Great firms engage in rigorous competitor analysis. They try to understand their rivals' goals, strategies, capabilities, and weaknesses. Beyond that, I believe that good competitor analysis entails an understanding of your competitor's time horizon. Are they managing the business quarter to quarter, so as to meet Wall Street expectations? Or, does your rival have a long term orientation? Are they willing to make significant investments today with payoffs expected well down the road?
Why does the time horizon of competitors matter? Suppose that your small firm is contemplating entering a new product market segment. You are trying to anticipate the incumbents' response to your entry. Will they retaliate aggressively when you try to take share? If they are very short-term oriented, they may not want to hurt their margins substantially so as to attack a small new entrant. On other hand, if they are very long term oriented, they might bite the bullet today to try to retain market share and deter future entrants.
Similarly, suppose that technological change is taking place in your industry, and firms are examining an unproven new technology with uncertain payoffs. A rival with a long term orientation may be willing to make a big, bold bet, knowing that the payoff may not come for a number of years. A rival who is focused on next quarter may hold off on such risky investments.