The role of competitive intelligence in building a business competitive advantage
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Date
2025
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
In today’s fast-evolving business environments, the rapid shifts in competitive dynamics, the growing digitalization of enterprises, and the intensifying market competition have heightened the significance of competitive intelligence as a vital component of strategic management. Michael Porter, a distinguished American scholar, is widely recognized as the pioneering figure in competitive intelligence research. Other notable contributors to this field include Gilad, B., Kahaner, L., Prescott, J.E., and Vezmar, J.M.
The first systematic implementation of competitive intelligence in practice was undertaken by Xerox, a leading manufacturer of photocopiers, which applied competitive intelligence at three distinct levels. This strategic approach has been widely credited as a key factor in the rapid expansion of Chinese companies in recent decades. The following statistics illustrate the extent to which competitive intelligence is utilized across various countries: 91% of companies in Japan, 90% in China, 80% in the United States, 75% in the United Kingdom, 70% in Germany, and only 27% in Russia leverage competitive intelligence data.
In Georgia, however, the development of competitive intelligence remains a significant challenge. Despite its strategic importance, the field has yet to receive adequate attention. Notable exceptions can be found in sectors such as banking, insurance, and other well-established industries. Nevertheless, as market competition intensifies, the role and practical application of competitive intelligence are expected to gain prominence. This is essential, as competitive intelligence delivers socially beneficial outcomes by enabling businesses – both domestic and international – to evolve, refine optimize their operations, and expand their market presence.
Looking ahead, as Georgia’s business environment continue to grow, professional business intelligence is likely to become a fundamental prerequisite for ensuring a company's long-term sustainability, competitive edge, and operational security. This encompasses a broad spectrum of practices, including competitive intelligence, business intelligence, industrial espionage, economic intelligence, and benchmarking.
The implementation of competitive intelligence within a company can encompass up to twenty distinct functions within a dedicated competitive intelligence unit. These functions vary based on the company's specific needs, scale, and industry.
A company’s management approach is largely shaped by its size and the nature of its operations. In the early stages, particularly within competitive environments, businesses often adopt an imitation strategy, leveraging existing practices to optimize resource allocation. While this approach can be highly effective in the short term, it may prove insufficient for sustaining long-term growth.
Conversely, a more innovative and proactive approach – often referred to as a "leapfrog" strategy — may be more effective. This strategy – can be more advantageous in the long run. This strategy empowers a company to outperform competitors and establish market leadership, offering a significant edge over the more reactive "following" strategy.
Case studies indicate that the success of supermarket chains is closely tied to the systematic integration of specialized marketing roles within their management structures. These roles are crucial for monitoring the competitive landscape and delivering analytical insights that inform strategic decision-making.
Marketing professionals in these positions typically oversee key areas such as strategic site selection for retail outlets, assortment planning, and pricing strategies. They analyze competitors' market share dynamics – tracking growth or decline trends – while also assessing ongoing advertising and promotional efforts. Additionally, they evaluate the technical and commercial infrastructure of competing businesses. An essential aspect of this work involves preparing visual and audiovisual materials – such as photographs and video content – to provide management with more comprehensive, data-driven decision-making tools.
This approach reinforces the idea that the success of modern supermarket depends largely on a well-structured, systematic management strategy supported by robust information analysis.
A critical prerequisite for the effective operation of commercial intelligence is its seamless integration with top-level management. This function reaches its full potential when operational and strategic management processes are closely aligned and well-coordinated.
Business intelligence typically consists of two primary components: internal and external intelligence processes. To ensure robust informational support, these processes must be harmonized within a unified analytical framework. This framework should facilitate continuous analysis, drawing insights from both internal corporate data and external market dynamics.
The best practices of leading companies highlight that all employees, whether directly or indirectly involved, play a crucial role in the collection and interpretation of competitive intelligence. This collaborative approach ensures a continuous exchange of information across various levels of the organization.
As a result, business intelligence has become an essential pillar of modern management structures. In an increasingly dynamic and volatile competitive environment, it serves as a fundamental driver of organizational success. However, the true effectiveness of this function depends largely on the extent to which top management understands its strategic importance and integrates it seamlessly into the company’s overall framework.
Description
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Keywords
Citation
"Economics and Business", №2, Volume XVII, 2025