Chapter IV

ANALYZING A COMPANY'S RESOURCES AND COMPETITIVE POSITION

 

 I. Situation Analysis

Situation analysis is centered on five questions (1-5)

1.) How Well Is the present Strategy Working?

bullet Need to investigate:
bullet Financial and strategic objectives
bullet Are you above average industry performance?
bullet What is your: market share, profit margin, ROI, stock price growth, etc.?

2.) What is the Company's Internal Strengths and Weaknesses, and External Opportunities and Threats?

bullet Conduct a SWOT analysis (Table 4.1, page 95)
bullet Strengths can be: skills, assets, competitive capabilities, alliances, etc.
bullet Weaknesses can be: lack of skills, assets, etc.
bullet Identify your core competencies: A competitively important!!! internal activity (usually resides in your people)
bullet Four tests for core competency (ies):
bullet Is resource hard to copy?
bullet How long does it last?
bullet Is it competitively superior?
bullet Can it be "trumped" by rivals?
bullet Identify your Opportunities (See table 4.1, page 95). Opportunities offer avenues for growth, provide competitive advantage, and match well with organizational resources.
bullet Identify your Threats. (Table 4.1, page 95). Must defend threats to your business.

3.) Are The Company's Price and Costs Competitive?

bullet E.g. prices paid for raw materials, energy, plant efficiencies, marketing costs, distribution costs, etc.
bullet Must use value chain analysis: analytical tool that identifies the primary activities that create value for your customers and related support activities (See Fig. 4.3, page 99)
bullet Can use benchmarking: Objective is to understand best practices in performing an activity, to learn how lower costs are achieved by others and to take action to improve a company's cost competitiveness.
bullet Strategic options for remedying a cost disadvantage:
bullet Implement best practices
bullet Invest in cost saving technologies
bullet Attack high cost of internally performed activities
bullet Etc.

4.) Is The Company Competitively Stronger or Weaker Than Key Rivals?

bullet How does your firm rank with rivals in terms of Key Success Factors?
bullet Is the firm at a disadvantage or advantage over rivals?
bullet Can your firm defend its market position?
bullet Note: Review closely, Table 4.4, page 110  for competitive strength assessment (Use the weighted approach)

5.) What Strategic Issues and Problems Merit Front-Burner Attention?

bullet How to combat rivals price discounting
bullet How to reduce high costs
bullet How to sustain growth rate
bullet Whether to expand product line
bullet Whether to acquire rivals
bullet Etc. 

Next Steps:  Please review the PowerPoint Overview slides (1-26) for this chapter.  Then proceed to the Lecture Notes for chapter five.

 
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