The competitive landscape refers to the nature of competition. The description covers several topics such as the number of companies, company size, their strengths and weaknesses, barriers to entry and exits, threats of substitutes.
Today, the competitive landscape changes rapidly, along with the continued evolution of technology and increasing globalization. Each company is trying to transform its strategy so that it brings the consequences of a new landscape of competition.
What are the main factors that have caused the competitive landscape to change in recent years:
- Rapid technological change has begun to disrupt various industries. For example, advances in interactive computer networks and telecommunications have blurred the boundaries of the entertainment industry today.
- New business models make conventional business models obsolete. The emergence of eCommerce makes traditional retail business models threatened.
- Competition is increasingly intensive. The company faces not only local but also global competitors. Through online channels, foreign companies can market their products domestically faster and cheaper without having to build a representative office.
- Higher price transparency. Transparency is increasing because it’s easier for consumers to compare prices on online channels.
- A growing environmental awareness. Weather conditions have changed in the last few years, increasing the campaign for more exceptional ecological care.
- Consumer protection. Technology raises opportunities for misuse of personal data.
- Geopolitical tension as more and more countries put forward their national interests. The trade war between China and the United States is the latest example.
What is the impact of changing competitive landscape
Shifts in the competitive landscape often cause conventional sources of competitive advantage to be no longer relevant. That forces many companies to revisit their existing strategy, whether it will still be relevant in the future.
For example, in the past, companies gained advantages by creating branding through a large advertising budget. Now, that may no longer be effective. Many small companies with minimal budgets can use cheap social media for advertising. The ad has a broader audience exposure than television or radio.
The change also forces existing companies to adapt, if not, they fail. Many newspapers migrate to online channels, as do retailers. Some of them still maintain the old business model or combine both, to serve specific segments.
Furthermore, a changing competitive landscape requires the adoption of a new mindset. Flexibility, speed, innovation, integration become more valued to meet the evolution of rapidly changing challenges. Flexibility is becoming increasingly crucial in carrying out strategic leadership and building dynamic core competencies.