chapter 4Lecture Notes
Analyzing a Company’s Resources and Competitive Position
Chapter Summary
Chapter 4 discusses the techniques of evaluating a company’s internal circumstances – its resource capabilities, relative cost position, and competitive strength versus rivals. The analytical spotlight will be trained on five questions: (1) How well is the company’s present strategy working? (2) What are the company’s resource strengths and weaknesses and its external opportunities and threats? (3) Are the company’s prices and costs competitive? (4) Is the company competitively stronger or weaker than key rivals? (5) What strategic issues and problems merit front-burner managerial attention? In probing for answers to these questions, four
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CORE CONCEPT: SWOT analysis is a simple but powerful tool for sizing up a company’s resource capabilities and deficiencies, its market opportunities, and the external threats to its future well-being.
2. A first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company’s resources, aims squarely at a capturing the company’s best opportunities, and defends against the threats to its well being.
A. Identifying Company Resource Strengths and Competitive Capabilities
1. A strength is something a company is good at doing or an attribute that enhances its competitiveness. A strength can take any of several forms:
a. A skill or important expertise
b. Valuable physical assets
c. Valuable human assets
d. Valuable organizational assets
e. Valuable intangible assets
f. Competitive capabilities
g. An achievement or attribute that puts the company in a position of market advantage
h. Competitively valuable alliances or cooperative ventures
2. Taken together, a company’s strengths determine the complement of competitively valuable resources with which it competes – a company’s resource strengths represent competitive assets.
CORE CONCEPT: A company is better positioned to succeed if it has a competitively valuable complement of resources at its command.
3. The caliber of a firm’s
The SWOT analysis is commonly known as a tool for business analysis. Its main use is for looking at strengths and weaknesses to do with the organisation, current or future opportunities and possible internal and external threats. These can then be dealt with to make them into a positive.
According to Nicole Fallon of the Business News Daily, a SWOT analysis is an analytical framework that can help any company face its greatest challenges and find its most promising new markets, by identifying the organization’s strengths, weaknesses, opportunities and threats (2017). It allows for an extensive evaluation of the company’s internal and external resources as well as current and future threats that the company may face. This process can be a great asset in determining and exploring new initiatives, as it helps to identify areas of improvement within the organization while helping with the facilitation and implementation of new business policies. This process is crucial in refreshing the strategies and tactics of any
A SWOT analysis is a tool used to identify the strengths, weaknesses, opportunities and threats of an organization. A SWOT model measures what an organization can or cannot do as well as the possible opportunities and threats. This is done by taking data from the organization’s environment, analyzing the information and separating it into the internal (strengths and weaknesses) and external (opportunities and threats). When this is completed the analysis can create a plan for the organization to achieve its goals, and identify what difficulties must be overcome to attain
If a firm’s resources are both valuable and rare, a firm may achieve a competitive advantage (Newbert, 2008). A resource is considered valuable when it improves the efficiency and effectiveness of a strategy, and when it exploits external opportunities or neutralises external threats (Barney, 1991). This wording is somewhat confusing as it draws a direct connection with the environmental model, i.e. Porter’s (1985) five forces. The ‘value’ variable could therefore be rendered exogenous to the RBV (Priem and Butler, 2001). On the other hand, Peteraf (1993) praises the model for its internal focus and ability to uncover potential sources of competitive advantage which cannot be attributed to the external environment, notably because areas of value are often so difficult to identify (Newbert, 2008). The term ‘potential’ is used because not all resources have the ability to create a SCA
The SWOT analysis is a great way for companies or organizations to determine their brand and product’s strengths, weaknesses, opportunities, and threats. In order to more effectively determine these areas, separation of internal and external issues within the company or association is crucial.
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources.
SWOT analysis provides a structure for analyzing either your own strengths and weaknesses, and the opportunities and threats you face, or in a work context for analyzing the strengths, weaknesses, opportunities and threats a business or event faces. Ideally it is one step in a process which helps you to
These are the strengths within your organisation. What exactly is it about you and your business that is better than the competition? Examples might include quality products, advanced technology, advanced knowledge and a long established business. Identifying the strengths of your current business or a new venture can improve the efficiency of your sales and marketing efforts – it helps you to visualise the unique selling point of your business which helps you write better sales copy, create better sales letters, make more successful sales calls and develop smarter marketing campaigns.
SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and weaknesses, and the opportunities and threats that the company face. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you will giving you the opportunity to ward off possible threats from external sources.
A company’s strengths are found within their own company and members. Depending on how well and to what extent a company uses its resources determines just what its strengths are. These strengths may be what they do better than other companies, what they do different from other
A SWOT analysis is an evaluation a company’s strengths, weaknesses, opportunities, and threats (Armstrong, 2010, p.77). A SWOT analysis is a useful tool in comparing a business, or in this case a character’s, traits to the situation and to other characters.
Through an internal environment analysis, companies can identify and understand their own unique resources, capabilities, and competencies that are required for their sustainable competitive advantage. Resources, capabilities, and core competencies are the foundation of competitive advantage. There is no competitive advantages are permanently sustainable in any companies, so they have to consist on their current advantages and develop new advantages by internally understanding and analyzing their resources and capabilities. Competitors have their own unique resources, capabilities, and core competencies to create values for their customers. Both tangible and intangible resources, which include individual, social and organizational phenomena, are combined to generate capabilities. In turn, company’s capabilities are used to build core competencies. Also, core competencies are as a source of competitive advantage for a company to win in the competitive market.
The process of SWOT analysis is a universal method widely approached in corporations to scan the internal and external environment so that companies can deploy relevant countermeasures to make improvements. It contains four elements, they are strengths, weaknesses, opportunities, and threats (Helms & Nixon, 2010).
SWOT analysis is a useful tool for understanding and decision-making for all sorts of situations in business and organization. SWOT analysis can be classified into internal and external factors affecting a company. The Strengths and Weaknesses of the SWOT analysis represent the internal factors that influence the viability of the company. While the Opportunities and Threats, on the other hand, are the external factors that may affect the company's performances. A SWOT analysis provides more understanding of the organization in relation to its internal and external environment so that manager can formulate better strategy in pursuit of its mission.
For transforming a short-run competitive advantage into a sustained competitive advantage we require resources that are heterogeneous in nature and not perfectly mobile. This translates into valuable resources that are neither perfectly imitable nor substitutable without great effort. If these conditions are fulfilled then the bundle of resources can sustain the firm's above average returns.