Ci Strategy

Author M.V Rakimane Information Management Topic: Apply the CI cycle in developing a CI strategy for an existing South African company. 16 August 2009

Introduction Competitive intelligence is rapidly becoming a management priority for operators in deregulated markets and is also an essential ingredient of successful planning tool integrating company’s strategy. Successful CI program do more than simply allowing company’s to react to market development but allowing those businesses to anticipate the market. The use of CI cycle [needs, planning and direction and information storage and processing, collection and reporting and analysis and production as well as dissemination] in developing a CI strategy will be explored in-depth to show how the CI program will be applied. In South Africa at the moment the concept of CI is still new and developing a competitive intelligence programme for joint venture in alcohol distributing environment will not be easy. The essay will focus on the following company Brandhouse of which it went to bed with the three giant companies; thus Diageo, Heineken and Namibia brewery. Brandhouse was established in 2004 and it is a growing young organisation, vibrant and its core objectives are to distribute premium quality product to the middle class segment of the greater South African population. Through its three parent companies, brandhouse has a workforce of about 580 and has 20 offices around the country and has a diverse portfolio of premium alcohol brands in the white spirits, brown spirits, ready-to-drink and beer category. The company’s vision is to be the most celebrated company in South Africa “celebrating life every day, everywhere”. The duties of CI team in a company are to achieve competitive advantage through a well organized CI program and strategy without intelligence is not strategy- it’s guessing.

Needs, Planning and Direction Information is power, truly enough but the trick part of it is synthesizing information into critical competitive insights that drive corporate strategy is the real art of the competitive intelligence. Indeed, as a highly effective CI leader at Brandhouse the management has raised a need for crucial information on SABMiller, Distell Group Limited and Pernod Ricard as they are the most threatening organisations in the market. A useful starting point for defining intelligence needs is to think in terms of six basic questions; •

Who?

What?

•

Where?

When?

•

Why?

How?

Consider for a moment the intelligence requirements of a distributing alcohol company like Brandhouse and the intelligence needs of the management is to know who their competitors in the market are and they are as follows SABMiller, Distell Group Limited and Pernod Ricard and therefore, the need to know what is their cost and prices, strategy, marketing, capacity and technology and market share. (Bernhardt, 2003:49-50). The market share of Distell [33, 4 %] and Pernod [30, 5 %] SABMiller [98 %], where is their most generated revenues come from; meaning their most likely distributed products such Grolsch and Peroni Nastro Azzurro (SABMiller), Chives and Jameson (Pernod) and Amarula and Three Ships (Distell). The next step as CI specialist is to know when and where [which customer] they plan to introduce their new product. Why have they chosen the new apparently more expensive and market competitive product? How have our competitors been able to tripe their production and distribution from 2005 to 2008? (Datamonitor, 2009). Strategic intelligence is designed to provide senior decision-makers with the big picture and long-range forecast they need in order to plan for the future, so at Brandhouse the aim is to combine the Marketing, Sales and Finance department to build a strong CI program, why the reason been to avoid the notion of the CI unit reporting only to the CEO but it should be a multifaceted and collaborative function of a CI because other organisations report to marketing and sales. This will enable the CI group to have a company-wide network and ultimately gain exposure in front of senior management where the CI leaders are able to communicate strategic implications. As the CI leader it will be manageable to send CI personnel at sales and marketing staff meetings to provide updates and exchange information. The direction of the company is to send also CI gatherers to conventions to collect specific information based on product team needs and to separate commercial and R&D CI functions to align personnel to appropriate roles (Stinson and William, 1990).

Information Storage and Processing At Brandhouse there is no intranet as the organisation is growing at a slow pace in terms of recruiting more staff and the duty of a CI is to develop a system that will be user friendly in terms of retrieving, archiving and searching applications. In most cases these are electronic in nature and typically reside within company intranets or in groupwave applications. For Brandhouse to be up-to-date with brand trends CI knowledgeHouse have to be set up to be able to synthesize information that is knowable and intelligence as well as relevant to the organisations culture. The CI program must have level set components (users should be able to obtain a working knowledge of CI in order to make orientation of new CI recruit more easier to understand the culture), research components (secondary and published information, including competitor profile) and knowledge management components (users should have a platform to share their information regarding sales, product, acquisitions and so forth) (Bernhardt, 2003:51). This section will include “yellow pages” or directory containing a list of Brandhouse framework for integrating CI applied for the company. The key to Brandhouse CI function is the implementation of a thorough CI program that will maintain and disseminate information to its management through the CI unit and also getting every individual worker to access to intranet site CI knowledgeHouse. The key features of this system are its information reusability and self-access. The CI programme maximises efficiency by automating much of the information collected during ad hoc request and researching the weekly report CI newsto-go or to post on intranet. As a CI practitioner with the assurance that access will be provided is obtained through justification of need (Blenkhorn and Fleisher, 2005:62). Processing refers to the conversion of raw data to forms usable by intelligence analysts and others. Since intelligence deliverables are tailored to meet the specific needs of predetermined users, raw ‘intelligence’ derived from sources such as industry and market studies, news articles and rumours are usually unsuitable for decision-makers’ consumption. Information storage and processing involve activities such as the translation or interpretation of press releases and technical reports, the drafting of commentary from interviewsespecially elicitation transcripts and collation of information. Collation will include arranging and annotating related information; drawing tentative conclusions about the relationship of facts to each other and their significance.

Proper collection and Reporting This portion of the cycle requires that the as the practitioner be able to obtain knowledge through primary and secondary sources. There are numerous methods to access internal,

external, primary and secondary sources. The CI team at Brandhouse have to implement ethical research skills and assumptions as well as hypothesis about Pernod Ricard that it signed an agreement to sell its cognac brand bisquit and associated inventories to Distell for $45.4 million. The transaction also includes a distribution agreement with the group covering France, Belgium, Switzerland and Luxembourg. However, CI practitioners must understand the

meanings

of

ethical

research

and

primary

research

requires

interpersonal

communication skills and the ability to conduct interviews. Secondary research skills include Internet and intranet searching, database searching and data mining and querying (Stinson and William, 1990). These types of research require determination because of high volumes of data, management of primary and secondary sources is necessary. Exploiting a network of internal and external human sources of intelligence can infuse an intelligence system with unique, new and competitively relevant information that can provide management with insights and decision options that secondary information alone cannot match. Knowing and defining customers helps in developing new product and brand commercial advertisement such a Brandhouse number one Taxi Driver Campaign, this initiative is to better understand the behaviour of South African drivers. Information sources for CI specialist are as follows suggested by (Blenkhorn and Fleisher: 2005), government agencies, online databases, Internet, intranet, other companies, the investment community, surveys, interviews, trade shows, conferences and drive-by or on-site observations. Of course, strict legal and ethical guidelines must be in place to dictate how and under what circumstances human-sourced intelligence is collected and utilized. Intelligence reporting at Brandhouse will be channel smoothly because of the combined departments [Marketing, Sales, Finance] will produce optimized market intelligence that leads to best-informed executive decision-making regarding company growth and by doing this it gain valuable opportunities to grow the business and best connect with customers, so the point really is the CI unit must provide a simply and easy to read report to the management so that every worker at Brandhouse can understand the position of the company in the market place. Information gathering on demographics and economic indicators, industry [company financial comparisons, journals and news articles search, emerging market overview, investment analyst reports, international business research, public entity filing and comparative information] and company [strategy, sales and proposals, HR and recruiting, marketing communications and new product development] (Datamonitor, 2005). Analysis and Production Analysis is sometimes referred to as the ‘black box’ why because it includes evaluating and transforming raw data into descriptions, explanations and conclusions for intelligence consumers. It is in fact the key driver of intelligence collection operators and the aim of

competitive analysis is to help analyst, strategists, managers and decision-makers to make sense of the environment and of their organisations evolving and dynamic position within it. Intelligence analysis serves its users best when the focus is on one or more of the following values: •

Opportunities and threats, especially unexpected developments that may require management action or reaction like for example Pernod Ricard is said to build another a production plant in Pretoria to easy its Cape Town production site this kind of development send a threatening messages to its competitors.

•

Motives, plans intentions, strengths and vulnerabilities of rivals and other key players; like for example weaknesses of Pernod Ricard is poor credit rating and their threats is increasing labour cost and strong on market presence in global wine and spirits market.

•

Tactical alternatives or options available for advancing the organisations goals; meaning drawing SWOT analysis about competitors will bring enough alternatives to reach organisations goals and objectives (Datamonitor, 2009).

The production of intelligence is through the following steps support the policymaking process without engaging in policymaking, long-shot threats and opportunities (interest in low probability, high-impact dangers and objectives), pointing is not choosing (intelligence analysts must identify and clarify the vulnerabilities of adversaries), timeliness challenge (avoiding managers to take whatever information available but delivering the best on time, and is better than disseminating a perfect product too late as well). Intelligence analysis and production is not a separate, stand alone activity but rather an integral component of organisations overall effort to protect against and reduce vulnerabilities to competitive threats (Herring, 2005). Analysis and production of CI is routed on these three analysis techniques thus, strategic analysis of rivals [knowledge of current and future capabilities and gaining competitive advantage over rivals], vulnerability assessments [allowing CI practitioners to assess the consequences of possible competitors] and tactical threat analysis [it is important in helping to disrupt, sometimes prevent or minimize the impact of near-term competitor actions that may jeopardize company operations] (Bernhardt, 2003:52). Dissemination Dissemination is also the weakest link in the intelligence cycle involving the distribution of finished, evaluated, accurate and reliable information to users, the very same decisionmakers whose needs drive the intelligence requirements from the beginning. Finished intelligence should at all times be delivered in the format preferred by the recipient, tailored to conform to the management preferences. Brandhouse managers mostly some of them

digest information best in bullet-point presentations; others prefer comprehensive, detailed reports with all supporting evidence. It is up to the CI unit staff members to know their customers and their individual decision-making styles. Like for example at Brandhouse the management prefer integrative rather than decisive, flexible and hierarchical. Distributing the meanings and useful content to the users to take action and intelligence workers as well as Sales, Marketing and Finance staff to re-learn and improve their inner knowledge about rivals of their organisation is ideally should be in terms of the extent of damage the firm is likely to suffer if the information were to become public or end up in the hands of their rivals. This means that only personnel cleared for a particular level of classification should be permitted to access intelligence product. According to (Bernhardt, 2003:54) there are four effective methods on intelligence dissemination and there are as follows; Oral delivery, inclusion of intelligence reports from the field, laying out the evidence and inclusion of optional actions and implications. By Oral delivery it means intelligence analysts should be most certain of bringing to light what the users really needs to know. The results for the dialogue and feedback that takes place between intelligence staff and their customers when meeting face-to-face and inclusion of intelligence reports from the field is assessing intelligence issues or problems adding considerably credibility to analysis completed by a central intelligence department and it helps in answering questions of ‘How do you know?’. Decision-makers value seeing evidence that supports analysts and conclusions meaning laying out the evidence is always wise to do so and the inclusion of optional actions and implications; meaning what actions might decision-makers wish to consider taking and what are the implications? Unluckily the smooth functioning of the intelligence process, from identifying intelligence needs through to dissemination is rarely a straightforward matter and there are not the only ways of how to disseminate the finished intelligence to the management of the company but only to know the culture and needs of the organisation (Bernhardt, 2003:55). Conclusions Considering the development of a CI strategy is always advisable to combine department in order to allow interaction and information sharing to ultimately reach the company’s visions and goals. This effort produces optimized market intelligence that leads to best informed executive decision-making regarding company growth. Therefore, CI program is to develop an intelligence needs that will be used to guide collection activities and ultimately, the production of appropriate and timely intelligence product. After all a good CI strategy is routed in the planning phase where intelligence staff and users establish and agree to the users core concerns and associated information requirements. The success of each and every company is ‘customer focus’ knowing what your customers want and fulfilling their expectation with innovative products and quality services and to accomplish this Brandhouse

is focusing on providing premium products and to be the most celebrated company in South Africa “celebrating life every day, everywhere”. The use of CI cycle [needs, planning and direction and information storage and processing, collection and reporting and analysis and production as well as dissemination] in developing a CI strategy showed how valuable CI is to any institutional development and prosperity its either in new product development, sales, marketing, finance and services it will be effective if applied in the right way.

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Herring, J. P. 2005. Create an Intelligence Program for current and future business needs. [Online]. Available from http://www.scip.org accessed on 11 August 2009. McHugh, D. 2007. CI planning: set yourself up for success. [Online]. Available from http://complete.wordpress.com/category/planning McLellan, H. 2001. Basic tools and strategies. [Online]. Available from http://www.scip.org accessed on 08 August 2009. Miller, J. 2000. Millennium Intelligence: Understanding and Conducting Competitive intelligence in the Digital Age. New York: Cyberage Books Stinson, J. E. and William, A. D. 1990. Developing Competitive Strategy. [Online]. Available from http://www.ouwb.ohiou.edu accessed on 12 August 2009. Ward, S. 2009. How to gather competitive intelligence on your competitors. [Online]. Available from http://sbinfocanada.about.com/od/marketresearch/a/comintelligence.html .