Are Your Competitors Actually Company Stakeholders?

First, a quick definition: Stakeholders are people and groups that can directly or indirectly affect a company's performance OR that are directly or indirectly affected by a company's performance.

The usual suspects listed as stakeholders are: customers, employees/managers, owners/shareholders, government (regulators etc), members of the media, securities analysts, suppliers, special interest groups, and labor groups.

The idea is that when you make a company decision, you should consider how that decision will influence or be influenced by your stakeholders. Makes sense, especially in this age of increasing transparency and with stakeholders finding new ways to make sure their voices are heard online and off-line.

Now consider whether your list should include competitors. Every company's performance is affected by what its competitors do...and every company affects, however indirectly, the performance of its competitors.

Of course it's illegal to cooperate and collaborate with competitors in the case of decisions such as pricing, and I'm definitely not advocating such actions.

Yet smart marketers do think about probable competitive responses to actions such as introducing a new product, changing prices, changing channel relationships, changing suppliers, and so on. Clearly, the point is not to satisfy the needs of competitors but to understand how competitors act and react to your company's moves. Remember, the best competitors are thinking about how your firm will react to its new products and channel moves--ideally, looking ahead two or three moves to achieve goals such as growing sales and share to overtake the market leader.

For a 2015 update on this topic, read about Target's withdrawal in Canada here.

IMHO, it makes sense to consider competitors to be stakeholders of your company, for these reasons:

1. A healthy industry is in the best interest of all stakeholders--including customers and suppliers. As a customer, I once doubted the wisdom of this concept. But in recent years, with so many companies bleeding red ink and other big, established firms gone forever, I've come to realize that an ailing industry actually reduces my choices as a buyer. That's not a good thing. Also, desperate industries do desperate things, like cutting corners on quality and service, ultimately hurting customers.
   
2. A little respect goes a long way. Viewing competitors as stakeholders is a way of acknowledging their ability to affect your performance--making it more likely that you won't underestimate them. That little upstart start-up firm you might brush off as a flash-in-the-pan could grow up to be the next Zappos or Netflix. That lumbering corp giant seemingly ready for the scrapheap might pull off a stunning turnaround and eat your lunch tomorrow. Accord competitors the respect of stakeholders, and you won't be tempted to dismiss them.

What do you think? Should competitors be considered stakeholders? Read my UPDATE to this post here.