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A brief excerpt from May/June Issue of Competitive Intelligence Magazine – Written By Ruth Stanat, President of SIS International Research. Courtesy of the Society of Competitive Intelligence (SCIP) and the Competitive Intelligence Magazine. Copyright (C) 2008. All Rights Reserved.

Global Competitive Blueprint

By Ruth Stanat, SIS International Research. Written in Competitive Intelligence Magazine

Global markets are a tempestuous sea of risks and opportunities for many companies. Competitive intelligence is not just a means of growth, but a requirement for survival no matter what the company’s size. Missteps and misunderstandings in global markets can cost billions of dollars. Companies are now creating positions dedicated to their strategic objectives, such as chief strategy officer, to better achieve their competitive objectives. The increased importance of strategic thinking stems from the many global companies whose initial market assumptions are continuously challenged or found to be flat-out inaccurate. About 4 billion consumers in emerging markets currently represent a total market value of US$5 trillion. From the most-considered emerging countries like Brazil, Russia, India, and China to peripheral markets like Thailand, Turkey, and Malaysia, companies need not only market data on their competitors but also must know about recent competitive actions and gauge a competitor’s possible reactions. These companies certainly need to understand their competitors’ vulnerabilities and strengths. With this insight, companies can carefully capture opportunities and maneuver through the global economy’s rapid transformations. This article discusses the elements and current challenges of global competitive intelligence and presents a model for effective intelligence gathering worldwide.

THREE ELEMENTAL E’S

Today’s intelligence practitioners face several changes and trends:

1. Competitive intelligence is increasingly essential for a company’s survival.
2. The rapidly changing business environment affects the understanding of and methods for intelligence gathering. The nature of globalization and local events affect the actions of customers, competitors, and companies.
3. The evolution of global intelligence gathering is towards integrated and hybrid approaches designed to comprehensively understand not only competitors, but also customers and the macro-environment.

1. Essential Competitive Intelligence

Global companies expanding into emerging markets often end up competing with local giants. For example, despite its universal brand name, Coca-Cola competes with local beverage makers in Latin America. The local and entrenched competitors have the brand image and pricing to compete with them. Even if companies have voluminous market research findings on certain emerging markets, they must develop and implement strategies appropriate to each individual market. Global companies must notice the way competitors understand the local market and employ appropriate strategies in response.

2. The Environment of Global Business

Relationships among people, markets, and business processes are becoming increasingly interlinked. For example, a company in China may employ strategies and actions comparable to those used in the United States. However, development and globalization do not fully standardize local practices. Instead, emerging markets adapt global processes and practices to local traditional environments, producing a “glocal” landscape. Indeed, competitive companies largely behave within the bounds of their markets and local governmental policies, as well as within global markets and standards.

3. The Evolution of Strategic Intelligence

Companies now look for integrated or hybrid methodologies to understand their environment. Competitive intelligence (CI) is extraordinarily useful in crafting and delivering strategy and responding to competitor developments. However, seeing through this perspective alone overlooks the customer viewpoint and satisfaction in their local market, traditionally a tenet of market research. After all, a firm can implement the shrewdest actions to counteract competitors, but if the firm’s market does not demand such actions, then the company is at a loss. Finding the correct intelligence mix for clients is crucial for CI to provide value. Each of these three elements suggests an increasingly complex environment for global intelligence gathering. The methodological challenges in conducting emerging markets competitive intelligence presents added obstacles for today’s CI practitioner.

CHALLENGES IN GLOBAL INTELLIGENCE GATHERING

Attempting to apply traditional intelligence-gathering techniques to research covering emerging markets can cause trouble. People around the world may engage in the same global business processes, but their reaction to stimuli depends on myriad influential factors, including personal, cultural, socioeconomic, technological, and local factors. Despite research methodology quality and researcher expertise, these influential factors can control and sabotage research quality. Both primary and secondary data collection provide a challenge for global researchers.

Primary Research: The Power of Elicitation

Because of its reliance on people who come from different nationalities and cultures, primary research is often the most difficult aspect of international intelligence gathering. Accordingly, international human intelligence-gathering processes differ significantly from domestic ones. For example, in China and several other emerging Asian markets, researchers may find the process of elicitation extraordinarily easy.

What they may not realize is that the executives are not only providing inaccurate information but intentionally misleading information. They believe that researchers are a tool of the competition — as can often be the case.

Moreover, emerging markets research frequently lacks reference points for triangulating collected data from other sources. For example, a person may report that the construction industry is growing at 30 percent, but no independent data can confirm this number.

Simultaneously, a competitor may say that the same market has a 10 percent growth rate. You will have to dig deep among existing and new informants to uncover the real picture. Misunderstanding cultural norms and practices affects research outcomes. For instance, the perception that exported Western technology is superior and bound to be successful among consumers in the local market is not supported in some countries. An example of this is the possible introduction of high-technology cellular communications. While telephone penetration is low in countries like Nigeria, this market could provide high-technology growth and a place to develop a competitive advantage with technological products among consumers. But this perspective ignores cultural norms and existing, time-trusted means of communication, which have significant influence on whether a technology will succeed.

Indeed, the glocal concept arises again when describing competitor actions.

Though many local business leaders have been trained in prestigious business schools abroad, their strategy, actions, and decisions are a mix of global macroeconomic factors and influential factors like personal,local, economic, or cultural norms. For example, a Chinese company may react to the same new opportunity as a Canadian company in a different manner, according to the local culture and the company’s experience. The Chinese company may be more risk averse than the Canadian one, but may be much more aggressive and efficient in pursuing low-risk opportunities. Likewise, glocality makes your task of gauging a competitor’s behavior all the more complex, requiring you to have an in-depth understanding of foreign markets.