Overview
Generate Section 06 of the business plan: the competitive analysis. Use this skill to map the real competitive landscape, test the strength of the business position, and show what actually makes the venture defensible.
Use When
- Use when drafting or revising the competitive analysis section for a plan, proposal, or pitch.
- Use when the business needs a credible account of competitors, substitutes, and market position.
- Use when pricing, marketing, or moat claims need to be tested against reality.
Do Not Use When
- Do not use to make vague claims that the business has "no competition".
- Do not confuse competition mapping with customer segmentation or market sizing.
- Do not claim a moat unless the evidence supports it.
Required Inputs
- Offer definition, target customer, price point, and operating geography
- Known direct competitors, indirect competitors, and substitutes
- Any evidence on competitor features, positioning, channels, and economics
- Adjacent market, marketing, and pricing sections that shape the competitive frame
Workflow
- Define the competition from the buyer's point of view, including substitutes and inaction.
- Profile the most relevant competitors and compare them on decision-relevant dimensions.
- Assess market position, barriers to entry, and the strength of the claimed advantage.
- Translate findings into a practical positioning argument for the business.
- Reconcile the analysis with target market, pricing, sales, and risk assumptions.
- Flag weak or unsupported moat claims that will fail under diligence.
Quality Bar
- Competitors are real, relevant, and analysed on criteria that influence choice.
- The positioning argument is specific and evidence-based.
- Claimed advantages are concrete, not slogan-level.
- The section shows how the business wins, not just who else exists.
Anti-Patterns
- Ignoring substitutes or the customer's option to do nothing.
- Calling routine strengths like "good service" or "quality" a moat.
- Using a SWOT table without real comparative analysis behind it.
- Competitive claims that contradict channel, margin, or execution reality.
Outputs
- A finished or revised Section 06 competitive analysis
- A competitor matrix, positioning argument, and moat assessment
- Explicit assumptions or diligence gaps to resolve before finalisation
Generate a rigorous competitive landscape analysis that honestly assesses the competition and demonstrates a defensible competitive advantage.
Required Elements
- Direct competitors Companies offering the same solution to the same market
- Indirect competitors Alternative solutions to the same problem
- Substitute threats Different approaches customers might take (including "do nothing")
- Competitor profiles (3-5 key competitors) Detailed analysis using template below
- Competitive matrix Feature/capability comparison with quantified scoring
- Market share analysis How share is distributed and measured (Farris)
- SWOT analysis Strengths, Weaknesses, Opportunities, Threats
- Competitive advantage / moat What makes the business defensible
- Barriers to entry What stops new competitors from entering
- Market positioning Where the business sits relative to competitors
- Guerrilla positioning How to compete asymmetrically against larger players
Competitor Profile Template
Company:
Website:
Founded / Years in market:
Size/Revenue (estimated):
Target market:
Key products/services:
Pricing model and range:
Strengths (be honest):
Weaknesses (verified, not assumed):
Market share (estimated %):
Revenue share vs. unit share: [Premium / Parity / Volume player]
Digital maturity: [Analogue / Digitising / Digital-first / AI-augmented / Immersive]
Threat level: [High / Medium / Low]
Likely response to our entry: [Aggressive / Moderate / Indifferent]
Competitive Matrix Format
Score each capability 1-5 (1=weak, 5=strong):
| Capability | Our Company | Competitor A | Competitor B | Competitor C |
|---|---|---|---|---|
| Core feature quality | X | X | X | X |
| Price competitiveness | X | X | X | X |
| Technology / AI integration | X | X | X | X |
| Customer experience | X | X | X | X |
| Brand / reputation | X | X | X | X |
| Distribution / reach | X | X | X | X |
| Innovation speed | X | X | X | X |
| Total | XX | XX | XX | XX |
Rule: Never score the company highest on every dimension investors will not believe it. Identify 2-3 dimensions where the business genuinely leads and acknowledge where competitors are stronger.
Market Share Analysis (Farris)
How Share Is Measured
Define the relevant share metric for this industry:
| Metric | Formula | When to Use |
|---|---|---|
| Unit share | Units sold / Total units in market | Product businesses with comparable units |
| Revenue share | Revenue / Total market revenue | All businesses |
| Relative share | Brand share / Largest competitor's share | BCG-style competitive positioning |
Industry Concentration
CR4 = Combined market share of top 4 firms
HHI = Sum of (each firm's share)^2
| CR4 | Structure | Entry Implication |
|---|---|---|
| 0-40% | Competitive | Easier entry, more competition |
| 40-60% | Moderately concentrated | Niche entry viable |
| 60-80% | Oligopolistic | Differentiation essential |
| 80-100% | Highly concentrated | Disruption or niche only |
Types of Competitive Moats
| Moat Type | Description | Durability | Example |
|---|---|---|---|
| Cost advantage | Lower cost structure | Medium can be copied | Scale manufacturing |
| Network effects | Value increases with users | High self-reinforcing | Marketplace platforms |
| Switching costs | Expensive to leave | High locks customers in | Enterprise software |
| Brand/reputation | Trust built over time | High slow to build | Professional services |
| IP/patents | Legal protection | Medium expires | Pharmaceutical |
| Data advantage | Proprietary data flywheel | High compounds over time | AI-powered products |
| Regulatory | Licences, approvals | High bureaucratic barrier | Financial services |
| Speed/agility | Faster execution | Low temporary advantage | Startups vs. incumbents |
Guerrilla Competitive Strategy
For small businesses and startups competing against larger players:
Asymmetric Advantages
- Speed Launch and iterate faster than incumbents can approve a meeting
- Focus Own a narrow niche that is too small for big players to care about
- Relationships Build personal connections that corporations cannot replicate
- Flexibility Customise solutions while competitors offer one-size-fits-all
- Values alignment Appeal to customers who prefer local, ethical, or authentic brands
Positioning Against Incumbents
Never compete on the incumbent's terms. Instead:
- Redefine the category criteria in the customer's mind
- Compete on dimensions incumbents cannot match (speed, personalisation, community)
- Target underserved segments the incumbent ignores
- Use education-based marketing to position as the expert, not the bigger brand
Generation Process
- Ask for: industry, key competitors (if known), primary differentiator
- Research direct, indirect, and substitute competitors
- Build competitor profiles with honest assessment
- Calculate or estimate market share distribution
- Create competitive comparison matrix with quantified scores
- Conduct SWOT analysis with real weaknesses
- Identify and articulate the competitive moat with durability assessment
- Define guerrilla positioning if competing against larger players
- Assess sustainability of the advantage over 3-5 years
Quality Criteria
- Analysis includes indirect competitors and substitutes (not just direct)
- Competitor strengths are acknowledged honestly investors spot bias
- SWOT weaknesses are real, not disguised strengths
- Market share is quantified or estimated with stated sources
- Competitive advantage is specific and defensible, not "better customer service"
- Moat durability is assessed how long before competitors can replicate
- Positioning is distinct clear blue water between this business and alternatives
- Guerrilla strategy is included for startups and small businesses
Porter's Five Forces Industry Analysis
(Porter, M.E., 1980)
Apply Porter's Five Forces to establish the structural attractiveness of the industry before detailing individual competitors. Five Forces explains why an industry is profitable or not competitor analysis explains who the players are. Both are required for a complete competitive analysis.
| Force | Key Questions | Assessment |
|---|---|---|
| Competitive Rivalry | How many competitorsSection How intense is price competitionSection How differentiated is the industrySection Is growth slow (zero-sum) or fastSection | High / Medium / Low |
| Threat of New Entrants | Are barriers to entry highSection Capital requirementsSection Regulatory licencesSection Economies of scaleSection Brand loyalty requirementsSection | High / Medium / Low |
| Supplier Power | How many suppliersSection Are inputs commoditised or specialisedSection How easy to switch suppliersSection Do suppliers pose a forward-integration threatSection | High / Medium / Low |
| Buyer Power | How concentrated are buyersSection Are they price-sensitiveSection Can they backward-integrateSection Do they have full information on alternativesSection | High / Medium / Low |
| Threat of Substitutes | Can customers meet the same need a different waySection Are substitutes improving in price-performanceSection What is the switching costSection | High / Medium / Low |
Five Forces summary: State whether the industry is structurally attractive (most forces Low = favourable; above-average returns sustainable) or structurally unattractive (most forces High = unfavourable; competition erodes returns to minimum). Then explain how this business's competitive strategy addresses the most unfavourable forces.
Strategic group analysis: Once Five Forces are assessed at the industry level, map competitors into strategic groups clusters of firms following similar strategies. Within-group rivalry is most intense; between-group competition is moderated by mobility barriers. Identify which group this business belongs to and what barriers protect it.
Cross-reference: references/competitive-strategy-porter.md for the full Five Forces framework with assessment questions and Uganda/EA examples. references/industry-structure-porter.md (in 04-market-analysis/) for strategic group mapping and industry evolution analysis. meta-due-diligence/references/osint-business-intelligence.md for methodology on gathering competitor intelligence in low-data EA markets.
Business Model vs Strategy Analysis (Teece)
When assessing competitive position, distinguish between the business model and the competitive strategy they are related but not the same (Teece, 2010):
| Dimension | Business Model | Competitive Strategy |
|---|---|---|
| What it answers | How does the business create and capture valueSection | How does the business win against rivalsSection |
| Replicability | Can be copied the model alone is not an advantage | Explicitly about making the model hard to imitate |
| Investor question | "Is this business viableSection " | "Can this business stay aheadSection " |
Application: For each competitor in the analysis, assess:
- Do they share the same business model as usSection (If yes, strategy must differentiate us)
- What makes our version of the model harder to replicateSection (IP, relationships, data, speed, community)
- Can a competitor adopt our model quickly, or do we have complementary assets (brand, supplier relationships, regulatory approvals, distribution) that they cannot easily acquireSection
Value capture mechanisms that create durable competitive advantage (Teece, 2010):
- Intellectual property (patents, trademarks, trade secrets)
- Complementary assets distribution networks, customer relationships, manufacturing capacity
- First-mover switching costs (customers embedded in our platform or processes)
- Network effects (value increases as more users join)
- Complexity and tacit knowledge embedded in processes not visible to competitors
Differentiation Analysis (Kaza)
Beyond standard competitive dimensions, assess differentiation across four experience layers (Kaza, 2025):
| Layer | What It Covers | Competitive Question |
|---|---|---|
| Aesthetic experience | How the product/service looks, feels, smells, sounds | Does our delivery experience itself differentiate usSection |
| Social experience | How customers feel being associated with our brand | Does buying from us signal something about who they areSection |
| Boundary interactions | Packaging, delivery, follow-up, receipts, after-sale service the edges | Are we better at the edges of the offering, not just the coreSection |
| Purposeful experiences | Every touchpoint designed to serve a specific customer feeling | Is there a consistent emotional through-line across all interactionsSection |
The signature touch principle: Small businesses can outcompete on the boundary interactions that large competitors standardise out of existence. Identify 2-3 signature touches specific to this business (e.g., personalised follow-up, handwritten note, proactive update before the customer asks).
Narrow specialisation as competitive moat: A business that commits to one offering, one process, or one customer type achieves operational excellence and a clear customer promise that broad-market competitors cannot match. Document the deliberate trade-offs the business makes what it chooses NOT to do is as strategically significant as what it does.
References
- Competitive metrics and share analysis: See
references/competitive-metrics.mdfor market share calculations, concentration analysis, brand development indices, and competitive benchmarking formulas from Farris - Positioning and differentiation: See
references/positioning-strategy.mdfor guerrilla positioning tactics, value-based differentiation frameworks, perceptual mapping, and blue ocean positioning approaches - Porter's Five Forces and competitive strategy: See
references/competitive-strategy-porter.mdfor the full Five Forces framework with Uganda/EA examples, three generic strategies (cost leadership, differentiation, focus), the four-component competitor analysis framework (future goals, current strategy, assumptions, capabilities), market signals, and strategic groups from Porter (1980) - Industry structure, strategic groups, and industry evolution: See
../04-market-analysis/references/industry-structure-porter.mdfor strategic group mapping methodology, mobility barriers, industry evolution driving forces, and the product life cycle critique from Porter (1980) - Competitor intelligence methodology: See
../meta-due-diligence/references/osint-business-intelligence.mdfor the 5-layer OSINT framework for gathering competitor intelligence in low-data EA markets physical surveys, digital footprint analysis, supplier/distributor conversations, and red flag registers - Competitive strategy tools: See
references/competitive-strategy-tools.mdfor competitor analysis framework, competitive position rating (0-5 scale), strategy maps, strategic gap analysis, generic strategies, value chain analysis, strategy evaluation tests, competitive life cycle, and Blue Ocean Strategy from Evans, Harris & Lenox, and Fahey & Randall - Strategy Choice Cascade: See
references/strategy-cascade-framework.mdfor the five-question strategy cascade, five strategy traps, where-to-play and how-to-win choices, activity system mapping, strategy logic flow, reverse engineering strategic choices, and cascade-to-business-plan mapping from Lafley & Martin - Business model vs strategy distinction, value capture mechanisms, business model archetypes: See
../03-products-services/references/business-models-innovation-teece.mdfor Teece's full framework - Differentiation types and signature touch principle: See
../07-marketing-sales-strategy/references/small-business-unconventional-strategy.mdfor Kaza's four differentiation layers and case studies - 3C Strategic Triangle and competitive dynamics (Ohmae): See
references/mind-of-strategist-ohmae.mdfor Ohmae's 3C Strategic Triangle (corporation/customer/competition), Key Factors for Success identification method (hypothesis-first + KFS industry table), four routes to strategic advantage (KFS focus, relative superiority, aggressive initiatives, Strategic Degrees of Freedom), Strategic Planning Unit tests, customer segmentation (objectives vs. coverage), profit diagrams, issue diagrams, challenging constraints method, and Uganda/EA application from Ohmae (McGraw-Hill, 1982). Read when defining the competitive positioning logic, especially for businesses that cannot compete on all dimensions and need to identify where to concentrate. - Layered competitive advantage, Value Net, and purchase cycle (Portable MBA): See
references/competitive-dynamics-portable-mba.mdfor the onstage/backstage competitive advantage model (Coke/Pepsi case), 13-step purchase and consumption cycle as differentiation audit, value chain architecture disruption (Nucor/IKEA/Dell cases), outsourcing risk taxonomy (non-performance/value expropriation/elimination), complementors as sixth competitive force (Brandenburger & Nalebuff Value Net), five determinants of complementor power, and Uganda/EA application from Fahey & Randall, eds. (Wiley, 2000). Read when assessing whether competitive advantages have backstage support, identifying non-obvious differentiation points across the purchase cycle, or evaluating outsourcing risks. - 24 competitive and business analysis methods (Fleisher & Bensoussan): See
references/competitive-analysis-methods-fleisher.mdfor the complete toolkit of 24 methods across six categories (strategic/industry, competitor intelligence, financial, environmental, futures, analytical process) including Nine Forces, competitive positioning, business model analysis, SERVO, McKinsey 7S, shadowing, win/loss analysis, benchmarking, war gaming, country risk, driving forces, technology forecasting, ACH, and linchpin analysis. Includes FAROUT evaluation framework, Business Plan Application Table, Method Selector, and Uganda/EA adaptations for low-data markets, informal competition, and relationship-based intelligence. Source: Fleisher & Bensoussan (FT Press, 2007). Read when selecting the right analysis method for a specific competitive question, explaining method choice to investors, or stress-testing analytical assumptions. - SWOT/TOWS, PESTLE, Porter's Five Forces, value chain structured descriptions: See
../meta-market-validation/references/business-analysis-techniques-cadle.md(Chapter 1 and Chapter 4 tools) for precise, step-by-step descriptions of PESTLE (Tool 1), Porter's Five Forces (Tool 2), SWOT/TOWS (Tool 6), Value Proposition Analysis (Tool 33), and Value Chain Analysis (Tool 34) with guidance on correct application and common mistakes Source: Cadle, Paul & Turner (BCS, 2010). Read when setting up the competitive analysis framework or when the client needs the analytical approach explained clearly.