Understanding your sector
Understanding your sector

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1 Identifying the different elements within your sector

No organisation exists within a vacuum with the luxury of being able to operate without regard for its immediate business environment. For example, a supermarket that pays no attention to the prices being charged by a competitor a mile away will not thrive for very long. Similarly, a manufacturing company that continues to purchase its raw materials from a supplier without comparing price and quality with those from another source might find that its profit margins and reputation suffer as a result.

Organisations, therefore, have to pay close attention to a range of immediate business realities or they risk failure. This is also true of both public and private sector organisations, although the former might be more protected from the worst effects of the market by the backing of their government. In the UK, many public sector functions are carried out by private contractors, and fulfilling a contract while making a profit is crucial if they are not to lose out in the next bidding cycle.

There are three main areas that organisations need to constantly appraise when assessing their relative business health in the marketplace.

  • Customers: knowing its customers is vital to an organisation’s welfare, and getting close to customers, finding out what they want and generating new markets is crucial.
  • Competitors: businesses are always seeking to gain a competitive edge over their rivals and understanding their practices and operations is fundamental to this.
  • Suppliers: all organisations rely on obtaining resources at a reasonable price, so using these effectively, and getting the right supply chain, are important elements in this process.

The following short activity will help you to think about these different elements in relation to your own organisation.

Activity 1 Identifying customers, competitors and suppliers

Timing: Allow about 10 minutes

Consider your own organisation, or perhaps a previous employer or one that you would like to work for, and think about the three elements – customers, competitors and suppliers. Try to identify as many different examples of each and list them in the table below. A couple of examples – a familiar name and an example of a small local business – have been provided to start you off.

Table 1 Identifying customers, competitors and suppliers
Organisation Customers Competitors Suppliers

Tesco

(supermarket)

Local residents

Local businesses

Sainsbury’s

Asda

Morrisons

Lidl

Aldi

Farms

Food manufacturers

Clothing manufacturers

Furnishers

Service providers – plumbers, electricians, etc.

John Smith (solicitors)

Local residents

Local businesses

Other local law practices

Larger regional law practices

Stationery suppliers

IT suppliers

Furniture suppliers

Caterers

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Comment

You might be surprised by the range of people and organisations with which an individual business – even a small one – typically engages. This might make you think about how an organisation manages its relationships with its customers, competitors and suppliers, and how it maintains its reputation.

Having identified these three important elements, you will now examine each in turn, beginning with customers.

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