Description of competitive situation and position in markets

Description of the biggest competitors

You might want to write a brief description of the worst competitors of your company. It should be able to answer at least to the following questions:
•     What is the current competitive situation, how has it been developing and how do you believe it will develop in the future?
•     How are market shares divided among companies? How have they been developing and how do you see the future?
•     How big and profitable are the competitors?
•     What are the major differences between the competitors?
•     What are the strengths and the weaknesses of each competitor?
•     Has the competition any special features (such as government regulation or major changes)?

Comparing to others

Always compare features of companies to the ones of your company. This way readers can get better vision of the market situation than just plain numbers without context. Remember that companies also have different kinds of valuations. If some company is in superb situation, growing fast or has exceptional profitability, it is natural that this company should have higher valuation. Valuation can be seen for example in P/E-, EV/EBITDA- and P/B - ratios. Compare these figures in your company's peer group. Still the acceptable level of these figures should be determined case by case.

Competition methods and advances

Tell about the competition methods of the business. Are companies competing with price, quality, image, brand or something else? What are the competitive advances of your company? Tell about their nature for example whether they are long-lasting or easy to copy and therefore temporary. Is the importance of your company's competitive advance diminishing or growing? Think also about the future and possible changes.

Try to express the situation in a way that everyone can assess how competition will develop in the future and how each company is going to succeed in it. You may also try to compare things like brand and image among peers group. Although it's difficult to estimate the importance of brand, it is clear that a strong and well-known brand has a significant effect on competitive situation and on consumer choices.

Where to get this kind of information?

First you should ask the company (investor relations contact). The company has surely information about its competitors and their market shares etc. and normally they also give investors at least some of this information. Even just a list of competitors is a good start and thereafter you can put the names on Google and... Also customers of the company are a very good source of information and they can tell you also much more interesting things than just the name of potential suppliers. The customers can reveal also why they prefer some suppliers over the others i.e. what are the relevant competitive advantages that the companies may have.