Competitive Intelligence/Key Intelligence Topics (KITs)< Competitive Intelligence
As companies become more globalized and technologically advanced, the need to identify Key Intelligence Topics (or KITs) becomes increasingly important for companies to survive. Companies are no longer dealing with local entry threats or local suppliers, but now face competition from firms in other countries around the world. Because of this globalization, the landscape has become extremely competitive with companies shifting focus to products, services and customer satisfaction. Evidence of this globalization can be seen over the last 50 years in the United States as the American automotive companies have been slowly overtaken by Japanese and European automakers, or in technology such as televisions and appliances.
The first step for firms to identify their KITs is through information gathering. The information gathered can be used for: strategic planning, possible mergers and acquisitions, new market decisions, pricing decisions, etc. Organizations have different ways of gathering information to define their KITs. For example, some companies such as AT&T and Pfizer have their own Strategy Departments which gather information through surveys, trade publications, analyst reports and database searches. Other companies, such as Kraft, have strategic departments within their Marketing Departments, these departments use public information in magazines and news papers to fill define KITs. While, still other companies, such as General Mills train their employees on competitive intelligence and gathers information through employee focus groups where data is gathered, organized and analyzed. Though the methods to define and analyze KITs may differ from company to company, the commonality in all of this is that they require management backing and support to operate. Without the full support of management, CI departments would not have the needed funds or power to operate successfully.
Once KIT information is gathered, they must be categorized to allow for proper analysis and presentation to management. The most common KIT categories are:
- Strategic KITs
- Early Warning KITs
- Key Player KITs.
Strategic KITs contribute to key decisions in relation to strategic formulations and implementation for the company. Strategic KITs are used to make determine on actions such as: investment decisions, global expansion, technological competitiveness, global alliances and/or acquisitions.
Early Warning KITs identify forthcoming threats and opportunities for the company in the market. Some examples of Early Warning KITs include: new entrant threats, government regulations, untapped market, and any shifts in bargaining power.
Key Player KITs arise from market rivalries, new entrants, and substitute products. However, Key Player KITs can also deal with none threatening means such as new suppliers or contractors which have entered the market as well.
Though information is placed in one of the three KIT categories, they do not operate independently of one another. There is an interrelationship that exists linking each of the three KITs. For example, the presence of an Early Warning KIT (new government regulation) may result in management looking into Strategic KITs (plan to counter / comply regulations), which may result in reviewing Key Player KITs as part of the strategy to form new alliances (contracting with lobbyists). Another example would be the presence of a Key Player KIT (new supplier), which results in an Early Warning KIT (possible new contract) and becomes a Strategic KIT (contract to lower cost and increase market share).
Looking at the three KIT categories, the majority of the world places more emphasis on Strategic and Early Warning KITs, while Key Players KITs are lower on the rankings. The emphasis on Strategic and Early Warning KITs could be attributed to the competitive nature of global market where foreign firms entering into new markets may threaten the incumbents’ market shares. However, the United States and North America employ Key Players and Strategic KITs, while Early Warning KITs less emphasized. The emphasis of North American companies on Key Players and Strategic KITs is reflexive of a strong sales culture, competitive market and entrepreneurial culture.
An example of using KITs in a global business is the entry of the KFC fast food restaurant’s dominant immergence in China as the most successful fast food chain in China. In the United States, KFC ranks 6th among fast food chains to giant McDonalds in a 2009 ranking . However, in China “Colonel Harland Sander’s image is a far more common sight in many Chinese cities than that of Mao” .
The Yum! Brand Company can be seen as one that has the use of KITs to move it into this new market. The use of Key Player and Strategic KITs are combined in this situation as the success of KFC is through the use of these KITs. One of KFC’s key players is the local management team used to work on their franchises. With the American brand being operated by Chinese locals, the flavor and the appeal of the restaurant can be better tailored to the culture. Also, the strategy of using cultural flavors in their ingredients rather than using the traditional flavors famous in America helps to win the locals over, rather than forcing them to like the American version of the famous chicken.