Sizing up your Competition

Jerry Rackley

By Jerry Rackley

If you do business successfully in a free market, it’s virtually guaranteed that you’ll have competition. It doesn’t matter if you’re the market leader or a niche player, you have keep watch over what your competitors are doing. Failure to do so invites disaster, or at least some nasty surprises.

The tea trade has a fascinating history and provides a case study on competition, which I discovered in Sarah Rose’s “For All the Tea in China: How England Stole the World’s Favorite Drink and Changed History”. In the mid-19th century, China was the sole source for tea of any quality or quantity. The British Empire had the upper hand when it came to trading with China for tea, but realized that the advantage was precarious. Unwilling to entertain the notion of doing without tea, the East India Company hatched a plan. It would make a preemptive strike and steal the intellectual property necessary to cultivate tea in the Darjeeling region of colonial India, effectively breaking the Chinese tea monopoly.

This industrial espionage mission was handed to Robert Fortune, an aspiring botanist. Despite the fact that he was a foreigner with no knowledge of the Chinese people, culture or land, he succeeded. Fortune smuggled thousands of tea plants, seeds and the know-how to cultivate and process tea to India. The Chinese had no idea their pockets were being picked until it was too late. Within 20 years of Fortune’s successful act of industrial espionage, the global tea trade had shifted from China to India.

The economic ramifications of this successful heist were amazingly widespread. Once a luxury, tea became accessible to the masses. As Britain consumed more tea, the mortality rate dropped because tea was made with boiling water that killed water-borne pathogens, like cholera. Before tea drinking was in vogue, factory workers nourished themselves with beer and ale, consumption that placed huge demands on British agricultural production, consuming up to half the annual wheat harvest. And the machinery of the Industrial Revolution did not tolerate “buzzed” workers well. Tea sweetened with sugar and milk provided a cheap, dense source of protein and calories. Rose asserts that European countries where alcohol continued as the staple drink lagged Britain 50 years in the process of industrialization.

This story brings a harsh truth about competition into clear focus. It is naïve to think that your competitors will play by your rules, or that those rules, if fair today, will remain unchanged. Your competitors won’t always play fair, and the honest combatants always seem to fall victim to those with fewer scruples. Recognize that some will not compete fairly even when you do.

Understand what’s at stake, not just for you but also for your competitors. If you’re a market leader, you may feel you have your leadership position at stake. Consider what’s at stake for the market follower:  survival. When the stakes are that high, companies exhibit great determination to stay in the game. It’s important to understand the stakes for you and all your competitors, because there usually isn’t parity. When the stakes are high, what might your competitors do?

Demand Metric has tools to help you keep an eye on your competition like the Competitor Analysis Tool for evaluating your competition across a set of value drivers, such as Service Quality, Reputation, Awareness and Innovation. Based on your inputs, this tool generates a differentiation chart that graphically depicts the areas of strength and weakness for each competitor, including your company.  Whether you use this tool or not, having a strategy for tracking and analyzing your competitors is not just critical to your success, but often your survival.  The Chinese never saw it coming.  Would you?


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