The Importance of Due Diligence

Article Published:Sep 26

As a major player in the investigations and intelligence industry, my company is often requested by clients to provide comprehensive due diligence reports on other companies. Normally, this is an exercise done as a result of a desire for one company to buy out another or, done as an insurance measure before entering into a trade agreement or contract.

However, I often find myself thinking, why do companies not run more competitive intelligence exercises on their competitors? Think about it … how do you know how your target market sees you versus your opposition, or what new investments your competitors have acquired that may impact directly on your share of the market? Is it that people view the subject as ‘taboo’ or, perhaps, feel it’s ‘unfair’ business practice? If so, why?

Take two international rugby teams before they face each other – coaching staff from both teams would have spent countless hours studying the opposition’s strengths and weaknesses. Every little detail of each player is carefully analysed so that the game plans and tactical strategies can be developed and employed on the field of play. Let’s not forget, professional sport is all about money and, therefore, it is a business.

So, what is the difference between how sports teams analyse their opposition compared to how your company does it? It is fair, it is beneficial and, as long as it’s done legally, it can mean the difference between “winning and losing”.

Here are ten things we would suggest you should know about your competitors; please keep in mind that the list is extensive and, therefore, many small to medium sized businesses will not have the budget to track each of these areas, especially for more than one competitor. We, at D&K Management Consultants cc, suggest that you ask yourself which of these points is most central to competitive advantage in your business sector. Then choose one to three points that are of real importance and interest and mandate a report on these. My staff will assist you to decide on which points are of highest value to you prior to the commencement of the project.

1.Customer Perceptions

What do customers think of competitors relative to what they think of you? Also known as market reputation.

2.Product Launches

What new products or services have your competitors launched or are planning to launch? How will this affect what you are offering or doing?

3.New Distribution Channels

How are your competitors getting their products or services out to their customers? Would your customers prefer theirs over yours?

4.Asset Acquisitions

What property, equipment, etc. have your competitors acquired and how are they planning to use it? Would this compromise your delivery/service in any way?

5.Marketing Strategies

How are your competitors promoting themselves and how is the target market responding to this?

6.Price

How do your prices compare to theirs? What value-added incentives do they offer compared to what you are offering?

7.Partnerships

Has your competitors entered into or planning to enter into partnerships with other entities? What would the effect of this partnership be on your business?

8.Financial Performance

Are your competitors experiencing sustained growth, improved profits or are they on a downward trend? What does this mean for you?

9.People Assets

What new hires have they made or what recent people have they lost and why?

10.Process Changes

Have your competitors changed the way they do things? What effect will this have on your business?

Important:

Much like the rugby teams I referred to earlier, accurate information on your competitors will, most certainly, help you to plan and strategise but, unless you start out by clearly understanding what it is you want to achieve from this exercise, the information is unlikely to be useful.

Ensure that you sit with the investigator doing the actual work and clearly define the objectives and parameters for each project.

Please call us at any time to discuss how we are able to assist you in becoming more informed.

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