What is the purpose of conducting competitive analysis?

The purpose of conducting competitive analysis is primarily to evaluate competitors' strengths and weaknesses. This type of analysis provides valuable insights into the competitive landscape of a market. By understanding what competitors do well and where they may fall short, a business can better position itself strategically.

Analyzing competitors allows a company to identify opportunities for differentiation, areas where it can gain a competitive advantage, and potential threats from existing rivals. This knowledge is crucial for making informed decisions regarding product development, marketing strategies, pricing, and overall business positioning in the marketplace.

In contrast, focusing solely on internal processes, as suggested by one of the alternatives, would neglect the external market dynamics that are essential for strategic planning. Eliminating all competition is not a feasible or realistic goal in a market economy, as competition often drives innovation and improvement. Lastly, generating random market strategies would not be beneficial; a systematic analysis is necessary to create effective and targeted strategies that respond to actual market conditions.