Detecting competitive threats is crucial to every business. Microsoft has concerns with Google’s growing market share. Ford attempts to avoid losing market shares to Toyota. A local supermarket is concerned with another supermarket opening up in the area and taking its customers away. When businesses are able to detect a competitive threat, they are better equipped to handle that threat. Steps may be taken to ensure that the impact of the new threat is minimized.
Competition is the effort of two or more firms, acting independently, to obtain the business of a buyer by offering the most favorable benefits. Competitive intelligence is the purposeful and coordinated monitoring of competitors, wherever and whoever they may be, within a specific marketplace. Competitive intelligence allows the firm to make informed decisions about the outcomes of its actions in the marketplace. For example competitor A, through the scanning of new building permits in the local newspaper, discovers that competitor B has taken out a permit for the construction of a new building on B’s property. From this information, and other legal sources, competitor A may draw some conclusions as to the purpose of competitor B’s new building and take actions designed to minimize the impact of B’s new building. The goal of competitive intelligence is to detect threats originating from competitors in all their forms.