Comparative Study of Competitive Intelligence Practices between Two Retail Banks in Brazil and South Africa

Using competitive intelligence (CI) can help developing countries to increase their competitiveness. This paper compares the CI activities between two retail banks in Brazil and South Africa. An e-mail survey in a sample of 2550 employees in a retail bank in Brazil and 847 employees in a retail bank in South Africa was carried out in which CI practices were measured. Respondents in both countries were not very effective to conduct effective CI analysis. Respondents from Brazil consider information on operational risks as the most important while for South African respondents the most important information was on changing regulatory requirements. Although there is a culture of competitiveness in both organizations, it is recommended that if they want to compete effectively in the global economy, they should create CI awareness by organizing CI training sessions for employees.


Introduction
With the increased volatility of the business environment, companies rely on early detection of environmental changes so that they may respond with appropriate counter measures.Since countries and companies require time to adapt to the changing environment they should have the ability to anticipate changes and imagine the consequences of alternative responses to those changes.Competitive intelligence (CI) is a strategic tool to facilitate the identification of potential opportunities and threats.Because CI improves decision-making, it helps a company to meet or exceed its objectives and business goals.According to Waheeduzzaman (2002: 13) the ultimate goal of competitiveness is to improve the standard of living or real income of the citizens of a country.Since companies actually compete in the global economy, many authors are of the opinion that when studying competitiveness, the focus should be on companies.The economic success of a country depends on its capacity to apply activities which create a competitive advantage, its ability to create an Available for free online at https://ojs.hh.se/Journal of Intelligence Studies in Business 2 (2013) 30-39 environment of transformation and progress, and its capacity to innovate (Canongia, 2006: 58).CI has long been recognised as a strategic management tool that could enhance competitiveness.This perception of CI as a strategic tool is not exclusive to developed countries.CI is expected to play a key developmental role in developing countries as well.The need to enhance companies' and by extension, countries' competitiveness has grown rapidly.CI is essential, and will increasingly be a challenge in the years to come, especially for emerging economies (Canongia, 2006: 59).

Problem Investigated
Little research has been done on the application of CI in developing countries (Dou, n.d.;Dou, Dou & Manullang, 2005;Du Toit, 2003: 112) and the purpose of this paper is to compare the current situation with regard to CI processes between two retail banks in Brazil and South Africa.CI is always influenced by country-specific environmental factors and a questionnaire survey was conducted to compare CI activities in the two organisations.Research questions: • Why is CI important for organisations in developing countries?• What is the level of importance attached to CI in the two organisations?• What information on the external environment is important for the organisations to get a competitive advantage?• What CI techniques do the organisations use to analyse information?

Competitive Intelligence
De Pelsmacker, Muller, Viviers, Saayman, Cuyvers, and Jegers (2005: 606) stated that "CI is actionable recommendations arising from a systematic process involving planning, gathering, analysing and disseminating information on the external environment for opportunities, or developments that have the potential to affect a company's or country's competitive situation".Calof and Skinner's (1999: 24) view is closely related; they state that "at its most basic description, intelligence is analysed information".CI is also defined as "the transformation of raw information regarding the competitive external environment into intelligence to support business decisions" (Hughes, 2005: 5)."Competitive intelligence focuses predominantly on qualitative research based on a well-developed process and relying also on a human source network" (Fouche, 2006: 18).These definitions revealed CI to be a tool that transforms information into actionable intelligence that, if used in strategic decisionmaking, could enhance an organisation's competitiveness.For the purpose of this research, CI will be defined as an ongoing, systematic evaluation of the external environment for opportunities, threats and developments that could have an impact on the organisation and influence proactive decision-making.CI is the process of developing actionable foresight regarding competitive dynamics and non-market factors that can be used to enhance competitive advantage.CI is concerned with the techniques used to select and filter information from a variety of sources, to interpret and analyse it, to communicate it to the right people and to use it effectively (Xu, Liao, Li & Song, 2011:745).Competitive dynamics refers to the evolution of a company's industry and the moves and countermoves of competitors, suppliers, customers, alliance partners and potential competitors (Shih, Liu. & Hsu, 2010:2885).Nonmarket factors such as government regulation, tariffs and the culture of a country impact competitive dynamics but are not suppliers of products or services to the industry (Prescot, 1999:40).CI uses legally and ethically public sources to assess the strengths and weaknesses of a company's competitors.

CI in Developing Countries
CI management is a well-established function in organisations in developed countries, because managers realise that if they do not monitor the actions and activities of their competitors, their strategic plans will fail.However, organisations in developing countries continue to be surprised by undesirable changes in the environment and it appears that the advances in managing intelligence are as yet largely unknown in these countries (Nasri, 2011:58).Kahaner (1996:61) states that CI has become the 'latest weapon in the world war of economics', in which many emerging economies view CI as a way to win economic wars against larger, more industrialised countries.By using their wits instead of weapons, these countries are able to turn raw information into usable intelligence to further their economic status (Calof & Smith, 2010: 38).According to Calof and Skinner (1999:30) a country will under-perform without an appropriate CI infrastructure and he quotes Prescott and Gibbons by stating that "the key question is not whether governments should play a role in a company's CI efforts but what should be the purposes and methods used by government."Countries such as France, Sweden, Japan and Canada have recognized the value of government and industry working jointly in the development of an intelligence culture (Calof & Skinner, 1999: 24).Hawkins (2004:42) and Nasri (2011:53) emphasise that companies in developing countries should use formal processes of collecting, analysing and disseminating intelligence to successfully compete in the global economy.
The new paradigm in development economics is based on self-analysis, self-reliance and selfrenewal, which would seem to necessitate a development-orientated intelligence policy in a country.Currently most developing countries are weakly integrated with the global economy.For organisations to compete globally they are facing many challenges since consumers use the Internet to compare products and prices and they need to stay ahead of their competitors (Huggins, 2010:640).If this situation is to change, major infrastructural investment in information systems and services, as well as technical training, is required.Utilising CI will enable organisations in developing countries to gain a greater market share and to compete successfully against international competitors (Pellissier & Kruger, 2011).

CI in Brazil
The focus of this paper is the comparison between CI practices of a Brazilian and a South African retail bank.Substantial political changes in Brazil since 1990 have led to greater information exchange and the Brazilian society has been evolving into a knowledge society dealing with political changes, globalisation, new technologies, hyper competition and new global competitors, such as China (Davis, 2007:1).Brazil is among the world's fastest-growing economies and the 9th largest economy in the world (Datamonitor, 2012).Like South Africa is seen as the gateway to Africa, Brazil is the gateway to South America (Libis, 2005:237).Brazil offers limited infrastructure to businesses and has limited energy resources but the government is trying to establish a positive business environment that stimulates business growth (Libis, 2005:239).Prior to 1995 the oppressive government was a barrier to information sharing among businesses and Brazil does not have a CI culture (Libis, 2005:241) but CI plays an increasing important role in Brazil.Large firms and international companies with head offices outside Brazil apply CI practices.A country's environment supports or threatens economic growth through its policies.A country like Brazil manages its competitive environment by relying on assets (land, people and natural resources) but is not necessarily competitive (Garelli, 2003).The Brazilian government and Brazilian companies have realised competing in a global economy requires a strong vision of what exists outside the country's borders.As a result, CI is becoming more accepted both as a profession and as an important business function.CI was introduced in Brazil in the mid 1990s as an initiative of the National Institute of Technology.A CI interest group, the Competitive Intelligence Society of Brazil (ABRAIC) was established and is sponsored by the government and industry.The growing market for CI created the development of consulting activities.Various CI tools were developed (for example a national database of science competencies) (Dou).

CI in South Africa
The business environment is highly complex in South Africa because of factors such as the country's unique history, diversity, geography, political and institutional landscape.Companies tend to be less dynamic and more resistant to change, compared to companies in developed countries.South Africa faces new socioeconomic challenges and research capacity needs to be developed in the context of the global economy.Before 1994 South Africa was isolated from the rest of the world as a result of the apartheid regime and this inhibited competitiveness (Viviers & Muller, 2004: 54).The use of CI before 1994 has mostly negative connotations since South African intelligence activities were mostly pursued by state institutions.Within a short period of time after the democratic elections in South Africa in April 1994, the international market opened up.Many industries were deregulated and privatised and there was a large construction boom due to the 2010 Soccer World Cup.To survive many South African companies needed to extensively globalise their business activities to exploit country differences and worldwide markets.This prompted companies to become more sensitive to external environments which includes monitoring political/legal, economic, technological, sociocultural and industry forces such as competitors, customers and suppliers.Currently South Africa as a net exporter of strategic minerals and the 'gateway' to Africa has an internal environment ideally suited to the use of CI by companies to gain the competitive edge in a developing domestic economy and a challenging external environment.CI is therefore enjoying increased prominence in South Africa.South Africa's lack of global competitiveness, according to various competitiveness indices (Blanke, 2007;IMD, 2012: 704), has over the past few years become a contentious issue with the main focus on the inability of the country to escape its competitiveness trap.Competitiveness concerns factors such as skills, higher education and training, efficient markets, the ability to harness the benefits of existing technologies and business sophistication (Blanke, 2007).One of the most prominent indices include the IMD's (IMD, 2012:713) World Competitiveness Yearbook, which analyses and ranks the ability of nations to create and maintain an environment that sustains the competitiveness of enterprises.Countries that consistently rank high in these indices are the US, Switzerland, Denmark, Sweden, Germany, Finland and Singapore (Blanke, 2007).
Common denominators of these leading countries are quality education and high spending on research and development (Blanke, 2007).In contrast to leading competitors, South Africa not only fails to improve its competitive position but its competitiveness is actually deteriorating.Although CI is a relatively new concept in South Africa, the competitive environment of South African companies is vast, competitors are numerous and technological advances staggering.With the recognition that competitive challenges and risks will increase significantly in the future, there is an increasing need to monitor the competitive landscape continuously to remain competitive.Most companies recognise the need to improve the quality and integration of their CI, but may seem unsure of how to adopt more effective, integrated and systematic approaches to CI. Multinational companies in South Africa face unique challenges as far as CI are concerned (Viviers, Muller & Du Toit, 2005:246).Many multinational corporations have their African head offices in South Africa and have to provide strategic level intelligence to their boards of directors concerning their African operations (Odendaal, 2004:48).Research by Viviers, Saayman, Calof and Muller (2002:30) found that the largest companies in South Africa have adopted CI in a comprehensive manner, including designing and setting up structures and appointing a dedicated CI staff.These are, however, few and limited to the largest companies in South Africa or local subsidiaries of multinationals based elsewhere.Research by Du Toit (2003:118) found that only 26% of manufacturing organisations have CI units, but that 76% of the organisations have a CI system.An interesting observation about the CI practices of South African companies is that the more companies rely on exports and interaction with the international market, the more they are inclined to adopt CI and the greater their understanding of the role and benefits of CI as a strategic business tool (Viviers & Muller, 2004).

Research methodology
In spite of an increasing interest in CI in both countries, the state of CI in Brazil and South Africa remains fragmented for decision makers who need reliable information to deploy innovative policies for economic development.The banking market in Brazil is dynamic and competitive despite involvement of the state with foreign banks gaining more presence.Modernisation of the financial system in 1988 has led to the creation of multipurpose banks and foreign participation in the commercial banking system (Datamonitor, 2012).Brazil has the largest financial system in South America and the banking industry is diversified and competitive.The 200 public and private commercial banks have adopted international best practices (Datamonitor, 2012).The top ten retail banks in Brazil are ABN AMRO, Banco do Brasil, Bradesco, HSBC, Itaú CEF, Safra, Santander, Unibanco and Votorantim (Datamonitor, 2012).Since 1990 the South African banking industry has gone through substantial changes.New bank legislation has been introduced and foreign banks have entered the domestic market (Heppes & Du Toit, 2009: 60).South African retail banks operate in a very dynamic and complex competitive environment and the five major banking groups (ABSA, FirstRand, Investec, Nedbank and Standard) control 89.4 per cent of total banking assets in South Africa.About 200 public and private commercial banks have adopted international best practices (Datamonitor, 2012).
The question is to what extent these differences in economic structure in general and banking activities in particular will have an impact on CI practices in retail bank activities in Brazil and South Africa.The purpose of the empirical survey was to investigate the current situation with regard to CI practices in a retail bank in Brazil and a retail bank in South Africa.The research question guided the design of the research in terms of what data were needed to answer the question, where the data were, how data were to be collected and how they were to be analysed.The study follows a quantitative research methodology.Employees in the two retail banks were asked about their practices of competitive intelligence.The measuring instrument was a questionnaire which was compiled which was compiled to cover the theoretical constructs of competitive intelligence.The questionnaire was divided into three sections.Section A focused on biographical data, Section B on the competitive environment and Section C on CI practices.The questionnaire used in this study is based on three questionnaires used in other empirical CI surveys (Heppes & Du Toit (2009: 48-66), Pellissier andKruger (2011) andDu Toit andStrauss (2010: 17-32)).
Of the sample frame of 110 000 employees in Brazil and 31 000 employees in South Africa a total of 2550 employees in Brazil and 847 employees in South Africa were randomly drawn by computer from the two retail bank's employee databases to form the sample of this study.The questionnaire was e-mailed to the whole sample with a cover letter explaining the purpose of the research and its legitimacy.The data collection took place over a period of two months and during this period, several reminders were sent to the participants on a weekly basis.Of the sample of 2550 employees in Brazil, 615 employees (24.1%) returned completed questionnaires and of the sample of 847 employees in South Africa, 346 respondents (40.85%) returned completed questionnaires.The credibility of the research was measured by the Cronbach Alpha Coefficient and an overall coefficient of 78, 5 per cent was calculated for the results obtained.This is considered to be in the range of scores considered as being reliable.

Biographical data
In Brazil the gender of the respondents was mostly female (54%) while in South Africa the majority of the respondents were male (69.5%).The length of employment differs between the two countries since the majority of the respondents in Brazil (58%) have been employed by their current employer ten years or more while .themajority of the respondents in South Africa (47.5%) have worked for their current employer for less than five years.In Brazil 61.1% (376) of the respondents were on top management level with 38.9% ( 239) on middle management level while in South Africa 68.8% (238) of the respondents were on top management level with 31.2% (108) on middle management level.This implies that more concern for CI in the South African organisation lies with top management.

Strategy to manage competitive environment
In trying to establish whether there was a strategy in place to manage the competitive environment, 94,1% (579) of the respondents in Brazil and 89% (308) of the respondents in South Africa answered in the affirmative.It is interesting to note that 64% (394) of respondents in Brazil and 70% (242) of respondents in South Africa indicated that CI was always a key-component of company strategy and is used as input to the organisation's annual strategic plan.This means that both organisations are competitor oriented and understand the significance of having a strategy in place to deal with competition.Such a strategy may encourage innovation and alliance with customers, which would lead to a competitive advantage.Prescot (1999: 50) and Calof and Smith (2010: 37) concur with the above and affirms that having a strategy in place would have a positive impact on the strategic direction of an organisation.

Competitive situation
According to Table 1 both organisations appear to be in control of changes in the business environment with respondents in Brazil coping slightly better with changes.This correlates with Kahaner (1996:93) who stated that organisations that are alert of changes in the environment will be least surprised and negatively affected when there are changes in their business environment.In assessing the perceived level of competition 64% (394) of the respondents in Brazil and 59.8% (207) of the respondents in South Africa are of the opinion that it is very intense while 36% (221) of the respondents in Brazil and 40.2% (139) of the respondents in South Africa believe that competition is intense.None of the respondents claimed that competition is not intense.

Information needs
Respondents were requested to indicate the frequency in which they require information on key elements of the competitive environment in which banks operate (see Table 2).The actual number of responses is shown in brackets below the percentage value.On average respondents in both countries required updates to all listed classes of information on a monthly basis.Information types for which updates were required less frequently were those with a longer term implications for the organisation, while those information types for which updates were required more frequently were those which require response from the organisation as/when they occur.The South African bank requires information on changing regulatory requirements more frequently than their Brazilian colleagues while information on operational risks is required more frequently in Brazil.This supports the finding by Pellissier and Kruger (2011) that South African organisations are cognisant of new government information legislation that impacts their organisation.Information on skills development is important for both organisations.

CI analytical techniques used
A set of five questions sought to establish the techniques used to analyse information by the two organisations.According to Figure 1 the three most popular techniques used by the respondents are SWOT analysis, competitor analysis and industry analysis.Surprisingly best practices and scenario analysis are seldom used.A SWOT analysis is an important technique for both organisations since it may provide a comparison between the organisation and their competitors.Overall, there appears to be a lack of the used of sophisticated techniques such as scenario analysis and best practices by both organisations.The Brazilian organisation mostly used SWOT analysis while the most popular technique used by the South African organisation is industry analysis.This correlates with the finding by Viviers et al. (2002:36) that South African organisations spend too much time collecting information and too little time on adding value to information by analysing it.

Conclusion and Recommendations
Using data from a CI survey sent to a retail bank in Brazil and a retail bank in South Africa the author has tried to establish whether there are significant differences between CI activities in retail banks in these two countries.To a certain extent the CI practices of the Brazilian and South African retail banks are highly comparable.Both organisations are competitor oriented and understand the significance of having a strategy in place to deal with competition while both seldom use sophisticated analysis techniques to analyse the information.Within both retail banks there are definite elements of CI and therefore the proposal is to develop the existing capabilities further in accordance with best practices.However, there are some remarkable and significant differences.The length of employment differs and more respondents in South Africa are on top management level.Respondents in the bank in Brazil cope slightly better with changes in the external environment.Information on the changing regulatory environment is more important for the South African organisation with information on operational risks more important for the Brazilian organisation.
An obvious limitation of the study is that it utilised a sample of employees in one company in Brazil and one company in South Africa.The findings therefore cannot be generalised beyond the sample that took part in the survey.More comprehensive research is still needed to clarify all the underlying dimensions of CI to enhance understanding of these issues.This is an exploratory study aimed at determining the application of competitive intelligence in two retail banks in Brazil and South Africa.These limitations leave scope for further empirical research.
As Brazil and South Africa become more integrated into the global economy it stands to reason that the global economy will have more of an impact on the countries' economy.To this end it has become more crucial to monitor global events and trends and it is very important for both organisations to develop an integrated CI culture.CI analyses not just the environment but competitors and markets as well.Therefore understanding the direction that competitors are moving to in the future is key to be able to counteract them timeously for both organisations.Keeping abreast of domestic and international market trends and their potential impact on the organisation is vital.Trend tracking needs to monitor the impact of not only product changes but also organisational changes such as future mergers and dissolutions.It is also recommended that both organisations should enhance a CI culture by creating CI awareness among employees and provide CI training sessions for new employees.
It is concluded that the purpose of CI is to collect information about competitors to provide benchmarks, avoid surprises and identify opportunities.The case for CI to play a role in developing countries is strong, but not much literature is available on the application of CI in these countries.As discussed in this article, the two retail banks in Brazil and South Africa are already carrying out CI practices and the importance as well as the recognition of CI as a strategic instrument will inevitably increase in these two countries in the coming decade.In the light of the importance of CI in developing countries the hope is expressed that companies in Brazil and South Africa will realise that CI is not only a system to improve the decision making in companies and regions but that it is an important lever to facilitate the industrial development and innovation in developing countries.
In both organisations the opportunity exists to take the current CI capabilities from predominantly defensive (avoiding surprises) and passive intelligence (benchmarking) to offensive intelligence with a primary goal of identifying opportunities.Areas for future research in both organisations should focus on a stakeholder analysis to determine the key intelligence users.Critical success factors for CI need to be identified.This includes issues such as senior management involvement, a focus on what is important to the organisations, the maintenance of ethical standards and the development of expertise in analysis and communication.

Table 1 .
Coping with changes in business environment

Table 2 .
Information needs