trends, regulatory developments, and even political risks. Competitor intelligence's time horizon typically The time horizon of interest typically runs from runs from six to twelve months in the past to one two years in the past to five to ten years in the year in the future. future. ------
EKONOMIKA A MANAGEMENT 3.3 Market Intelligence • Current manufacturing methods and proces ses in use. Market intelligence is intelligence developed e Key patents and proprietary technology being on the very current activities in the marketplace. used by or being acquired by competitors. In a real sense, market intelligence is a child of • A competitor's access to, use of, and depen the computer age's support for the detailed ana dence on outside technology, as well as its lysis of retail consumer goods sales. need for new technology. It could help: o The size and capabilities of competitors' re Find out that a product promotion is less search staff. successful than anticipated, and immediately o Types and levels of research and development respond to change a promotion that is not being conducted by competitors, as well as working or to intensity one that is working. estimates of current and future expenditures • Determine what other promotions competitors for research and development. are running against yours - and where - and • What does technical intelligence focus on? respond appropriately. • "Test" product linkages by seeing if custo Technical intelligence's practitioners see it as mers buying your products also buy another having a slight overlap with both competitor and one very frequently and cross-promote your market intelligence, particularly with respect to products. its interest in suppliers and customers. However, • Who and what does market intelligence serve? instead of dealing with market trends, TI is usually primarily focused on technology trends and scien The primary customers of market intelligence tific breakthroughs. Technical intelligence practi are usually marketing departments and the sales tioners have argued that technical intelligence, in force. To a lesser degree, market intelligence fact, should focus more on opportunities for the' serves market planning by providing retrospe firm than it should on threats to the firm. Techni ctive data on the success and failure of our own cal intelligence's time horizon typically runs from sales efforts. twelve months in the past to five or more years in Market intelligence's focus on sales, pricing, the future. payment and financing terms, promotions being offered, and their effectiveness. In some compa nies, that may be further limited to what is happe 4. The Process of Ci ning with your own product or service. The CI process is usually divided into five basic Market intelligence's time horizon typically phases, each linked to the others by a feedback runs from three to six months past to no more loop. These phases, making up the CI cycle, are than six months in the future. Most of the time, as follows (Fig.i) [7,8]. however, the horizon is actually measured in terms of weeks rather than months. Fig. 1: CI cycle
3.4 Technical intelligence Collection Technical intelligence activities are those, 8; Reporting Planning which permit a firm to respond to threats from & and to identify and exploit opportunities resulting Direction from technical and scientific change. Technical intelligence, variously referred to as TI or as CTI (competitive technical intelligence) has become a growth area within CI. Analysis CI itself has always had a particular relevance & and linkage to research and development activi Production ties. Using CI techniques in areas of technology and research, those practicing technical intelli gence now can determine the following: Source: [ 121 EKONOMIKA A MANAGEMENT 4.1 Establishing CI Needs, Plan In some literature we can find one another phase of CI - taking action. ning This means that company has to recognize 4.5 Taking Action the need for CI and define what CI is needed. Using the CI in decision making. CI may be It also means considering what type of issue used as an input to decision making or it may be (strategic, tactical, marketing, etc.) is motivating the first of several steps in an overall assessment the project, what questions need to be answe of, for example, a new market. red with the CI, who else may be using the CI, There is an additional factor, which runs throu and how and by whom the CI will ultimately be gh and directly links all of the phases of CI. That used. is the need to continually monitor what you have done and how you have done it. The goal is to 4.2 Collecting the Raw Data provide feedback to the other three phases of the CI process and thus to improve the product of First, needs are translated into an action plan. an individual assignment, as well as the entire CI This involves identifying the questions and the process as you are using it. Feedback to and from likely sources for collecting the data needed to each phase is essential. answer those questions. Company may have to decide who should be collecting the raw data, 5. Information Sources foB' CI which will be turned, into intelligence through the CI process. This can be one or more of the About 90 percent of all information that a com following: the end-user, internal CI professional, pany needs to make key decisions and understand other employees, or an external CI firm. Compa its market and competitors is already public or can ny should have a realistic understanding about be systematically, legally, and ethically developed timing, financial, organizational, informational, from public data. But what can we mean by public? and legal restrictions. Then the data sources Public in CI is not equivalent to published; it is a sig that are most likely to produce reliable, useful nificantly broader concept. Public, in CI, means all data are identified and acquisition begins. information you can legally and ethically identify, locate, and then access. CI professionals have to be very careful to 4.3 Evaluating and Analyzing Raw avoid crossing either legal or ethical bounda Data ries when collecting data for any intelligence program. In spite of the print media's frequent In this phase, the data company collected are failure to see or to communicate this, there is evaluated and analyzed and thus transformed a distinct and critical difference between com into CI. This might involve comparing the data petitive intelligence and industrial espionage. found with data from other sources, integrating Industrial espionage involves violating criminal conclusions from the data with other CI, or or civil law to collect data. In some instances, measuring the results of company's CI against a grey area exists between industrial espionage predetermined benchmarks. and legitimate intelligence collection efforts; in these instances, you may face taking actions that 4.4 Communicating the Finished are not illegal but that still violate a company's Intelligence policy or ethical standards. The use of the terms black, grey, and white can Preparing - sometimes with reformatting - the be useful in understanding where CI fits in the ga results and then presenting them in a usable thering of data. By black, we are referring to data "container" and in a timely manner. The CI may acquired by illegal, that is, criminal means. Grey is have to be distributed to those who asked for it that acquired by improper, but not criminal, ways. and, in some cases, to others who might profit And white refers to data acquired by legal, proper from having it. In some cases, the CI is simply means. (See Tab. 1.) made available to potential users. In any case, Information sources generally can be divided into the final forms of the CI, as well as its security, two basic forms that are: are both important considerations. EKONOMIKA A MANAGEMENT
Tab. 1: Resources utilization to Information Acquisition
Public Available Methods Available Illegal Methods Sources to Companies
Closed (confidential) Information Sources PROHIBITED PROHIBITED ESPIONAGE Black Information 5%
Grey Informati· DANGEROUS on (available) CI CI FOOLISHMENT Open (pub- 15% lic) Informa- tion Sources White Informati- 95% EXPENSIVE FOO- DANGEROUS on (published) CI LlSHMENT FOOLISHMENT 80%
Source: [2J • Unpublished sources: they could be gathered • Exchange reports, by special methods • Press releases and other intelligence, • Published sources: they could be found in • Reports describing markets, industrial bran- variety of sources - printed or in a electronic ches, form - annual reports, articles from economic • Product information, press, statistics, patents, professional magazi • Intellectual property, nes, conference papers and others • Juridical and legislative information, • Demographic information etc. Published Sources Traditionally, CI relied upon published company Grey Sources reports and other kinds of printed information. As noted above there exist also grey sources In recent years, Internet has rapidly become an or "grey literature". These publications are not extremely good source of information about the currently available, they are published on a small competitive environment of companies and has scale and it is difficult to get them. Typical grey been reported by a Futures Group survey in 1997 sources are: to be one of the top five sources for CI professio • Research reports, nals [3]. It is important to note that the Internet is • Technical reports, quite different from traditional computer applicati • Special analyses, ons in that the Internet is inter-organizational and • Dissertations etc. supports multiple business functions, from human communications to business transactions. By There is one special grey literature database in using Internet, a company can monitor (manually Europe. It is called SIGLE (System for Information or by using intelligent agents) the presence, po on Grey Literature in Europe) and it provides lots sture, products, and prices of other players in its of information coming from European information industry. It can track the views of customers and centres in several countries. seek out new ideas and expertise internationally. It A plenty of these information contains Internet. can also draw upon files and databases from go vernment agencies, foundations, universities, and Databases research centres to broaden its thinking and help There are two basic types of online databases: it be aware of the needs of the marketplace [11]. bibliographic and fulltext. Bibliographic data Internet provides these on-line sources [10]: bases were the earliest of the commercial online • Financial and credit information, databases available to the public. As the name • Catalogues, company's indexes, indicates, they were basically lists of books and EKONOMIKA A MANAGEMENT magazine articles, which were organized by title, Established in 1986, today SCIP has over 50 author, and a subject. chapters around the world, with individual mem Fulltext database offers immediate access to bers in more than 50 nations. In addition, SCIP a complete article in which we may be interested, has alliance partnerships with independent affili instead of just an abstract and a citation. ate organizations in many countries. More information about this society and 6. Problems with CI Implementa its activities you can find on the web pages: www.scip.org. Of course there are lots of sub tion jects interested in the CI - various marketing Implementation of the CI has lots of various societies and associations, information-librarian aspects it is a multidisciplinary problem. To societies etc. See the pages e.g. solve it we need the knowledge in these areas • http:;/www.fuld.com [2]: • http://www.cipher-sys.com/ • Management: the ability to coordinate all the • http://www.academyci.com participants in the process; • http://www.competia.com/home/. • Field of company's activity: the ability to deter mine company's information needs; • Psychology: the ability to motivate, persuade References: and communicate with the people at different [1] BARSON, D.C. Competing intelligently. GCI, levels; 2002, vol. 6, p. 28-28. • Legislative: the ability to define the rules of [2] Competitive Intelligence - pl'edpoklad vaseho the information gathering and exploitation uspechu: problemy zavadeni CI [online]. 2002, ( deontology); [cit. 2002-03-30]. Available on WWW:
[11] TEO, T.S.H., CHOO, W.Y. Assessing the Impact of Using the Internet for Competitive Intelligence. Information & Management, 2001, no. 39, p. 67-83. [12] VEJLUPEK, T. Firemni zpravodajsky infor macnf system. In Inforum 2001. Praha, 2001. cit. [2003-04-08]. Available on WWW:
In9. Miroslava Brazdilova Univerzita Tomase Bati ve Zline Fakulta managementu a ekonomiky Ustav informatiky a statistiky [email protected]
Doruceno redakci: 17.2.2005 Recenzovano: 20. 6. 2005 Schvaleno k publikovani: 12. 10.2005 EKONOMIKA A MANAGEMENT
SHRNUTí
KONKURENČNí ZPRAVODAJSTVí A KONKURENCESCHOPNOST PODNIKŮ
Miroslava Brázdilová
Příspěvek se zabývá aktuální problematikou zajištění konkurenceschopnosti podniků. Je zde na stíněna metoda, která našla již hojné zastoupení v západních zemích, praktikována je také v evrop ských zemích a Japonsku. Pro tuto metodu, která v angličtině nese název "competitive intelligence" (akronym CI), se v naší zemi vžil pojem konkurenční zpravodajství. Podstatou metody je vytěžování veřejných informačních zdrojů za účelem získání informací o konkurenci. Konkurenční zpravodaj ství realizuje své výstupy také v oblasti strategického řízení, kde má vysokou přidanou hodnotu. Doposud vznikly postupným vývojem 4 separované typy zpravodajství, které s CI souvisejí a lze je považovat za podmnožinu konkurenčního zpravodajství. Jsou to strategické zpravodajství, zpra vodajství o konkurentech, technické zpravodajství a tržní zpravodajství. V rámci těchto typů zpra vodajství probíhá tzv. zpravodajský cyklus, jenž flexibilně reaguje na informační potřeby podniku. Je tvořen čtyřmi fázemi: plánováním - identifikací informačních potřeb v návaznosti na formulaci zadáni, sběrem informaci a jejích verifikaci, analýzou a distribuci spojenou s praktickou aplikaci výsledků zpravodajství do podnikových procesů. V rámci příspěvku je kladen důraz zejména na vyhledávání informačních zdrojů, které jsou pro potřeby této metody zásadně legální. Zhruba 80 % informací pro potřeby zpravodajství je veřejně dosažitelných, a to buď v tištěné nebo elektronické formě. Ovšem častá zaměňování s průmyslovou špionáží vedlo informační profesionály k založení spolků hlásajících společnou etiku vyhledávání informací a dodržování pravidel, jimiž se podrobněji zabývá deontologie. V závěru jsou zmíněny problémy, které doprovázejí podniky při zavádění CI - nevhodná speci fikace informačních potřeb, neochota zaměstnanců sdílet informace, neefektivní informační toky v podniku a špatná komunikovatelnost informací.
Klíčová slova: konkurenční zpravodajství, zpravodajský cyklus, konkurence, konkurenceschop nost, informační zdroje