In a Business world driven by technology and digitalization, competition is much more fluid as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that, in the short-term, seem unrelated.
Why traditional comparable analysis frameworks might fail in a tech-driven business world
A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis, it is possible to understand the competitive landscape of the target organization.
Among the most common and perhaps simple and effective frameworks to look at competition is given by Joshua Rosenbaum and Joshua Pearl, authors of “Investment Banking,” offer us two main criteria to select our comparable companies:
- The business profile.
- And the financial profile.
Under the business profile, we have things like sector, product & services, customers & end markets, distribution channel, and geography. In the financial profile, we can look at more specific aspects like size, profitability, growth profile, return on investment, and credit profile
So far, so good, but let’s integrate into this analysis also the VTDF Framework developed on FourWeekMBA.
Competitor Analysis Framework
It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.
We do want to overlap customer profile, technology, distribution, and financial model used by companies. While at the same time looking at how the technological model will affect an entire industry in the future.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
We do believe that tech companies often operate at two intersections.
On the one hand, a first intersection is about applying existing technology to an existing market, thus creating more competition.
On the other hand, and this is the tricky part, there is usually a gradual, then sudden swift investment in new technologies that not only intersect current markets, they have the potential to create new ones, that not only might eat up an existing market, they might also end up creating a much bigger market.
From here the technological potential needs to be assessed early on to evaluate how much that technology can interpolate with an existing market but also eat that up.
Thus creating overlapping in the future, which might be hard to imagine today.
The great market reshuffling
To analyze how future technologies might reorganize markets, thus reshuffling and redefining entire industries it is critical to keep an open mind on what competition entails. Thus, in this kind of market cooperation and competition become very fluid (see the concept of coopetition).
There are fewer boundaries.
Key Highlights
- Fluid Competition in Technology-Driven Business: The rise of technology and digitalization has made competition more dynamic, as innovation can come from various sources. This bottom-up innovation approach challenges the traditional definition of market boundaries and requires a comprehensive analysis.
- Traditional Comparable Analysis Frameworks: Comparable company analysis is a method to understand the financial performance of a target company by comparing it to similar organizations. The framework involves business and financial profiles, considering factors like sector, products, customers, profitability, growth, and more.
- Integration of VTDF Framework: The VTDF (Value, Technology, Distribution, Financial) Framework, developed by FourWeekMBA, offers a holistic approach to competitor analysis. It involves overlapping aspects like customer profile, technology, distribution, and financial models. This analysis helps map competition facets for a tech business model, allowing a better understanding of a business’s position and future potential.
- Technological Modeling: Technological modeling supports sustained innovation and the development of both incremental and breakthrough products. The Barbell Strategy suggests a dual approach, combining continuous innovation with investments in technologies that can create significant leaps forward.
- Two Intersections of Tech Companies: Tech companies often operate at two intersections: applying existing technology to current markets to increase competition and investing in new technologies that can reshape existing markets or create entirely new ones.
- Assessing Technological Potential: Evaluating the potential impact of new technologies on markets is crucial. Assessing how a technology can interpolate with existing markets and potentially reshape or expand them is essential for effective competition analysis.
- Market Reshuffling: Future technologies can reorganize markets, reshuffling and redefining entire industries. In this context, competition and cooperation become fluid, leading to fewer defined boundaries. The concept of “coopetition” (cooperation + competition) plays a role in this dynamic market landscape.
Direct Business Competition Examples
Uber Competitors
Starbucks Competitors
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating almost 33,000 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts.
Carvana Competitors
Carvana is an online used car retailer with vending machines located around the United States. The company was founded in 2012 by Ryan Keeton, Ben Huston, and Ernest Garcia III. The company is the fastest growing online used car retailer in North America and was recently one of the youngest companies to be added to the Fortune 500 list. While Carvana is currently the only American company selling cars in vending machines, its growth and success have not gone unnoticed by other players. In this article, we’ll take a look at some of the company’s major competitors.
GoodRx Competitors
GoodRx is an American healthcare company known for its telemedicine platform and a website and mobile app that track prescription drug prices. As part of this service, the company makes drug coupons available for free to consumers. GoodRx was created by Trevor Bezdek, Doug Hirsch, and Scott Marlette. Hirsch, an early employee at both Yahoo and Facebook, got the idea for the company after picking up a prescription with private health insurance and still having to pay $450. Given the high variability in prices between different pharmacies, Hirsh went on a mission to make prescription drug prices more transparent and affordable for ordinary Americans. Revenue in the second quarter of 2021 amounted to $177 million with over 7.5 million app customers using the GoodRx app. While the company was the first to provide a comprehensive list of pharmacy drug prices, new players have entered the market. The rest of this article will be devoted to looking at the main GoodRx competitors.
Coca-Cola Competitors
The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year. The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. What’s more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.
Pepsi Competitors
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a “marriage made in heaven”. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the world’s leading food and beverage companies. Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.
Disney Competitor
Headquartered in Burbank, California, Disney has global reach and influence with its universally popular resorts, movies, streaming services, video games, and merchandise. But as one of the largest media conglomerates in the world with a diverse range of products in multiple marketplaces, Disney is no stranger to competition.
Peloton Competitors
Peloton is a media and exercise equipment company primarily making money making money via its fitness products. The idea for the company came from John Foley, who argued that technology could help time-poor individuals get a full workout at home. The company competes with other players like Bowflex, NordicTrack, Life Fitness, MYX Fitness.
IBM Competitors
International Business Machines Corporation (IBM) is an American multinational technology company. It was founded in New York as the Computing-Tabulating-Recording Company in 1911 by Charles Ranlett Flint. IBM is a diverse company with a similarly diverse portfolio of products and services. It produces and sells hardware, middleware, and software. It also offers hosting and consultancy services in nanotechnology and mainframe computers. What’s more, IBM has a strong culture in research and development, filing the most U.S. patents of any business for the past 28 years.
Google Competitors
While Google (now Alphabet) has been born as a search engine, it is now a diversified company, even though its core business remains search, as most of its revenues still come from Google, the search engine, and YouTube, the “video engine.” However, as a tech giant, which business is primarily based on advertising, the company does compete with Facebook, Twitter, Microsoft (with Bing), and Amazon (with e-commerce search and its advertising machine).
Airbnb Competitors
