Competitive Threats

Competitive Threats

Competitive Threats Jonathan Poland

A competitive threat is a potential source of competition that has not yet materialized, but has the potential to do so in the future. It is a risk of competition that can be evaluated based on its probability and potential impact. Like any other risk, a competitive threat can be managed or mitigated through various strategies and tactics.

Some common ways to address competitive threats include keeping a close eye on the market and staying informed about potential new entrants or emerging technologies that could disrupt the industry, continuously improving and innovating to maintain a competitive edge, and building strong relationships with customers to foster loyalty and reduce the likelihood of them switching to a competitor.

In summary, a competitive threat is a potential source of competition that has not yet materialized, but has the potential to do so in the future. It can be managed and mitigated through various strategies and tactics, such as staying informed about market developments, continuously improving and innovating, and building strong relationships with customers. The following are the basic types of competitive threat.

New Competition
The potential for new firms to compete for your customers. This includes startups and established firms that may expand into your market.

New Products
Improvements to the products and services of competitors. For example, a high speed train company that launches a safer, faster, easier to operate and more efficient model may suddenly gain significant market share.

New Business Models
A new way of capturing value that competes with your business model. For example, streaming media services that can be accessed over an internet connection as opposed to being tied to the content available from your local telecom company.

The ability of competition in different markets to attract your customers. For example, restaurants may take business from supermarkets if they can convince customers to eat out every night.

The potential for a price war. For example, an airline that is charging $800 for a flight suddenly drops the price to $500 sparking reduced prices from competitors until the route is unprofitable for everyone.

Customer Experience
Improvements to customer experience. For example, the four major airlines in a nation all have reasonably low customer satisfaction. One gets a new CEO and suddenly their customer satisfaction is improving every quarter. The other three airlines start having to discount more tickets to sell seats as customers begin to prefer the better customer experience of the improving airline.

There are two nightclubs in a college town with both spending $500 a week on promotion. Suddenly, one starts spending $5000 a week on promotion to become the more popular spot. This results in an escalating competitive battle that damages both businesses.

The potential for the competition to recruit your most valuable employees.

Intellectual Property
The potential for the competition to develop superior intellectual property such as trade secrets and patents that allow them to outperform you.

Learn More
Performance Objectives Jonathan Poland

Performance Objectives

Performance objectives are goals that individuals set for themselves on a regular basis, such as quarterly, semi-annually, or annually. These…

Corporate Identity Jonathan Poland

Corporate Identity

Corporate identity is the visual representation of a company’s brand and values. It includes elements such as a company’s logo,…

Analytical Skills Jonathan Poland

Analytical Skills

Analytical skills are the abilities, knowledge, and experience related to the gathering, processing, organizing, and interpreting of information. These skills…

Examples of an Argument Jonathan Poland

Examples of an Argument

An argument is a series of statements or reasons that support a particular position or viewpoint. This position can be…

Aftermarket Jonathan Poland


The aftermarket refers to the market for products and services that are used to upgrade, customize, repair, or maintain durable…

Recruiting Jonathan Poland


Recruiting refers to the process of attracting, screening, and selecting qualified candidates for employment. This process is essential for any…

Risk Culture Jonathan Poland

Risk Culture

Risk culture refers to the values, attitudes, and behaviors related to risk management that are inherent in the culture of…

What is Avoidance? Jonathan Poland

What is Avoidance?

Avoidance is the act of avoiding something that one finds unpleasant or inconvenient. This can involve a variety of different…

Good Customer Service Jonathan Poland

Good Customer Service

Good customer service is a service experience that goes above and beyond to meet the needs and expectations of customers,…

Search →

There are two ways

to work with me…

for business

Key Bridge

“A platform for building better assets…”

for investing

Wall Street Pig

“Unfiltered commentary across the capital markets…”