Assumptions Gaining an understanding of a competitor's assumptions about itself and other firms in the industry can be quite beneficial to firm. When a these assumptions are not accurate. they can create"blind spots" that make the competitor vulnerable. If a competitor believes. for example, that it has unusually strong customer loyalty. it be vulnerable to competitive may moves such as price cuts and new product introductions. Similarly. a firm can hold inaccurate assumptions about the industry its environment or automobile firms. for example. had long felt that the demand for small cars was based strictly on economics: this belief made them erroneous vulnerable to foreign competitors whose cars offered more luxury components and were perceived to be of higher quality