The Competitive Situation
A glass manufacturing company wanted to know why a competitor was still in the glass business, as its glass business was losing money, and had been for several years. Their ultimate goal was to predict when this competitor would exit the glass business so they could capture the competitorâs customers.
My Mission
My goal was to learn as much as I could about the competing glass company, and most importantly why they were motivated to remain in the glass business. Most of the publicly held competitorâs revenue, and all of its profit, came from their food business.
My Findings
I had found out that the competitor was investing minimally in their glass factory operation, and hired many Spanish speaking immigrants to work in the less hot and less dangerous jobs. There were piles of scrap glass around the factory, but they didnât bother hauling them away.
It was time for the quarterly earnings phone call, and my client suggested I listen in. I almost didnât as I figured I could read this later. However, something made me listen. The competitorâs CEO was all cheery when discussing the food business. Then an analyst asked, âAnd what about the glass business? What are you doing there?â âAhâŚthe glass businessâŚwellâŚ,â uttered the CEO in a dejected and hesitant tone.
Hmmm I thought, it sounds like the CEO is emotionally attached to the glass business. I researched and found out that the CEOâs Dad had bought the glass business, and surmised that he wanted to stay in it for that reason, not for revenue or profit. I called the analyst who had asked about the glass business to learn why he thought the company remained in the glass business, and what might cause the company to exit it. He agreed that the CEO was emotionally attached to the glass business. Thus, he was not likely to leave the glass business for any rational reason, else he would have already done so.
These conversations and research gave me the insight to answer my clientâs question: what would cause the competitor to divest or sell the glass business?
While I couldnât say when, I concluded that it would take a catastrophic event for the CEO to exit the glass business. It would have to be an event that was out of his control. I figured an accident in the factory or something that serious, could be a trigger.
I recommended that my client should closely monitor the competitor since something was bound to push the company out of the glass business. Thus, my client closely monitored the competitorâs activity. The trigger was when a stockholderâs group filed a complaint and threatened to submit a class action suit against the company if they didnât divest the money losing glass business. Bingo, this was the event my client was waiting for. They went after the competing companyâs glass business. The time was right, and they were ready.
Conclusion
All too often we rely only on written digital data. It turned out the CEOâs tone of voice in the competitorâs earnings conference call provided the pivotal clue. If I had only read the earnings reportâmy original intentionâI would have missed it. My lesson learned: in competitive intelligence projects, when you can listen to the human voice, especially the companyâs CEO, do so.
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Filed under: Competitive Intelligence, competitor, Denver, Ellen Naylor | Tagged: Competitive Intelligence | 2 Comments »