How Well is the Company’s Present Strategy Working?
In evaluating how well a company’s present strategy is working, a manager has to start with what the strategy is. While there’s merit in evaluating the strategy from a qualitative standpoint (its completeness, internal consistency, rationale, and relevance), the best quantitative evidence of how well a company’s strategy is working comes from its result. The stronger a company’s current overall performance, the less likely the need for radical changes in strategy.The weaker a company’s financial performance and market standing, the more its current strategy must be questioned.
What Are the Company’s Resource Strength and Weaknesses and Its External Opportunities and Threats?
SWOT analysis provides a good overview of whether the company’s overall situation is
fundamentally healthy or unhealthy. A first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company’s resources, aims squarely at capturing the company’s best opportunities, and defends against the threats to its wll-being.
A resource strengths is something a company is good at doing or an attribute that enhances its competitiveness in the marketplace. Resource strengths can take any of these forms: a skill-an area of specialized expertise, or a competitively important capability, valuable physical assets, valuable human assets and intellectual capital, valuable organizational assets, valuable intangible assets, an achievement or attribute that puts the company in a position of market advantage, competitively
valuable alliances or cooperative ventures.
A competence is an activity that a company has learned to perform well. It is nearly always the product of experience, representing an accumulation of learning and the buildup of proficiency in performing an internal activity. A core competence is a competitively important activity that a company performs better than other internal activities. A distinctive competence is a competitively important activity that a company peroms better than its rivals – it thus represents a competitively
superior resource strength. The competitive power of a resource strength is measured by these four tests: is the resource really competitively valuable? Is the resource strength rare? Is the resource strength hard to copy? Can the resource strength be trumped by substitute resource strengths and competitive capabilities?
Competitively valuable resource strengths and competencies call for the use of a resource based strategy. Core concept of Resource-based strategy is that it uses a company’s valuable resources strengths and competitive capabilities to deliver value to customers in ways rivals find it difficult to match. The core concept of Identifying company resources weaknessess, missing capabilities, and competitive deficiencies is that a company’s resources strengths represent competitive assets; its resource weaknessess represents competitive liabilities. In identifying a company’s external market opportunities, a company is well advised to pass on a particular industry opportunity unless the company has or can acquire the resources to capture it. It is management’s job to identify the threats to the company’s prospects and to evaluate what strategic actions can be taken to neutralize
or lessen their impact.
SWOT analysis are drawing conslusions from the SWOT listings about the company’s overall situation, and translating these conslusions into strategic actions to better match the company’s strategy to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats. The final piece of SWOT analysis is to translate the diagnosis of the company’s situation into actions for improving the company’s strategy and business
prospects.
Are the Company’s Prices and Costs Competitive?
The higher a company’s costs are above those of close rivals, the more competitively vulnerable it becomes. Two analytical tools that are particularly useful in determining whether a company’s prices and costs are competitive are value chain analysis and benchmarking. Core concept of value chain is to identify the primary activities that create customer value and the related support activities.
Benchmarking is a potential tool for learning which companies are best at performing particular activities and then using their techniques (or best practice) to improve the cost and effectiveness of a company’s own internal activities.
Is the Company Competitively Stronger or Weaker than Key Rivals?
Step 1 in doing a competitive strength assessment is to make a list of the industry’s key success factors and most telling measures of competitive strength or weakness.
Step 2 is to rate the firm and its rivals on each factor.
Step 3 is to sum the strength ratings on each factgor to get an overall measure of competitive strength for each company being rated.
Step 4 is to use the overall strength ratings to draw conclusions about the size and extent of the company’s net competitive advantage or disadvantage and to take specific note of areas of strength and weakness.
High competitive strength ratings signal a strong competitive position and possession of competitive advantage; low ratings signal a weak position and competitive disadvantage. A company’s competitive strength scores pinpoint its strengths and weaknesses against rivals and point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive vulnerabilities.
What Strategic Issues and Problems Merit Front-Burner Managerial Attention?
The final and most important analytical step is to zero in on exactly what strategic issues that company managers need to address –and resolve- for the company to be more financially and competitively successful in the years ahead. Zeroing in on the strategic issues a company faces and compiling a “worry list” of problems and readblocks creates a strategic agenda of problems that merit prompt managerial attention. Actually decising upon a strategy and what specific actions to take is what comes after developing the list of strategic issues and problems that merit front-burner management attention.
A good strategy must contain ways to deal with all the strategic issues and obstacles that stand in the way of the company’s financial and competitive success in the years ahead.
Source: Thompson, Crafting and Executing Strategy, Chapter 4.
In evaluating how well a company’s present strategy is working, a manager has to start with what the strategy is. While there’s merit in evaluating the strategy from a qualitative standpoint (its completeness, internal consistency, rationale, and relevance), the best quantitative evidence of how well a company’s strategy is working comes from its result. The stronger a company’s current overall performance, the less likely the need for radical changes in strategy.The weaker a company’s financial performance and market standing, the more its current strategy must be questioned.
What Are the Company’s Resource Strength and Weaknesses and Its External Opportunities and Threats?
SWOT analysis provides a good overview of whether the company’s overall situation is
fundamentally healthy or unhealthy. A first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company’s resources, aims squarely at capturing the company’s best opportunities, and defends against the threats to its wll-being.
A resource strengths is something a company is good at doing or an attribute that enhances its competitiveness in the marketplace. Resource strengths can take any of these forms: a skill-an area of specialized expertise, or a competitively important capability, valuable physical assets, valuable human assets and intellectual capital, valuable organizational assets, valuable intangible assets, an achievement or attribute that puts the company in a position of market advantage, competitively
valuable alliances or cooperative ventures.
A competence is an activity that a company has learned to perform well. It is nearly always the product of experience, representing an accumulation of learning and the buildup of proficiency in performing an internal activity. A core competence is a competitively important activity that a company performs better than other internal activities. A distinctive competence is a competitively important activity that a company peroms better than its rivals – it thus represents a competitively
superior resource strength. The competitive power of a resource strength is measured by these four tests: is the resource really competitively valuable? Is the resource strength rare? Is the resource strength hard to copy? Can the resource strength be trumped by substitute resource strengths and competitive capabilities?
Competitively valuable resource strengths and competencies call for the use of a resource based strategy. Core concept of Resource-based strategy is that it uses a company’s valuable resources strengths and competitive capabilities to deliver value to customers in ways rivals find it difficult to match. The core concept of Identifying company resources weaknessess, missing capabilities, and competitive deficiencies is that a company’s resources strengths represent competitive assets; its resource weaknessess represents competitive liabilities. In identifying a company’s external market opportunities, a company is well advised to pass on a particular industry opportunity unless the company has or can acquire the resources to capture it. It is management’s job to identify the threats to the company’s prospects and to evaluate what strategic actions can be taken to neutralize
or lessen their impact.
SWOT analysis are drawing conslusions from the SWOT listings about the company’s overall situation, and translating these conslusions into strategic actions to better match the company’s strategy to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threats. The final piece of SWOT analysis is to translate the diagnosis of the company’s situation into actions for improving the company’s strategy and business
prospects.
Are the Company’s Prices and Costs Competitive?
The higher a company’s costs are above those of close rivals, the more competitively vulnerable it becomes. Two analytical tools that are particularly useful in determining whether a company’s prices and costs are competitive are value chain analysis and benchmarking. Core concept of value chain is to identify the primary activities that create customer value and the related support activities.
Benchmarking is a potential tool for learning which companies are best at performing particular activities and then using their techniques (or best practice) to improve the cost and effectiveness of a company’s own internal activities.
Is the Company Competitively Stronger or Weaker than Key Rivals?
Step 1 in doing a competitive strength assessment is to make a list of the industry’s key success factors and most telling measures of competitive strength or weakness.
Step 2 is to rate the firm and its rivals on each factor.
Step 3 is to sum the strength ratings on each factgor to get an overall measure of competitive strength for each company being rated.
Step 4 is to use the overall strength ratings to draw conclusions about the size and extent of the company’s net competitive advantage or disadvantage and to take specific note of areas of strength and weakness.
High competitive strength ratings signal a strong competitive position and possession of competitive advantage; low ratings signal a weak position and competitive disadvantage. A company’s competitive strength scores pinpoint its strengths and weaknesses against rivals and point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive vulnerabilities.
What Strategic Issues and Problems Merit Front-Burner Managerial Attention?
The final and most important analytical step is to zero in on exactly what strategic issues that company managers need to address –and resolve- for the company to be more financially and competitively successful in the years ahead. Zeroing in on the strategic issues a company faces and compiling a “worry list” of problems and readblocks creates a strategic agenda of problems that merit prompt managerial attention. Actually decising upon a strategy and what specific actions to take is what comes after developing the list of strategic issues and problems that merit front-burner management attention.
A good strategy must contain ways to deal with all the strategic issues and obstacles that stand in the way of the company’s financial and competitive success in the years ahead.
Source: Thompson, Crafting and Executing Strategy, Chapter 4.
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