The Role of Competitive Analysis in Effective Strategy Consulting

In today’s rapidly shifting organizational environment, competitive analysis is more than a diagnostic tool; it’s a foundational deliverable for effective strategy consulting. Whether a client is seeking sharper market positioning, stronger strategic execution, or a clearer link between vision and mission, competitive analysis provides important insights needed to design and deliver a winning organizational strategy.

Sun Tzu, the ancient Chinese military strategist, offered timeless wisdom on competitor analysis in The Art of War. While written for warfare, his insights apply broadly to strategic competition in strategy consulting and beyond. He famously stated: “If you know the enemy and know yourself, you need not fear the result of a hundred battles.”

This underscores the importance of understanding your clients capabilities and those of their competitors. Competitor analysis is essential for refining value propositions, identifying market gaps, and sustaining competitive advantages in a dynamic business landscape. It involves evaluating rivals’ products, pricing, marketing strategies, distribution channels, and financial performance. For strategy professionals, competitor analysis provides actionable insights to anticipate moves, differentiate offerings, and mitigate risks.

Michael Porter revolutionized competitor analysis with Competitive Strategy (1980), transforming informal observations into a structured discipline. His famous framework, Porter’s Five Forces, reveals how competitive intensity, customer power, supplier influence, the threat of substitutes, and barriers to entry collectively influence a firm’s ability to sustain advantage. Without such insights, even the best-formulated vision statements and objectives risk being disconnected from external realities.

Porter’s Five Forces in Brief

Harvard professor Michael Porter developed the Five Forces model to explain the pressures shaping competition and profitability:

• Competitive Rivalry – The strength of competition among existing players.
• Buyer Power – Customers’ ability to influence price and quality.
• Supplier Power – Influence suppliers have over costs and resources.
• Threat of Substitutes – Risk of alternative solutions replacing your offering.
• Threat of New Entrants – How easily new competitors can enter the market.

For example, a mid-sized healthcare consulting firm might use Porter’s Five Forces to evaluate its environment: rivalry is high due to competition from both large global firms and specialized boutiques; buyer power is significant because hospital systems can demand lower fees; supplier power is moderate since the firm depends on expert subcontractors; substitutes such as in-house strategy teams and AI-driven analytics tools create pressure; and barriers to entry are moderate, with new niche players frequently entering the market. Taken together, this analysis highlights where the firm must differentiate by emphasizing specialized expertise and measurable outcomes to compete effectively.

Applying this model helps assess competitive pressures, identify leverage points, and prioritize strategic actions. By systematically helping clients apply Porter’s framework, organizations can align strategies with market realities and drive long-term success. Strategy professionals play a vital role in translating these insights into effective competitive strategies for their clients and for their own firm.

Learn how our Strategic Planning & Management Consulting Services can help your organization design and deliver a winning organizational strategy.