What is competitive analysis?

Competitive analysis is fundamentally the assessment of competitors' strengths and weaknesses. This process involves systematically gathering information about rival companies to understand their strategies, market positions, product offerings, and operational capabilities. By identifying what competitors do well and where they may be lacking, businesses can develop informed strategies to enhance their own competitive edge. This practice is essential in strategic planning as it helps organizations to anticipate market trends, adapt to changes, and make tactical decisions based on competitor behavior.

Effective competitive analysis not only includes examining direct competitors but also explores indirect competitors and potential market entrants. This broadening of scope allows organizations to better grasp the competitive landscape and to exploit opportunities for differentiation and innovation. Engaging in this type of analysis is critical for formulating strategies that capitalize on competitors' weaknesses while reinforcing one's own strengths, ensuring sustained market competitiveness.

The other options focus on aspects that do not encompass the full scope of competitive analysis. Increasing product prices pertains to pricing strategy rather than a broader competitive evaluation process. Monopolizing the market suggests a desire for market dominance without the nuanced understanding that competitive analysis provides. Enhancing customer service, while important, is just one component of a more comprehensive competitive strategy that should include extensive market and competitor understanding.