The second crucial component in competitors analysis is identifying each competitors's assumptions.
These fall into two major categories:
- The competitor's assumptions about itself
- The competitors's assumptions about the industry and the other companies in it.
Answers to the following questions help identify a competitor's assumption:
- What does the competitor appear to believe about its relative position - in cost, product quality, technological sophistication, and other key aspects of its business - based on its public statements, claims of management and sales force, and other indications? What does it see as its strengths and weaknesses? Are these accurate?
- Does the competitor have strong historical or emotional identification with particular products or with particular functional policies, such as an approach to product design, desire for product quality, manufacturing location, selling approach, distribution arrangements, and so on, which will be strongly held to?
- Are there cultural, regional, or national differences that will affect the way in which competitors perceive and assign significance to events?
- Are there organizational values or canons which have been strongly institutionalized and will affect the way events are viewed? Are there some policies that the company's founder believed in strongly that may still linger?
- What does the competitor appear to believe about future demand for the product and about the significance of industry trends? Will it be hesitant to add capacity because of unfounded uncertainties about demand, or likely overbuild for the opposite reasons? Is it prone to misestimate the importance of particular trends? Does it believe the industry is concentrating, for example, when it may not be?
- What does the competitor appear to believe about the goals and capabilities of its competitors? Will it over- or underestimate any of them?
- Does the competitor seem to believe in industry "conventional wisdom" or historic rules of thumb and common industry approaches that do not reflect new market conditions?