What are the key values in examining competitors' assumptions?

Identifying a competitor's assumptions fall into two major categories:

·         The competitor's assumptions about itself

Every firm operates on a set of assumptions about its own situation. These assumptions about its own situation will guide the way the firm behaves and the way it reacts to events. If it sees itself as the low-cost producer, for example, it may try to discipline a price cutter with price cuts of its own.

A competitor's assumption about its own situation may or may not be accurate. Where they are not, this provides an intriguing strategic lever. If the competitor believes it has the greatest customer loyalty in the market and it does not, for example, a provocative price cut may be a good way to gain position. The competitor might well refuse to match the price cut believing that it will have little impact on its share, only to find that it loses significant market position before it recognizes the error in its assumption.

·         The competitor's assumptions about the industry and the other competitors in it

Just as each competitor holds assumptions about itself, every firm also operates on assumptions about its industry and competitors. These also may or may not be correct. There are many examples of firms that greatly over- or underestimated their competitors' staying power, resources, or skills.

1. The past recent records of the production values and financial results, specifically of past year.

2. The same trend of the above values during the latest three to five years.

3. The key significant type of recruitment made by the competitor and the recruitment advertisements/needs announced by the competitor.

4. The feedback from the end clients.

5. The feedback from the official organizations, media and stock exchange market.