Nvidia, a company with a significant market share in graphics cards for gamers, will need to outmaneuver AMD, Intel, and Apple to retain its market share in the future. Knowing which companies are making moves in your industry matters, and companies often use competitor analysis to explore this information. Ultimately, the results will affect your marketing strategy, operations, hiring, and more. But, importantly, it can also impact your legal risk.
In this 5 Tip Friday, we’re sharing:
5 things you need to know about your competitors to manage risk
1. Who are your competitors?
Your competitors are the brands that provide products or services that are similar enough to your company’s product(s)/service(s) in terms of quality, price point, and availability to impact your sales. In essence, your competition provides products or services that your customers may choose instead of yours.
If your company produces $80 jeans, then a company that produces $450 jeans (for instance) is likely not a competitor. Customers who are purchasing luxury items, like $450 jeans, would have a very different profile to those purchasing $80 jeans.
Generally, it can be helpful to define your competition broadly. This helps you gather more information, which can help you develop your corporate strategy, improve your understanding of your customers, and perform a more thorough SWOT analysis. But this knowledge can also help you avoid common legal compliance issues within your industry. We’ll discuss these in the tips below.
2. What information is publicly available about your competitors?
When you undertake an analysis of your competitors, you can consider all the information that is publicly available about them. Consider:
- Which keywords are they targeting with their online search ads?
- Are they advertising on social media? If so, what do you guess their targeted demographics are?
- What does their website reveal about their corporate strategy?
- Who are their suppliers? (You may be able to work this out based on the components/products being sold.)
- Which corporate structure did they choose?
- What does their management team look like?
- Do their press releases or financial reports reveal anything?
- The list goes on.
You are permitted to act based on any information that is publicly available.
3. What intellectual property is owned by your competitors?
Knowing what intellectual property is owned by your competitors and how it is protected is important in managing your legal risk. Generally speaking, if a product is patented or copyrighted, the information about producing the product might be publicly available, but it has protection that allows the owner to sue where their work is reproduced. In these cases, you cannot reproduce that product without written permission – even if you independently ‘invent’ it without looking at the patent or copyright material.
Again, it’s important that you don’t rely on confidential information supplied by former employees (or anyone else who might be subject to a prior employment agreement or an NDA, including, suppliers, manufacturers, etc.) when you work to replicate their product.
What corporate growth strategies are your competitors taking advantage of?
Many companies will release details to the press if they are taking part in a merger or other major acquisition or sale or if they receive significant financing through angel investors, venture capital or private equity firms, or other accelerators or incubators. By keeping track of when, how, how much, and what type of investment your competitors are attracting, you are in a better place to plan your growth strategy.
Legally, this is important because your corporate structure and aspects of your corporate governance can vary based on your growth strategy. Knowing this information going in gives you a better chance of getting your legal strategy right the first time around.
Which lawyers represent your competitors?
Law firms are not allowed to represent opposing parties in litigation. But the same restrictions don’t apply for law firms undertaking transactional, commercial, corporate, or other legal services. This means that, unless you’re seeking legal advice for a claim made against you by one of your competitors, you can have the same legal representation – and there are advantages to this.
It is important to note that your legal representation cannot share information about your competitors with you. That is not the advantage you gain by choosing the same lawyers (or a law firm offering substantially similar services). Instead, you know that your law firm has experience navigating the challenges you will face in your location and industry. Choosing a law firm with relevant experience and expertise can ensure your legal issues are managed effectively and efficiently – and can help you keep your legal costs down (read more on that here).
This information won’t often be publicly available, but you may be able to either find out or work it out. If you have a good relationship with your competitors, you can simply ask who represents them. They might be more than happy to share that information! If you don’t feel comfortable asking, review the websites of potential law firms and see whether they have testimonials from your competitors or other companies in your industry. You can also explore the websites to see if they have any other specific references to your industry.
If you need assistance navigating corporate or intellectual property law or if you have a topic you’d like us to cover in a future 5 Tip Friday article, reach out. We’re here to help!
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.