Academic journal article IUP Journal of Business Strategy

An Information Processing View of Competition Analysis

Academic journal article IUP Journal of Business Strategy

An Information Processing View of Competition Analysis

Article excerpt

Introduction

The fields of competition analysis and Competitive Intelligence (CI) are areas of interest to both the researchers and practitioners of competitive strategy in the hypercompetitive market. "CI is increasingly being considered an important, if not mandatory, piece of every business' overall strategy and functioning" (Mc Gonagle and Vella, 2004). There have been many attempts (Bose, 2008; and Saayman et al., 2008) to understand the nature and dynamics of competitive intelligence and these are mainly in the broad areas of CI. Managerial cognition defined as the cognitive activity of interpreting informational stimuli, analyzing and categorizing problems, reasoning with the data and contemplating goals "can result in better assessment of a firm's strategic position in the market place, competitor's strategies and strategic positions, market conditions and requirements of resources and capabilities that, in turn, can have far-reaching implications for achieving competitive advantage" (Madhavaram et al., 2011).

This paper makes an attempt to understand the nature of information processing, specific processes of managerial cognition and the development of the competitive cognitive field as it is the cognitive dimension that focuses on the 'stuff ' (Shelfer and Verner, 2001) of competitive information.

The body of CI includes information and knowledge primarily in relation to competitors, and secondly it gathers information from customers, suppliers, technologies, environments and future business relationships (Saayman et al., 2008). The components of CI are understood to be planning and focus, collection, analysis and the active utilization of knowledge (Bose, 2008; and Saayman et al., 2008). Competitive cognition, which is central to the above phases of CI, is the internal framework with which a manager organizes, categorizes and retains knowledge about competitors (Walker et al., 2005). The crux of the issue is how the gathered data/information is analyzed, synthesized and put into good use. The cognitive processes elaborated in the use of information/knowledge acquired and stored over a long period of transaction with the external and internal stimuli along with the newly retrieved knowledge enable the competition-analyst manager to define and redefine the landscape of competition. Defining and redefining the field of competition brings in new contours and frontiers along with the intensity and extensiveness of the dynamism that characterize the moves and countermoves of different firms. The competition of the future is driven by information-based strategies where information and knowledge become the primary basis of competition (Singh, 2005). The different strategies for creating knowledge are still not well understood (Un and Cuervo-Cazura, 2004). In other words, it is the dominant logic or the cognitive frame of the top management (Gourlay, 2004) that influences the strategic decision processes. Cognitive processes of managers are linked to strategy forming, organizational performance and competitive analysis (Barr et al., 1992). CEOs as 'cognizers' integrate differing views, a task that demands high cognitive complexity (Calori et al., 1994).

The classical interpretation of competitiveness draws upon the performance of other similar firms place d in a specified are a of operation. The conve ntional approach to management in hypercompetitive environment is reactive and adaptationist (Staber and Sydrow, 2002). The reactive and corrective measures meet with no effective results, thus putting the competition in an inescapable wheel from which no headway or growth can be conceived in the traditional formulation of competition, which is generally and wholly controlled and guided by the interplay of the external forces.

Corporates following this approach tend to adopt a 'lean and mean' strategy, focusing on their core competencies, streamlining routines and tightening resource belts (Harrison, 1994). …

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