The development of a
Competitor Intelligence Function
Author: Anne Veldhuis
Student number: 1178385 Groningen, January 2005
Rijksuniverstiteit Groningen
Faculty of Business Administration Specializations: - Marketing
- International Business
First supervisor: Mr. W.W. Wijnbeek
Second supervisor: Drs. J. Berger
Supervisor LeasePlan: Dhr. B. Frissyn
Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and of yourself, you are certain in every battle to be in peril.
Sun Tzu, 4
thcentury BC
Preface
This report has been written for LeasePlan. It is the final thesis for both specializations Marketing and International Business of the faculty of Business Administration at the University of Groningen. The objective of this thesis is to develop a structured approach to competitor intelligence for the LeasePlan Group in order to improve decision-making on both a global and a local level. This has lead to a design and an implementation approach. The research has been executed at the head office of LeasePlan Corporation in Almere.
This report is initially written for LeasePlan. The Business Development department within Group Services can use this report to set up a competitor intelligence function.
Furthermore, the report can be useful for anyone that wants to develop a competitor intelligence function since a lot of the aspects discussed can also be applicable to other (multinational) organizations.
Finally, I want to thank all the people that have helped to accomplish this report. In particular I want to thank Brian Frissyn, who has supervised me in LeasePlan. I also want to thank the other employees of LeasePlan that have contributed to the realization of this report. Furthermore, I would like to thank my supervisors from the University of Groningen, Mr. W.W. Wijnbeek and Drs. J. Berger for their time, effort and above all, their good advice when writing this thesis.
Groningen, January 2005
Anne Veldhuis
Management summary
During the COO meeting (Athens, November 2003), Arval PHH was identified as the strongest upcoming player in the Full Operational Lease market and as an increasing competitive threat to the LeasePlan (LP) Group. And even though Arval PHH definitely challenges LP’s position, other strong competition is out there too. It was agreed that a closer analysis should be performed on competitors in order to gain more insight and understanding of their moves and to use the analysis in the formulation of LP’s strategic directions.
Business Development however realized that the LeasePlan Group has limited experience in performing competitive analysis. Therefore a structured approach to competitor intelligence needs to be provided, including a wide range of LP’s competitors, which can support and improve the decision-making process on both a global and a local level. The objective in this research is therefore:
To provide a structured approach to competitor intelligence by developing standard CI procedures supported by an information system (the tool) that should be used by all the countries in the LeasePlan Group in order to improve decision-making on both a global and a local level.
Gaining an insight in the competitors will enable LeasePlan to better allocate scarce resources to business opportunities and better identify and select strategies. This will help LeasePlan to stay always one step ahead of its competitors.
In order to develop a structured approach to competitor intelligence, first the current CI practices performed within LeasePlan have been diagnosed. The diagnosis has been made on the basis of the intelligence cycle. The intelligence cycle is an analytical concept for identifying the components of the intelligence process and understanding their complex interrelationships. The components of the intelligence cycle used in this research are:
1. Planning 2. Collection 3. Processing 4. Production 5. Dissemination
It appeared that there is no standardized way of performing competitor intelligence within LeasePlan. Although all operating countries (OpCo’s) are quite unanimous about the objectives of competitor intelligence, the way they handle the process to produce intelligence is very different from each other. A reason for this is that performing competitor intelligence is not a mandatory task within LeasePlan and therefore easily put on a sidetrack. Another reason is that not all OpCo’s have an equally developed CI function due to differences in size and resources available.
Because there is no standard approach to CI, a set of standard CI procedures is developed. Furthermore a new system should be created that can support the CI activities regardless the size of the OpCo’s.
To develop a standard procedure of CI activities the OpCo’s have been grouped into 3
groups: small, medium, and large. As all the OpCo’s are involved in the competitor
intelligence process, they all go through the intelligence cycle. The same thing applies to
Group Services - Business Development (GS-BD). The BD department is a LeasePlan 'Group Services' department that conceives and brings valid (strategic and tactical) global solutions and offers support implementing them internationally. GS-BD is also involved in the competitor intelligence process and produces a variety of intelligence products, so for producing this intelligence GS-BD needs to go through the intelligence cycle as well. The standard CI procedures for each of these four parties are discussed on the basis of the components of the intelligence cycle, which have been made measurable by defining seven variables. These variables include: objective and required data (planning), sources (collection), tool (processing), analyses (production), frequency and distribution (dissemination). The variable ‘tool’ is discussed separately because there is only going to be one CI system developed, which should be suitable for all the countries.
The small countries
The small countries have no CI activity or a rather low level of CI activity. This implies that most of these countries only have a sales department and no marketing department.
Objective To create awareness and improve decision-making.
Required data Local competitor information; no focus on specific topics and can remain very high- level.
Sources − Meetings with prospects/clients
− Grapevine
− Research for industry information
− Tenders
− Industry contacts Analyses SWOT analysis
Frequency Continuously through the CI system.
Distribution Through the CI system (based on Intranet) and the sales/account meetings
The medium countries
The medium countries have a medium level of CI activity. This implies that a small marketing department is in place and some experience with competitor intelligence already exists.
Objective To improve decision-making and to support the sales speech.
Required data Sales/account managers:
Local competitor information about products and services, pricing, customers, competitor won deals and suppliers.
Marketing department:
Local competitor information:
− Market share, Fleet statistics.
− Pricing, Products and services, Contracts
− Sales approach, Marketing, Segmentation, Customer portfolio information.
Sources Sales/account managers:
Meetings with prospects/clients, grapevine, industry information, tenders, industry contacts.
Marketing department:
Won/lost client interviews, grapevine, competitor research, external research companies, events.
Analyses SWOT analyses, competitor profiles, and possible other analysis when these are needed.
Frequency SWOT’s are distributed at least twice a year. Competitor profiles are distributed on a continuous basis through the intranet. Other analysis are distributed at the department’s own discretion.
Distribution Through the CI system and through emails to individuals.
The large countries
The large countries have a high level of CI activity. This implies that a large and well- organized marketing department exists and a lot of experience with competitor intelligence has already been gained.
Objective To improve decision-making on an operational, tactical and strategic level.
Required data Sales/account managers:
Products and services, pricing, customers, competitor won deals and suppliers.
Marketing department:
Same topics as the medium countries but the focus should be on the items that are needed about each topic (see appendix 14).
Sources Sales/account managers:
Meetings with prospects/clients, grapevine, industry information, tenders, industry contacts, tender/client interviews.
Marketing department:
Won/lost client interviews, grapevine, competitor research, external research companies, events, investigating external communications, mystery shopping, cold calls, and surveys.
Analyses SWOT analyses, competitor profile, benchmarking analyses, and possible other analysis when these are needed.
Frequency SWOT’s at least twice a year. The competitor profile should be updated at least every three months and be able to be viewed continuously through the intranet.
Other optional analyses are distributed at the department’s own discretion.
Distribution Through the CI system, emails, and electronic newsletters.
Group Services – Business Development
Not only the countries will be collecting and analysing competitor information, also LeasePlan Corporation needs to produce intelligence. This is done by the Business Development department of Group Services. The intelligence produced by GS-BD only concerns the global competitors on a global level.
Objective To support decision-making on a corporate level, and after sharing intelligence with the countries, also to support local decision-making.
Required data Information on a global level only involving the global competitors:
− Strategic directions and objectives, Key financial figures
− Geographic coverage, Key management team, Structure and ownership
− Market share, Fleet statistics
Sources First: grapevine, events, industry contacts, or doing competitor research. When the CI function has extended: performing surveys, mystery tenders, or hiring external research companies.
Analyses Global SWOT’s, global competitor profiles, global benchmarking analyses, consolidated SWOT’s and consolidated benchmarking analysis.
Frequency Distributing the global profiles, SWOT’s and benchmarking analyses should be done on a continuous basis and the consolidated analyses are distributed twice a year.
Distribution Through the CI system and quarterly newsletters.
To support the activities of each of these four parties an information system needs to be developed. A system that is very appropriate to support the production of competitor intelligence is a marketing decision support system (MDSS) and the most suitable way for LeasePlan to develop this system is through the evolutionary method (prototyping).
For the implementation of the CI tool a pilot conversion will be used. For implementing
the CI tool this means that 3 pilots have to be tested; one for the small countries, one for
the medium, and one for the large countries. The pilots should be launched and
completed sequentially; only when a pilot has been successfully launched, the CI system will be implemented into the other countries. The reason why this approach is most suitable for LeasePlan is that it fits with the way the CI system is developed; after each prototype has been made a pilot can be launched.
The competitor intelligence products made by the countries and GS-BD are used together with internal analyses and other external analyses, to support decision-making on a strategic, tactical, or operational level, which will steer the organization in a certain direction. But besides steering the organization, the CI function needs to be steered as well. This is called meta-steering and should occur during the implementation as well as afterwards when the CI function is in operation in order to make sure that the CI function stays successful in the future as well. For this type of steering the same three levels of decision-making can be distinguished: strategic, tactical, and operational.
The strategic decision concerning the implementation states that within 3 years all the LeasePlan countries and GD-BD should have implemented the CI system and have started to develop a standard approach to competitor intelligence. During the implementation tactical decisions should be made involving the allocation of resources.
For the OpCo’s this implies reallocating personnel to the CI function and time that this personnel needs to spend on their CI activities. The same allocation applies to LPCorp, and in addition also money needs to be made available for the development of the CI tool. On operational level technical and organizational factors should be taken into account in order to fulfil the strategic decision regarding the implementation. Technical factors include the features of the CI system; the system needs to be user friendly, flexible to the wishes of the users, adaptable to changes in information needs, stable in terms of errors in hardware and software, and integration with other systems needs to be possible. Organizational factors concern human factors, involvement of the users, support from the organization, cultural differences, language, training, and cooperation with LPI.
The strategic decision concerning the design states that in at least 5 years each OpCo and LPCorp should have developed a standardized approach to competitor intelligence to improve decision-making on both a global and a local level.
On a tactical level resources still need to be allocated to the CI function but less than
during the implementation period because experience has been gained so that the CI
activities will take less time, and the CI system has been already built so that less money
can be allocated. And on an operational level several factors should be taken into
account in order to fulfil the strategic decision. They include feedback, a collaborative
culture, close reporting relationships with senior management, dissemination of
information, a dynamic system, differentiation between information and intelligence, rich
analysis, and a broad focus on competitors.
Table of contents
Chapter 1: Description of the company... 10
1.1 Introduction ... 10
1.2 LeasePlan Corporation... 10
1.2.1 Shareholders ... 10
1.2.2 Subsidiaries... 10
1.2.3 Mission and Strategy ... 11
1.3 LeasePlan Group ... 12
1.3.1 Vision, Mission, Values... 12
1.3.2 The market ... 12
1.3.3 Products ... 13
1.4 Group Services... 14
1.4.1 Group Services - Business Development... 14
Chapter 2: Research set-up... 15
2.1 Problem description... 15
2.2 Problem definition... 15
2.3 Expected benefits... 17
2.4 Definitions ... 17
2.5 Constraints ... 17
2.6 Scope... 18
2.7 Conceptual model ... 19
2.8 Research model ... 21
2.9 Research method ... 22
2.10 Timescale... 23
Chapter 3: Theoretical background ... 24
3.1 Planning ... 26
3.2 Collection ... 26
3.3 Processing ... 27
3.4 Production ... 27
3.5 Dissemination... 29
3.6 Marketing Information Systems ... 30
Chapter 4: Diagnosis ... 32
4.1 Introduction ... 32
4.2 Research method ... 32
4.3 Results ... 34
4.3.1 Objectives... 34
4.3.2 Required data... 34
4.3.3 Sources ... 34
4.3.4 Tools ... 35
4.3.5 Analysis ... 36
4.3.6 Frequency ... 36
4.3.7 Distribution instruments ... 36
4.4 Conclusion ... 37
Chapter 5: Design ... 38
5.1 Introduction ... 38
5.2 Standard CI procedures ... 38
5.2.1 Small Countries ... 39
5.2.2 Medium countries ... 40
5.2.3 Large countries... 42
5.2.4 Group Services - Business Development... 43
5.3 The CI system (the tool) ... 44
5.4 Conclusion ... 46
Chapter 6: Change ... 48
6.1 Introduction ... 48
6.2 The implementation approach ... 48
6.3 Recommendations concerning the implementation ... 51
6.3.1 Strategic decisions concerning the implementation ... 51
6.3.2 Operational decisions concerning the implementation ... 52
6.4 Time schedule... 54
6.5 Execution ... 54
Chapter 7: Conclusions ... 56
7.1 Introduction ... 56
7.2 Conclusions... 56
7.3 Recommendations concerning the design ... 62
7.3.1 Strategic decisions concerning the design ... 63
7.3.2 Operational decisions concerning the design... 63
7.4 Reflection and discussion... 65
7.4.1 Choice of research method... 65
7.4.2 Choice of scope... 66
7.4.3 Possibilities for generalization... 66
7.4.4 Recommendations for further research... 66
References... 68
Appendices
Chapter 1: Description of the company
1.1 Introduction
This chapter will give a description of LeasePlan. The first paragraph gives information on the holding named LeasePlan Corporation N.V. The second paragraph will give insight in the LeasePlan Group, which is part of the holding, and the third paragraph focuses on Group Services, which supports the LeasePlan Group. This research is done for the Business Development department within Group Services.
1.2 LeasePlan Corporation
LeasePlan Corporation is an international network of companies specializing in fleet management and vehicle leasing together with a wide range of related activities. The main activities vary from company to company but they are all related to the automotive services industry (see appendix 3 for an historical overview and appendix 4 for the organizational structure of LeasePlan Corporation).
Worldwide the group employs over 7,400 people in 26 countries around the world (see Appendix 5 for an overview of the countries). At the end of 2003, the companies managed a total fleet of almost 1.25 million vehicles and a consolidated lease portfolio with a value of EUR 9.7 billion.
LeasePlan Corporation aims for leadership in all the main markets in which they are present and are continuously looking for opportunities for expansion in new countries.
The ambition is to provide value-added services in all segments of the automotive value chain.
1.2.1 Shareholders
On 21 April 2004, it was agreed that a consortium of three shareholders, led by Volkswagen Group, would take over LeasePlan Corporation from ABN AMRO.
Completion of this transaction has taken place at the end of the summer of 2004. The new shareholders are:
• Volkswagen
Group, Germany
•
Olayan Group, Greece
• Mubadala Development Company, Abu Dhabi, UAE
1.2.2 Subsidiaries
Through Carvantis, established in France in February 2002, the private market has been entered with an extensive and convenient range of vehicle leasing services distributed over the Internet. Via QEK Global Solutions, LeasePlan Corporation is also active in the provision of vehicle lifecycle asset management services. Other activities of LeasePlan Corporation include:
• Euro Insurances Ltd - LeasePlan Corporation's captive insurance company.
• Travel Card - enables, processes and monitors fuel transactions for leasing
companies and other businesses in the Netherlands.
• Keddy Rental - short-term car and truck rental service in Belgium.
• MOX - operational leasing of golf cars and similar electric vehicles in France,
Spain and the United Kingdom.
•
CarflexS - damage repair company in the Netherlands.
• JB Carrosserie - damage repair company in Belgium.
Figure 1.1 - Organizational Chart of LeasePlan Corporation.1
1.2.3 Mission and Strategy
Mission
The mission of LeasePlan Corporation is to provide cost efficient, flexible and integrated vehicle management solutions to corporate customers and consumers, globally and locally.
Strategy
The strategy of LeasePlan Corporation is to develop a global infrastructure across the corporation by building and leveraging scale and scope. The corporate strategic thrusts are:
•
Maintain an independent position
• Become global
•
Build scope
• Build scale
•
Leverage scale and scope The key strategic objectives are:
• Optimise international presence
•
Establish a leading position in key countries
1 Adapted from www.leaseplancorp.com.
• Develop full corporate customer coverage
• Create value for money
• Create a full product offering
• Create a model for service delivery consistency
• Become a loyalty leader
•
Create a well recognized and preferred global brand
1.3 LeasePlan Group
LeasePlan is LeasePlan Corporation’s main brand. This company has offices in all of the 26 countries in which the group is present. LeasePlan is European market leader in operational leasing and one of the leading providers of vehicle and fleet management solutions worldwide. In each country, LeasePlan is among the leaders in its market.
Via LeasePlan International, LeasePlan is one of the few leasing companies, which can service major multinationals on a global basis through its own network. LeasePlan counts many top global companies among its clients, which benefit from a unique and cost-effective approach to fleet management - based on a philosophy of openness, flexibility and proactive partnership.
1.3.1 Vision, Mission, Values
Vision
”At LeasePlan we are focused on building strong, long term relationships and integrating our knowledge into our customer's businesses so they can remain focused on their core business and thus optimise profitability. In this context, LeasePlan will become the first reference in supplying vehicle management solutions worldwide for corporate customers.”
”LeasePlan will be felt locally and seen globally as the only choice in fleet management.”
Mission
”To liberate and project the vitality of our employees into every part of our business. To integrate continuously the needs and desires of our customers with our business - to be on their side anytime, anywhere.”
Values
• Integration - working alongside the customer
•
Proactive engagement - actively anticipating the customers' needs
• Expertise - offering added-value partnership
•
Flexibility - always finding the right solution
• Vitality - showing positive energy at all times
1.3.2 The market
The market of LeasePlan is the lease market, but not all sorts of leasing are offered.
LeasePlan offers Fleet Management, which includes the following:
- Operational lease and management, no financial lease.
- Open and closed calculation.
- Passenger cars, vans and trucks, with the focus on passenger cars and vans. Other means of transportation are offered only by exception.
- Management, advice and information.
- Insurances, maintenance, damages, fuel, emergency services, replacement transportation and the sale of cars leaving a contract.
The target audience, to who LeasePlan offers their services, are companies, institutions, and non-profit organizations. Individuals are not able to lease cars. For this purpose they have to go to Carvantis.
1.3.3 Products
LeasePlan has designed several products that deliver to most customers the optimum value cost benefits. However, depending on the specific needs of the customers and in keeping with the transparent approach, a fully customized product and service offering can be developed prior to any formal agreement.
LeasePlan prides itself on giving the customers all the flexibility they need. However, there are seven products that give most customers the best solution for their type of business.
BasicPlan: BasicPlan is based on closed calculation. A fixed amount per month is guaranteed for a prearranged duration and the number of kilometres driven. This allows the client to know beforehand where he stands, hence making it easier to make a budget.
EasyPlan: A simple solution offering a standard range of services and a pre-determined lease price that eliminates unexpected costs. Easy Plan is well suited to companies with small fleets up to 25 cars.
ComfortPlan: A full range of services from which the customer can build his own preferred solution. Then a pro-active account manager takes care of everything while the customer concentrates on his core business. Comfort Plan is well suited to companies with a fleet of 25 cars or more (based on closed calculation).
PartnerPlan: Partner Plan means flexibility, cost control, detailed management information and full and open disclosure - True partnership. Partner Plan is well suited to companies with a fleet of 25 cars or more (based on open calculation).
OwnerPlan: The fleet does not have to be leased from LeasePlan to benefit from the services of LeasePlan. LeasePlan gives the possibility to the customer to arrange the financing himself while LeasePlan takes care of the fleet management. Owner Plan gives the opportunity to make full use of LeasePlan's service options and relationship with preferred suppliers. Owner Plan is a lease package that is designed specially for clients with fleets of 25 cars or more.
TransitionPlan: TransitionPlan is a special program for companies that want to transfer their entire on-the-road fleet to LeasePlan, but do not wish to use a Sale-and-Lease- Back arrangement. With TransitionPlan, LeasePlan helps the client to keep track of when the contracts for cars in the clients fleet that are provided by other lease companies reach their expiry dates.
Global Solutions: If the customer operates a fleet across several countries, LeasePlan
International will provide the client with the coordination and support structure to deliver
a harmonized range of products and services everywhere he operates.
1.4 Group Services
Group Services steer and execute the following central activities for the LeasePlan group:
•
Business Development
• Business Process management
•
ICT
• International Operations & Procurement
• Car
Remarketing
Furthermore they develop, communicate and monitor functional policies for their area of expertise, and they support regions and countries in close cooperation with the Regional Leaders. This research is done for the Business Development department within Group Services.
Figure 1.2 - Organizational chart including Group Services.2
1.4.1 Group Services - Business Development
The Business Development department is a LeasePlan 'Group Services' department that aims at being recognised as a department which conceives and brings valid (strategic and tactical) global solutions and offers support implementing them internationally.
This is carried out with the objective of transforming the LeasePlan Group into the commercially (sales and marketing), most effective efficient and proactive Fleet Management Solutions Provider in the world. To realise this, GS-BD strives for a harmonious relationship with all the colleagues throughout the Group.
The Business Development department consists of five teams, which are the Market Development team, the Product Development team, the Pricing & Profitability team, the Communications team and the e-business team. This research was conducted for the Market Development team. See Appendix 6 for an organizational chart of the GS-BD.
2 Adapted from LeasePlan Corporation’s Intranet.
Chapter 2: Research set-up
2.1 Problem description
During the COO meeting (Athens, November 2003), Arval PHH was identified as the strongest upcoming player in the Full Operational Lease (FOL) market and as an increasing competitive threat to the LeasePlan Group. Arval PHH has strengthened its competitive position by acquiring Arma (NL, BE, UK – 20.000 vehicles in total) becoming an even more serious global and local competitor. However their global positioning still is confusing with 2 brands: Arval PHH (100% BNP Paribas) and PHH Arval (100%
Cendant) plus various local partnerships. But they’ve kept a stronger outward focus whilst LeasePlan has been doing lots of internal optimisation. After discussing the position of Arval PHH compared to LeasePlan it was clear that Arval PHH is not better than LeasePlan, but at least Arval PHH tries to claim that.
At the end of the meeting it was agreed to continue to trust and build on LP’s own strengths but a closer analysis should be performed on this competitor for the LP Group in order to gain more insight and understanding in its moves and to use the analysis in the formulation of LP’s strategic directions, which can lead for example to new products, adjusted communication or additional sales force training.
Business Development however realized that the LeasePlan Group has limited experience in performing competitive analysis and does not hold a structured approach to gather the required and in-depth information about competitors. And even though Arval PHH definitely challenges LP’s position, other strong competition is out there too.
Therefore, it was also highlighted that such a structured approach could benefit the analysis of a wider range of LP competitors and not just Arval PHH.
GS-BD will therefore initiate and manage continuous cycles of collecting, filtering, interpreting, aggregating and reporting competitor information primarily for local action purposes. The result of such a structured approach should be competitor intelligence that supports and improves the decision-making process on both a strategic and tactical level. Gaining insights in trends and developments, customer priorities and customer decision criteria, will enable LP to better allocate scarce resources to business opportunities and positively influence the outcome of the sales cycles. This causes LeasePlan to stay always one step ahead of its competitors.
2.2 Problem definition
The process for an organization to formulate well-founded strategies can be explained
on the basis of the strategic planning process of Aaker (2001). External and internal
analyses provide the input to strategy development and the set of strategic decisions
that is the ultimate output. This research is only aimed at one part of the external
analysis: the competitor analysis.
Figure 2.1 - The strategic planning process.3
The benefits of competitor analysis to the firm are; improved market knowledge, improved cross-functional relationships in the organization, greater confidence in strategic plans and improvements in product quality relative to the competition. A firm, which does not rigorously monitor and analyse key competitors, is ill equipped to formulate or implement a sound competitive strategy (D. Bernhardt, 1993: 6). Therefore the following objective is set and the accompanying research question is asked.
Objective
To provide a structured approach to competitor intelligence by developing standard CI procedures supported by an information system (the tool) that should be used by all the countries in the LeasePlan Group in order to improve decision-making on both a global and a local level.
Research question
How should the CI procedures and the CI tool be formed and how can the CI function be embedded best in the organization in order to support and improve decision-making on a global as well as a local level?
Sub questions
In order to answer the main question the following sub-questions will be asked:
1. What is competitor intelligence (CI) and how can it be produced? (Theoretical Framework)
2. What does LeasePlan currently do about competitor intelligence? (Diagnosis)
3. What kind of CI activities have to be performed and how should the CI tool be formed that will support these CI activities? (Design)
4. How should the new CI function be implemented and what decisions should be taken during the implementation in order for the CI function to become a success? (Change)
3 Adapted from Aaker, D.A., Strategic Market Management, 6th edition, John Wiley & Sons, p. 19, 2001.
External analysis
• Customer analysis
• Competitor analysis
• Market analysis
• Environment analysis
Internal analysis
• Performance analysis
• Determinants of strategic options
Strategy identification and selection
Opportunities / Threats Strengths/ Weaknesses
2.3 Expected benefits Benefits for the OpCo’s:
• A local centralized tool for gathering, analysing and sharing competitor insight to
support strategic commercial sales.
• A central point of contact within GS-BD to assist with information and analysis.
•
Receive competitor intelligence and benchmarking analyses on global competitors from LPCorp.
Benefits for LP Corporation:
•
A central knowledge bank containing an overview of competitors in the global fleet management market.
•
Better support global strategic direction versus competitors of the LP Group.
• Receive competitor intelligence on a local level from OpCo’s.
2.4 Definitions
The word ‘intelligence’ is often mistaken with the words ‘information’ or ‘data’ (L. Fuld, 1995: 24). The definitions of these words that are given here will be used as the basis for the rest of the research.
• Data: Scattered bits and pieces of information.
• Information: A pooling of these bits of knowledge.
• Analysis: Distilled information. It involves the transformation of information
acquired in raw form into a usable intelligence product.
• Intelligence: The implication that will allow you to make a decision.
Information is a relatively inexpensive and easily obtainable commodity, but is should be analysed in order to come to the right intelligence which in turn will then lead to the right actions. Competitor intelligence can therefore be defined as:
•
An analytical process that transforms disaggregated competitor and market data into actionable strategic knowledge about competitors’ capabilities, intentions, performance and position.
• The end product of that process.
2.5 Constraints
The following prerequisite constraints can be distinguished according to constraints from the University of Groningen:
• The internship at LeasePlan Corporation will last at a maximal time of six months
(March-September 2004).
• The report should deal with appropriate issues of the specializations Marketing
and International Business from the study Business Administration of the RUG and should be scientifically justified.
The following prerequisite constraints can be distinguished according to constraints from LeasePlan Corporation:
• The research is to be executed from the head office of LeasePlan Corporation in
Almere. It takes place within the Business Development Department of Group
Services.
• The final report only contains information that is allowed by LeasePlan
Corporation to be published. LeasePlan will screen the thesis and decide which part of the thesis can be published. Primarily determined parts of the thesis can be treated as confidential information.
2.6 Scope
Because competitor environment is very extensive, it is important to define who the competitors are and what part of them is used in this research.
According to Alsem (1991) competition analysis can be filled-in in two ways: analysis of the industry and analysis of the competitors. The scope of this research only includes the second way: analysis of the competitors. This is the analysis of the behaviour of the separate competitors. It means that only the direct competitors in the industry are included. The objective of competitor analysis is to get an insight in the strengths and weaknesses of competitors and their future behavior. See appendix 7 for detailed explanation of the competitor environment.
It is also important to define which types of intelligence are going to be included in the CI
function. Intelligence can be classified into three main types. These are strategic, tactical
and counter intelligence. Strategic intelligence is practiced at a corporate level or
business unit level and is mainly concerned with competitor analysis; gaining an
understanding of a competitor’s future goals, current strategy, assumptions and
capabilities (Porter, 1980: 49). Tactical intelligence is practiced at an operational level
and is mainly concerned with smaller scale issues like price policies. Tactical intelligence
is mostly used by middle level marketing managers and sales managers. Counter
intelligence is concerned with how to defend the company’s secrets. This research will
only include strategic and tactical intelligence and the counter intelligence is left out of
scope.
2.7 Conceptual model
In a conceptual model the main variables, components, themes and issues of the research are identified and the predicted or presumed relationships between them (Saunders et al., 2000). It reflects the global view, which is the basis for the research (De Leeuw, 1996). In the model mentioned below the relations are given between the different concepts used in this research. As can be seen the conceptual model is larger than the actual research frame. Although this research will only be concerned with the part within the research frame, the conceptual model will help to place the research into a greater context.
Figure 2.2 – The conceptual model
• Internal analyses (performance analysis and determinants of strategic options)
• Other external analyses (customer, market, and environment analyses)
Research Frame The intelligence cycle
Planning
Collection
Processing
Production Dissemination
Evaluation of the process
Marketing Information
System (MDSS)
Key decision maker - OpCo
Key decision maker - LPCorp
Support strategic decision-making;
Selection of local strategy
Support strategic decision-making Selection of corporate strategy
Support tactical decision-making Evaluation
of CI output Requests
Support operational decision-making
This research focuses primarily on how to create a structured approach to producing competitor intelligence (part within research frame). The intelligence cycle is used as the basis for this structured approach. An explanation of the steps of the intelligence cycle will be given in chapter 3: the theoretical framework. In order to create a structured approach to CI, the intelligence process can be (partly) mechanized by means of computer systems. Therefore also the characteristics of Marketing Information Systems (MIS) will be mentioned. A specific type of MIS is the Marketing Decision Support System (MDSS). This system will be explained in more detail, as this type is very suitable to support the intelligence process.
The part outside the research frame is concerned with how the outputs of the intelligence cycle (the intelligence products) are incorporated in the decision-making process. Although this part is not directly included in the research, it is still important as the intelligence products should fit the managers’ needs in order for them to make decisions as best as possible. These decisions will steer the organization in a certain direction. De Leeuw (1997) defines steering as every form of directed influencing.
The internal analysis and other external analyses (in the dashed frame) are analyses that in practice will also be taken into account when making decisions, but will not be discussed in this research because this research only concerns the competitor analysis.
The intelligence products can support three levels of decision-making: operational, tactical, and strategic (Paul et al., 1994). Operational decisions are decisions that are aimed at making primary and supporting processes go well on a short term (0 to 1 year).
Tactical decisions are aimed at how to organize the organization and allocate the resources available within the organization, so that strategic decisions can be translated into operational processes. These decisions concern the medium term (1 to 2 years).
Strategic decisions are aimed at the direction that the organization wants to take and concern the long term (3 to 5 years).
The intelligence products are disseminated to LeasePlan Corporation as well as to the LeasePlan countries.
The users of the competitor intelligence within LP Corporation are key decision-makers that use the intelligence (together with internal analysis and other external analysis) to select a corporate strategy and support strategic decision-making. Generally, these users are the higher management, but also other managers within LeasePlan Corporation can appeal to the CI function for intelligence.
The users of the competitor intelligence within the OpCo’s are key decision-makers that use the intelligence (also together with internal analysis and other external analysis) to support strategic decision-making on a local level. The corporate strategy, made by LeasePlan Corporation, serves as an input for selecting local strategy as well. Generally, the users of strategic local intelligence involve the higher management of an OpCo.
After the local strategies have been made they serve as an input for tactical decision- making, which in turn serves as an input for operational decision-making. Operational decision-making can also be supported with competitor intelligence but instead of strategic intelligence, tactical intelligence is used, which is concerned with much more smaller scale issues.
Every employee, either in LPCorp or in the OpCo’s, can appeal to the CI function in case
competitor intelligence is needed. The application can be made by filing a specific
request to the corporate or local CI function respectively. The request will be
incorporated in the planning and direction phase of the intelligence cycle.
When the key decision makers have received the intelligence to make operational, tactical, or strategic decisions, the intelligence output needs to be evaluated. Has the right intelligence been produced in order to support the decisions a manager has to make? If yes, the intelligence process can continue as before. If not, adjustments have to be made in the intelligence cycle; different data might have to be collected or different kinds of analyses might be needed in order to produce intelligence that better fits the manager’s needs.
Not only the intelligence output has to be evaluated but also the intelligence process needs evaluation. Even if the intelligence output is effective, the process itself can be very inefficient. Because competitor intelligence is a very time sensitive product, the intelligence has to be produced and disseminated as fast as possible. Otherwise the intelligence is already outdated or the organization might be too late to react to it.
2.8 Research model
The research is structured on the basis of the D.O.V. model from de Leeuw (1996). This model is chosen because this research concerns a problem solving research. The products of such research are recommendations and/or designs that will solve the problems. De Leeuw splits problem solving research into three phases: diagnosis, design, and change (in Dutch: Diagnose, Ontwerp, Verandering). These phases form the main road through this research. In figure 2.3 a model is given of how the research is set up.
Error!
Figure 2.3 - The conceptual model concerning the set-up of the research.
Diagnosis
The diagnosis is based on the CI practices currently used within LeasePlan. In order to give a judgement about the CI practices, it is essential to formulate a set of criteria to base the judgement on (De Leeuw, 1996). The set of criteria used is based on the steps of the Intelligence Cycle. The Intelligence Cycle consists of five steps: planning, collection, processing, production, and dissemination (see the theoretical framework for an explanation of the Intelligence Cycle). To make a judgement, each of these 5 steps has been made measurable by formulating variables (the criteria). The variables that have been formulated and used to make the diagnosis are explained in chapter 4.
Design
The design should be chosen in a way that solves the problem. In this case the design should be applicable for all the 26 countries LeasePlan is operating in. That means that the design should be suitable for the very developed countries as well as for countries that have just been established, and every country in between.
Design Implementation
Theory/ Best Practices
Diagnosis
Requirements
Gap diagnosis/design
Critical Success Factors
In this research the design is made on basis of the diagnosis and the requirements of the stakeholders. Furthermore theory is consulted in order to create the optimal design.
Change
The change phase is the step in which the developed design is being realized. First the approach to implementation is explained, and secondly strategic, tactical and operational decisions have been formulated in order to steer the CI function into the direction of a successful implementation. The actual execution of this phase is outside the scope of this project but it is crucial to realize beforehand not only how the new CI function should be implemented but also what the consequences are for the entire organization.
The final step on the way to problem solving is evaluation. It is important to test the solution/design to the problem definition and investigate to what extend the problems have disappeared.
2.9 Research method
In order to give an answer to the research and sub questions data has to be collected.
According to Baarda en De Goede (1997) there are three ways to collect data:
1. Use existing information
2. Obtain data through observation
3. Obtain data through written or oral interview
In this research the first and the third method are used. Existing information is useful to make an inventory of the CI practices currently used by LeasePlan. Existing literature is used for creating a theoretic framework and existing researches/articles are used to collect best practices.
Interviews are used to collect people’s attitudes, knowledge, and opinions to complete the existing information about the current CI procedures. Another reason to use interviews is to find out the stakeholders requirements concerning the new CI function.
Observation is not a useful method for this research because observation is preferred to discover behaviour and that is not the case in this research. The data collection method for each sub question will be explained now in more detail.
1. What is competitor intelligence (CI) and how can it be produced? (Theoretical Framework)
To answer this sub question a literature research has been done, including books and articles.
2. What does LeasePlan currently do about competitor intelligence? (Diagnosis)
To answer the second sub question different methods have been used. First, internal research has been done to investigate the existing CI procedures, tools, and competitor information used within LeasePlan. Second, interviews by telephone with local marketing managers are used to further reveal the existing CI practices used within LeasePlan.
3. What kind of CI activities have to be performed and how should the CI tool be formed that will support these CI activities? (Design)
Inputs for the design of the CI tool are the requirements gathered through telephonic interviews with the local marketing managers and through a meeting with the Marketing Strategic Team (MST). Second, research articles about best practices from the Market Leadership Council and Corporate Executive Board also form an input for the design.
The literature research is the third input for developing a new design.
Furthermore, a workshop has been organized with local marketing managers and other stakeholders to further discuss the content of the new CI function, the sources to find the data, and the people responsible for gathering the information. Last, frequent consultation has taken place with a International Communications Manager to discuss the technological/intranet possibilities. (See Appendix 2 for a list of all the interviewees and workshop attendants).
4. How should the new CI function be implemented and what are the Critical Success Factors that have to be taken into account during the implementation process and afterwards during operation? (Change)
In order to come to a successful implementation approach, consultation has taken place with the Market Development Manager and the Senior Vice President of Business Development.
The Critical Success Factors that should be taken into account during the implementation process and afterwards when the system is in operation, are gathered by literature research and through the workshop.
2.10 Timescale
A timescale is helpful to decide on the viability of the research and it will give a clear idea as to what is possible in the given timescale (Saunders et. al, 2000). In this way the progress of the research is being guarded.
Gather CI practices currently used within LeasePlan March-April ‘04 Present first diagnostic analysis to MST members Apr 14
th’04
Design CI function April-June ‘04
Workshops with stakeholders to validate proposed design June 8
th‘04
Improve design of CI function June ’04
Develop and execute design of the new CI tool July-August ‘04
Roll out CI tool to OpCo’s September ‘04
Chapter 3: Theoretical background
In the previous chapter the problem definition has been described. In this chapter the theories will be discussed that can be used to answer the research question.
In order to formulate an effective strategy Hussey and Jenster (1999) have made a procedural guide for designing a strategic information system. This approach is based on the idea that the executive must focus on factors most vital to the organization’s success and then manage by creating a context within which others are able to align their effort accordingly. The method incorporates nine steps:
The design method serves as a means for top management to create and identify essential strategic elements, make use of information relevant to success, align rewards and incentives, and reach strategic goals. It is the means for creation of a strategic context for the firm. The philosophy behind this design is that the strategy formulation and the plan execution cannot be treated as two separate issues; the strategic planning process and the system facilitating implementation are interrelated.
The design as described by Hussey and Jenster is a structured approach to the process of selecting an effective strategy, in which competitor intelligence is only a small part of this process. This approach corresponds with the whole plan as pictured in the conceptual model. However, in the light of this research and considering the research frame, it is not the objective to get a structured approach to the whole process of strategy selection but to develop a structured approach to produce competitor intelligence as part of the process of strategy selection.
I have chosen the concept of the intelligence cycle to describe the process of producing competitor intelligence. The intelligence cycle is one of the more useful analytical concepts for identifying the components of the intelligence process and understanding their complex interrelationships. Furthermore it can be used to differentiate the process of intelligence into discrete organizational activities. The basic elements or phases of the intelligence cycle are:
1) Directing 2) Collecting 3) Processing
4) Disseminating and use which are surrounded by
5) Planning and supervising
44 Adapted from FM 30-5, Combat Intelligence, Headquarters Department of the Army, G.P.O., Washington, D.C., 1973, pp. 2-14.
1. Provide structure for the design process
2. Determine general elements which will influence success 3. Develop a strategic plan or review/modify the current plan 4. Identify a selected number of CSFs
5. Determine who is going to be responsible for what 6. Select the strategic performance indicators (SPIs) 7. Develop and enact appropriate reporting procedures 8. Initiate use of procedures by managerial personnel 9. Establish evaluation procedure.
In recent years, the concept of the intelligence cycle has been modified by a number of authors to fit the competitor intelligence needs of the strategic planning process. A few modifications of the intelligence cycle will be discussed here after which a final cycle will be made that will form the basis of this research.
Porter (1980) has modified the cycle into the following steps:
1) Collecting Field Data and Published Data 2) Compiling the Data
3) Cataloguing the Data 4) Digestive Analysis
5) Communication to Strategist
6) Competitor analysis for Strategy Formulation
5Bernhardt (1993) describes the intelligence cycle as:
1) Planning and direction 2) Collection
3) Processing
4) Analysis and production 5) Dissemination
Tyson (1990) came to the following model:
1) Data collection of published information and non-published information 2) Synthesis and review
3) Indexing and Storing 4) Analysis
5) Reporting and Communication
6Lackman, Sabban, and Lanasa (2000) have developed a closed-loop model that incorporates various functions into a market intelligence system. The phases in the closed-loop model include:
1) Identify users
2) Asses intelligence needs 3) Identify sources of information 4) Gather information
5) Interpret information 6) Communicate intelligence
7Davidson (2001) also used the intelligence cycle for his research and modified the intelligence cycle as follows:
1) Planning and direction
2) Data collection & organization 3) Data analysis & interpretation 4) Dissemination & implementation 5) Evaluation, updating & maintaining
85 Porter, M.E., Competitor Strategy, Free Press New York, Figure 3.4, p.73, 1980.
6 Tyson, K.W.M., Competitor Intelligence Manual and Guide, Engelwood Clieffs, New Jersey: Prentice Hall, 1990.
7 Lackman, C.L., K. Saban, and J.M. Lanasa, ‘Organizing the competitive intelligence function: a benchmarking study’, Competitive Intelligence Review, Vol. 11 (1) 17-27, 2000.
As can be seen, different authors use different phases but they do not differ that much from each other. The differences result mainly from the way the elements are defined.
The elements of the cycle that will be used for this research is based on a mixture of the cycles mentioned above, but corresponds closely with the intelligence cycle as described by Bernhardt.
Figure 3.1 - The competitor intelligence cycle.
The reason for using only five elements is that the more elements are chosen, the more difficult is gets to measure them. Furthermore, the elements in the cycle have been named rather general. This is done in order to be able to define the elements more broadly. Next an explanation is given of how each of these elements is defined. In chapter 4, each of the five the elements are made measurable which results in the formulation of variables.
3.1 Planning
Planning refers to the preparation that needs to be done before the intelligence process is started. A problem of producing intelligence is not collecting information but rather what to collect and for what purpose (Sammon et.al., 1984). Otherwise competitor information will be collected in an aimless, unsystematic fashion, which will end up in heaps of information without any strategic value. Intelligence priorities will be set by those who produce it rather than those who use it; the key decision makers. Therefore the researchers have to know exactly who the users are, what it is that they need, and what they plan to do with the intelligence once they have it.
3.2 Collection
After an inventory is made about what the users’ intelligence needs are the actual collection can start. Collection refers to the gathering of data from all kinds of sources.
CI information typically comes from three sources: internal sources, external primary sources and external secondary sources. Internal sources are those sources that already exist inside the organization. Most of the time these sources have a lot of
8 Davidson, W.L., ‘Measuring Competitive Intelligence Effectiveness: Insights from the Advertising Industry’, Competitive Intelligence Review, Vol. 12 (4) 25-38, 2001.
1. Planning
2. Collection
3. Processing
4. Production 5. Dissemination
information available but this information is not disclosed. Examples of internal sources are front line employees, sales force, technical support staff and employees in contact with competitors, consumers, regulators and the general public. External primary sources are sources outside the company that are used to deliver data about competitors. Examples of these external primary sources are: CI consultants, electronic clipping services, interviews with competitors’ customers, competitors’ former employees and competitors’ suppliers, distributors, and other affiliated companies.
External secondary sources are sources outside the company that deliver information for other purposes but can still be used to derive competitor information from. Examples include employment advertisements, patent offices, Internet, local newspapers, association publications for members, and shareholder annual reports.
The acquisition of external information can also be outsourced. Using external consultants and services (e.g. on-line databases) can be more cost effective due to the scale and scope of their resources. Furthermore, outside intelligence gathering firms are often able to obtain information from competitors’ suppliers and customers that is not easily obtained by in-house CI departments. A disadvantage of outsourcing the CI function is that within the firm the understanding of core competitors may be much higher and a second reason for not outsourcing the CI function is that in-house acquisition of some information enables companies to benchmark information obtained from external consultants (Westney, 1994: 435).
3.3 Processing
Processing refers to the part of the cycle where the raw competitor data is evaluated and recorded. First, the data is reviewed for its significance. Second, the data is indexed and stored. In the case when the raw competitor data is found by a party other than the one who is responsible for evaluating and recording the data, the raw data needs to be forwarded to the responsible party. This activity is called forwarding and is also included in the processing step.
3.4 Production
Production refers to the making of competitor analyses. Analyses should be made after the data is collected, evaluated and stored. The objectives of competitor analysis are:
1. To determine the strengths and weaknesses of competitors.
2. To derive the expected behaviour of competitors.
Many different types of analysis exist but there are no ‘best’ analyses. Each company must use and often develop those analyses, which suits the project at hand.
Different authors recommend a different set of analyses, which will be explained shortly.
Alsem (1991) uses the following methods for competitor analysis: management judgement, experience curves, positioning research, key success factors, result analysis, effectivity measurements of market instruments, and scenario analysis.
Research from the Corporate Executive Board (2000) showed that the profiled
companies conduct the following types of research: Broker comparisons, commission
rates analyses, competitive capabilities analyses, fee comparisons, financial
performance, internet delivery analyses, margins analyses, market size forecasts, revenue contributions, strategic analyses, and technology comparisons.
Hussey and Jenster (1999) discuss competitor profiles, portfolio analysis, and benchmarking, and Fuld (1995) discusses the usage of cost analysis, SWOT analysis, and benchmarking.
A common mistake when performing analysis is that employees are assigned to find out everything on the competition for everybody. Most corporate CI functions fail because they lack focus. Important is to know which key areas should be analysed.
In consultation with LeasePlan three analyses have been selected that should at least be incorporated in the intelligence tool. These analyses are standard but they can of course be completed with other analyses that fit a specific need. The analyses involve the competitor profile, the SWOT analysis, and the benchmarking analysis. The competitor profile and the SWOT analysis both serve as an input for strategic decisions;
the benchmarking analysis can be used for either strategic or operational decisions depending on the level of detail that is used.
Competitor profiling
For keeping an ongoing knowledge of competitors a competitor profile can be useful.
Ongoing knowledge of competitors is to ensure that a company is aware of what the competitors are doing and how that will affect the organization. In addition it is also important to consider the actions of the competitors in reaction to the organization’s activities. This calls for a method of recording information that is kept up to date, and which is always immediately accessible: the competitor profile. It shows only the key information about each significant competitor, which managers should consult regularly and which should be updated on a continuous basis. Each competitor profile contains information about one competitor in one country. If a competitor is competed with in more than one country, a profile is needed for each country, including a global summary.
(Hussey et al., 1999: 97). Issues that can be covered in a competitor profile will be explained in appendix 8.
SWOT analysis
The SWOT process is an effective way of identifying those issues that really matter; the major issues of high importance to the future, which must be tackled in any strategy. A SWOT analyses can be developed of the own company as well as on competitors (Adcock, 2000: 55).
STRENGTHS
• What is the company doing right?
• What has the company accomplished?
• What are the company’s strengths
WEAKNESSES
• Where can the company make improvements?
• What is the company not accomplishing?
• What should the company avoid?
OPPORTUNITIES
• What are the weaknesses of the competition?
• What are emerging trends and technologies in the marketplace?
• How are the company’s target markets and demographics changing?
THREATS
• What are the strengths of the competition?
• What changes are taking place that could harm the business?
• What current limitations exist in the marketplace?
Figure 3.2 - SWOT analysis.9
9 Adapted from Aaker, D.A., Strategic Market Management, 6th edition, John Wiley & Sons, 2001.
