In terms of strategy, what is the purpose of a competitive analysis?

A competitive analysis primarily serves the purpose of understanding competitors' strengths and weaknesses. This understanding is crucial for assessing the market landscape and identifying opportunities and threats that may affect your organization's position. By evaluating what competitors do well and where they falter, a business can tailor its strategy to capitalize on these insights.

For instance, knowing a competitor's strong market presence or innovative offerings may prompt a company to enhance its product features or customer service. Conversely, recognizing a competitor's weaknesses could inform strategic decisions to exploit gaps in the market. This comprehensive understanding fosters a more informed approach to positioning, resource allocation, and competitive advantage.

While developing new products or establishing pricing strategies can be informed by competitive analysis, these tasks are more about application rather than the core purpose of the analysis itself. Employee training enhancement, although important, is not directly related to the overarching goal of understanding the competitive dynamics within the industry.