After a corporate competitor took advantage of public tours of a Kellogg Co. plant to discover what makes the firm's products snap, crackle and pop, the $2.6 billion breakfast-cereal company decided to close the doors.

Tuesday, the inventor of the corn flake will halt its 80-year-old tradition of public tours. Kellogg officials concluded their tours were giving the competition an edge on making new products for the international market, where approximately one-third of Kellogg's annual sales are made.

"They were, in fact, able to begin manufacturing operations to make competitive ready-to-eat products as a result of visiting the plant," said company spokesman Joseph M. Stewart. "This is a very competitive industry, and we will no longer make technology available for public review."

The food maker that capitalized on Kellogg Co. technology is only one of a battalion of firms, from high-technology to financial services companies, that are turning to old-fashioned gum-shoe techniques and innovative investigations in the face of intense domestic competition, mounting foreign competition and rapidly changing technology.

"We are doing everything we can to understand the competition from a technical and business standpoint -- everything that is ethical," said Ed Finan, the chief engineer at Xerox Corp.

Finan, who oversees competitive intelligence activities for the copier division, said the market for everything from typewriters to copiers has become much more competitive because of Japanese and European inroads into this market, coupled with domestic innovation.

"Technology is advancing so rapidly and the pressure on costs is getting so great . . . I don't think you can stay competitive in this environment" without employing a little corporate intelligence, he said.

Xerox, for example, loves seeing how things tick, so it rips them apart.

The company, which eyes firms such as Eastman Kodak Co. and the Japanese firms of Canon and Minolta, gutted Canon's PC20 copier to see how it works.

"We maintain a completely equipped . . . laboratory facility; we bring in all new products and we tear these apart and dig into them," Finan said.

Many companies are forming complete corporate-sleuth departments, have trained company personnel to perform research functions, or use a combination of in-house and outside sources to investigate their competitors. Some of the companies willing to admit it include Xerox Corp., GTE Corp., General Electric Co., General Motors, IBM Corp. and AT&T.

In a recent survey, Information Data Search Inc. of Cambridge, Mass., found that, out of 25 Fortune 500 companies surveyed, more than 20 increased their intelligence budgets substantially in the last three years.

The companies now spend an average $450,000 a year to track the competition. Five years ago, about one-third of the companies did not even have intelligence-gathering departments.

In addition, consultants who specialize in sleuthing have become a high-growth industry. In Washington alone, at least five consulting firms will research and analyze the competition for as much as $1,800 a day, and one of the five -- Washington Researchers Ltd. -- has taught more than 1,000 seminars on the art of corporate sleuthing.

Increasingly, Washington law firms will perform the services or work in tandem with those who do.

The techniques for snooping are mostly legal, and include "reverse engineering," or tearing products apart, trading information, touring plants and perusing public filings.

Cultivating telephone relationships with trade associations, regulatory agencies, suppliers, customers and employes is a must, say consultants.

Marriott Corp. of Bethesda, which manages about 150 hotels and 1,000 restaurants, sends employes out to try its competitors' hotels. Then Marriott simulates the rooms and tries them out on customers. "We'll lease a floor, build fake hotel rooms and bring people into the location and tell them its research," said Frank Camacho, vice president of corporate marketing services. "Some of the rooms are the enemy, and some are our response."

Marriott also pays as much as $50,000 to construction companies to estimate how much a competitor's hotel costs to build or lease. "You say, 'Go over and look at the new chain, reverse-engineer it, give me the drawings, and give me a bid,' " he said.

Trading information is yet another information-gathering technique -- even though a competitor may not like what he finds out in a trade.

"We find that we get better competitive data if you are willing to share some of what the consultant finds on a general basis back to the people who made the contribution," said D. Otis Wolkins, who oversees GTE Corp.'s intelligence operations.

For example, GTE might ask consultants to get information on customer reactions to different types of phone service and give some results back to the competitors who talked, said Wolkins.

In an information trade, though, the consultant hired by GTE would not tell a competitor who had retained him.

Xerox is perfecting the art of information trading. It has eliminated the consultant middleman and, through legal counsel and personal contacts, is forging direct relationships with outright and indirect competitors.

"L. L. Bean is an example where we are recognizing their terrific inventory-control system," said Finan. "They will turn out anything you order in 24 hours."

Setting up a similar system could save Xerox money, and appeal to consumers. Xerox also recently traded information with Eastman Kodak about plant design.

Public plant tours are enjoying great popularity in virtually all industries, say corporate investigators. Corporate snoops sometimes inform competitors they are coming.

In Kellogg's case, the competitor engineers sent through its plant told the company only after the fact. "We were told directly," said spokesman Stewart. "The truth is we had public tours and I could not accuse them of spying."

Because many foreign companies are not required to publicly disclose as much information as American companies are, many American companies are forming joint ventures with the competition they so desperately need to analyze.

General Motors Corp. said its explicit reason for a California car-making venture with Toyota was to get tips on cost control. "Their cost of production is enviable, and we have to be competitive with the sales price," said GM spokesman John Hartnett. "Sure, we analyze the competition."

But the gift of gab appears to be what gets most companies ahead.

"Sometimes these people you literally cannot shut up," said Leila K. Kight, president of Washington Researchers.

If people are loathe to spill the beans, a variety of telephone techniques based on flattery or personal gain are at the ready.

"Very often people have a selective loyalty," said Kight. For example, when Washington Researchers did a study on the domestic luggage market, it finally pitted two of a company's departments against each other to get the information.

"Everybody who would know was tight with it, but the international marketing head knew sales figures for the international and national divisions -- he shared information on the national line," she said.

Walker Lewis, chairman of Washington's Strategic Planning Associates Inc., advocates a method known as "divide and conquer."

Said Lewis, "If they don't say, you can put together logical facts -- labor rates are general competitive knowledge, energy rates are public knowledge, the size of the facility is public knowledge. By putting together unconnected facts, we can construct a picture."

The full extent of sleuthing is not known, and no one knows how often companies break or stretch the law in fighting for a competitive edge, officials conclude.

"Industrial intelligence is a lot like VD," said Brian Hollstein, manager of security at Xerox and a member of the board of the American Society of Industrial Security in Rosslyn. "Many have suffered from it, but not many talk about it."