Management

There are five key questions to consider in analyzing a company´s own particular competitive circumstances and its competitive position vis-à-vis key rivals:

Evaluating the strategy from qualitative standpoint (completeness, internal consistency, rationale, and suitability to the situation) and also from a quantitative standpoint. The stronger a company current overall performance, the less likely need for radical strategy changes. The weaker a company’s performance and/or the faster the changes in its external situation, the more current strategy must be questioned.

A SWOT analysis provides an overview of a firm’s situation and is an essential component of crafting a strategy tightly matched to the company’s situation. The two most important parts of SWOT analysis are drawing conclusions about what story the compilation of strengths, weaknesses, opportunities and threats tells about the company’s overall situation, and acting on those conclusions to better match the company’s strategy, to its resource strengths and market opportunities, to correct the important weaknesses, and to defend against external threat. A company’s resource strengths, competencies, and competitive capabilities are strategically relevant because they are the most logical and appealing building blocks for strategy; resource weaknesses are important because they may represent vulnerabilities that need correction.

One telling sign of whether a company’s situation is strong or precarious is whether its prices and costs are competitive with those of industry rivals. Value chain analysis and the benchmarking are essential tools in determining whether the company is performing particular functions and activities cost-effectively, learning whether its costs are in line with competitors, and deciding which internal activities and business processes need you be scrutinized for improvement. Value chain analysis teaches that how competently a company manages its value chain activities relative to rivals is a key to building a competitive advantage based on either better competences and competitive capabilities or lower cost than rivals.

The key appraisals here involve how the company matches up against key rival son industry key success factors and other chief determinants of competitive success and whether and why the company has a competitive advantage or disadvantage. Quantitative competitive strength assessments, indicate where a company is competitively strong and weak, and provide insight into the company’s ability to defend or enhance its market position. As a rule a company’s competitive strategy should be built around its competitive strengths and should aim at shoring up areas where one or more rivals are weak it makes sense to consider offensive moves to exploit rivals’ competitive weaknesses. When a company has important competitive weaknesses in areas where one or more rivals are

...