EVALUATING A COMPANY'S RESOURCES, Dr.

Parameth Voraseyanont
CAPACITY AND COMPETITIVENESS
LEARNING OBJECTIVES
§ UNDERSTAND THE INTERNAL ANALYSIS FRAMEWORK
§ COMPREHENDED ON HOW INTERNAL AND EXTERNAL ANALYSIS ARE INTEGRATED FOR STRATEGY
DEVELOPMENT

§ CAPABLE TO ANALYZE A FIRM’S RECOURSES, CAPACITIES AND COMPETITIVENESS

§ ABLE TO APPLY THE ‘STRATEGIC DEVELOPMENT’ TOOL IN STRATEGIC DEVELOPMENT
§ CAPABLE TO ANALYZE A FIRM’S VALUE CHAIN SYSTEM FOR STRATEGY DEVELOPMENT
§ ABLE TO QUANTIFY AND PRIORITIES THE DIMENSION TO TRUCKLE BY MEANS OF STRATEGY
 INTERNAL ANALYSIS FRAMEWORK
INTERNAL ANALYSIS FRAMEWORK = ANALYZING OF COMPETITIVE RESOURCES

INTERNAL ANALYSIS ENABLES MANAGERS TO DETERMINE WHETHER THEIR STRATEGY IS LIKELY TO GIVE THE COMPANY A
SIGNIFICANT COMPETITIVE EDGE OVER RIVAL FIRMS.

INTERNAL RESOURCES SUPPLY CHAIN RESOURCES THE PRESENT’S COMPANY STRATEGY

AVAILABLE RESOURCES, COMPETITIVE NETWORKING RESOURCES HOW WELL DOES THE CURRENT
RESOURCES STRATEGY?

COMPETITIVENESS?
HOW DOES THE EXISTING RESOURCES ENHANCE COMPANY’S COMPETITIVENESS?
HOW DO/DOES EXISTING RESOURCES RESPONSE TO CHANGE IN COMPETITIVE ENVIRONMENT?

BUSINESS OBJECTIVES AND THEN STRATEGY

ROLES OF INTERNAL ANALYSIS –
UNDERSTANDING AND ANALYSIS FRAMEWORK
KEY QUESTION TO IDENTIFY YOUR COMPETITIVE GAPS FOR OBJECTIVES AND STRATEGY DEVELOPMENT

1. HOW WELL THE COMPANY’S PRESENT STRATEGY?

2. WHAT ARE MOST IMPORTANT RESOURCES AND COMPETENCIES THAT GIVE CA?

3. IS THE COMPANY’S CA STRONGER OR WEAKER THAN RIVALS?

4. HOW DO COMPANY VALUE CHAIN IMPACT COST STRUCTURE AND VALUE PROPOSITION?

5. WHAT ARE STRENGTH AND WEAKNESS ON MARKET OPPORTUNITY AND THREAT?

6. WHAT STRATEGIC ISSUES AND PROBLEMS MERIT FRONT BURNER MANAGERIAL ATTENTION?

COMBINING WITH EXTERNAL ANALYSIS, INTERNAL ANALYSIS FACILITATES AND UNDERSTANDING OF HOW TO
REPOSITION A FIRM TO TAKE ADVANTAGE OF NEW OPPORTUNITY AND TO COPE WITH COMPETITIVE THREATS
HOW WELL IS THE COMPANY’S PRESENT STRATEGY WORKING?
 THE BASIC COMPONENTS OF A SINGLE-BUSINESS
COMPANY’S STRATEGY M OVE TO ATTRACT CUSTOMERS AND
OUTCOMPETE RIVAL VIA IMPROVED PRODUCT
R&D, TECHNOLOGY, DESIGN, BETTER FEATURES, WIDER SELECTION,
PRODUCT DESIGN LOWER PRICES AND THE LIKE.
SUPPLY MANAGEMENT
MOVE TO RESPONSE CHANGING CONDITIONS
STRATEGY
IN THE MACRO- OR INDUSTRY-ENVIRONMENT
PRODUCTION STRATEGY AND COMPETITIVE CONDITIONS
KEY
SALES AND MARKETING
FUNCTIONAL BUSINESS STRATEGY EFFORT TO BUILD COMPETITIVELY VALUABLE
STRATEGY
STRATEGIES PARTNERSHIPS AND STRATEGIC ALLIANCES WITH
INFORMATION
TECHNOLOGY STRATEGY OTHER ENTERPRISES WITHIN ITS INDUSTRY.

HUMAN RESOURCES
STRATEGY
INITIATIVES TO BUILD COMPETITIVE ADVANTAGE BASED ON LOWER COSTS,
FINANCIAL STRATEGY BETTER PRODUCT OFFERING, SUPERIOR ABILITY TO SERVE A MARKET NICHE OR
SPECIFIC GROUP PF BUYER, EXPAND OR NARROW GEOGRAPHIC COVERAGE.
 HOW WELL IS THE COMPANY’S PRESENT
STRATEGY WORKING?
WHETHER THE
WHETHER IT IS GAINING
COMPANY IS ACHIEVING WHETHER ITS FINANCIAL
CUSTOMER AND
THE INDICATORS ITS STATED FINANCIAL PERFORMANCE IS ABOVE
GAINING MARKET
AND STRATEGY THE INDUSTRY AVERAGE
SHARE?
OBJECTIVES

• TRENDS IN THE COMPANY’S SALES AND EARNING GROWTH

• TRENDS IN THE COMPANY’S STOCK PRICE
• THE COMPANY’S OVERALL FINANCIAL STRENGTH
SPECIFIC INDICATORS • THE COMPANY’S CUSTOMER RETENTION RATE
• THE RATE AT WHICH NEW CUSTOMER ARE ACQUIRED
• EVIDENCE OF IMPROVEMENT IN INTERNAL PROCESSES SUCH AS DEFECT RATE, ORDER
FULFILLMENT, DELIVERY TIMES, DAYS OF INVENTORY, AND EMPLOYEE PRODUCTIVITY
EXERCISE 4.1: COMPANY’S COMPETITIVE POSITION

WHAT TO DO!
THE CASE STUDY REFERENCES

• READ THE CASE

• IDENTIFY THE KEY VISION, MISSION AND STRATEGY
• ANALYZE THE COMPANY EXTERNAL SITUATION
• ANALYZE ITS FINANCIAL STATEMENT AND IDENTIFY THE
COMPANY’S PRESENT COMPANY STRATEGY WORKING
OR NOT WORKING!
WHAT ARE MOST IMPORTANT COMPANY’S RESOURCES AND COMPETENCIES, AND WILL
THEY GIVE THE COMPANY A LASTING COMPETITIVE ADVANTAGE OVER RIVAL
COMPANIES?
 RESOURCES, CAPACITY, AND COMPETITIVE ASSETS
RESOURCES IS PART OF
THE COMPETITIVE ASSETS
THAT IS OWNED OR RESOURCES
CONTROLLED BY A
COMPANY

COMPETITIVE ASSETS COMPETITIVENESS

CAPACITY OR
COMPETENCE IS A
CAPACITY OF THE FIRM CAPACITY
TO PERFORM SOME A COMPANY’S RESOURCES AND CAPACITIES REPRESENTS
INTERNAL ACTIVITY COMPETITIVE ASSETS AND ARE DETERMINANTS OF ITS
COMPETENTLY. COMPETITIVENESS AND ABILITY TO SUCCEED IN THE MARKET
PLACE.
COMPETITIVE ASSETS
 TYPES OF COMPANY RESOURCES
TANGIBLE RESOURCES
PHYSICAL RESOURCES: LAND, PLANTS, EQUIPMENT,
DISTRIBUTION FACILITIES, LOCATIONS, OWNERSHIP OF OR
MINERAL DEPOSIT
FINANCIAL RESOURCES: CASH OR EQUIVALENTS, SECURITIES,
CREDIT RATING, BORROWING CAPACITY
TECHNOLOGICAL ASSETS: PATENTS, COPYRIGHTS,
PRODUCTION TECHNOLOGY, INNOVATION TECHNOLOGIES,
TECHNOLOGICAL PROCESSES
ORGANIZATIONAL RESOURCES: IT, PLANNING,
COORDINATION, ORGANIZATIONAL CONTROL, DESIGN AND
STRUCTURE
INTANGIBLE RESOURCES
HUMAN ASSETS AND INTELLECTUAL CAPITAL: EDUCATION,
EXPERIENCES, KNOWLEDGE, TALENT, CUMULATIVE LEARNINGS,
KNOW-HOW, LEADERSHIP, CREATIVITY, INNOVATIVENESS
BRANDS: COMPANY IMAGE AND REPUTATION ASSETS, BRAND
NAME, TRADEMARK, PRODUCT IMAGE, BUYER LOYALTY,
GOODWILL, RELIABILITY
RELATIONSHIP: ALLIANCE, JOINT VENTURE OR PARTNERSHIP
THAT PROVIDE ACCESS TO TECHNOLOGY, KNOW-HOW,
MARKET, NETWORK OF DISTRIBUTION
COMPANY CULTURE AND INCENTIVE SYSTEM: THE NORM,
BUSINESS PRINCIPLE, ATTACHMENT OF PERSONNEL, MOTIVATION
LEVELS AND COMPENSATION SYSTEM
EXERCISE 4.2: WHAT IS THE COMPETITIVE
RESOURCES OF THE FOLLOWING FIRMS
IDENTIFY CAPABILITY
• CAPACITY IS BUILT UP THROUGH THE USE OF RESOURCES AND DRAW ON SOME
COMBINATION OF THE FIRM’S RESOURCES AS THEY ARE ‘EXERCISE’
SOURCES OF
• VIRTUALLY ALL ORGANISATION CAPABILITIES ARE ‘KNOWLEDGE-BASE,’ ‘RESIDING IN
CAPABILITY
PEOPLE AND IN COMPANY’S INTELLECTUAL CAPITAL,’ OR IN ‘ORGANISATION PROCESSES
AND SYSTEM IN WHICH EMBODY TACTIC KNOWLEDGE’

• AMAZON’S SPEEDY DELIVERY CAPACITIES RELY ON THE KNOWLEDGE OF ITS FULFILLMENT

CENTER MANAGER, ITS RELATIONSHIP WITH THE UNITED POSTAL SERVICE. AND THE
EXPERIENCES OF ITS MERCHANDISERS TO CORRECTLY PREDICT INVENTORY FLOW.
EXAMPLE
• BOSE’S CAPABILITIES IN AUDITORY SYSTEM DESIGN ARISE FROM THE TALENTED ENGINEERS
THAT FORM THE R&D TEAM AS WELL AS THE COMPANY’S STRONG CULTURE, WHICH
CELEBRATES INNOVATION AND BEAUTIFUL DESIGN
 TWO APPROACHES TO UNCOVER A FIRM’S
CAPACITIES
COMPLETE LISTING OF FIRM RESOURCES APPROACH
• SINCE CAPACITIES ARE BUILT FROM RESOURCES AND
UTILIZE RESOURCES AS THEY EXERCISE, A FIRM
RESOURCE CAN PROVIDE A STRONG SET OF CLUES
ABOUT TYPES OF CAPACITIES THE FIRM LIKELY TO
HAVE ACCUMULATED
FUNCTIONAL APPROACH
• MANY CAPACITIES RELATED TO FAIRLY SPECIFIC
FUNCTIONS; THESE DRAW ON A LIMITED SET OF
RESOURCES AND TYPICALLY INVOLVE A SINGLE
DEPARTMENT OR ORGANIZATIONAL UNIT.
• E.G., CAPACITY IN INJECTING MOLDING OR
CONTINUOUS CASTING
EXERCSE 4.3: MEGA

THE CASE STUDY WHAT TO DO!

• READ THE CASE

• IDENTIFY THE KEY CAPABILITY OF THE FIRM
 ASSESSING THE COMPETITIVE POWER
COMPANY’S RESOURCES AND CAPACITIES ARE COMPETITIVELY SUPERIOR AND TO WHAT
COMPETITIVE
EXTENT THEY CAN SUPPORT A COMPANY’S QUEST FOR A SUSTAINABLE COMPETITIVE
ADVANTAGE
ADVANTAGE OVER RIVALS.

THE FOUR TEST OF A RESOURCES COMPETITIVE POWER (VRIN TEST)

RESOURCES OR CAPABILITY
COMPETITIVELY ‘VALUABLE’?
IS THE RESOURCES OR
(DOES CAPACITY RELEVANT IS THE RESOURCES OR IS THE RESOURCES OR
CAPABILITY ‘RARE’?
TO THE COMPANY STRATEGY CAPACITIES IMITABLE? CAPACITIES ‘NO
(IS IT SOMETHING RIVAL
AND MAKE COMPANY A (IS IT HARD TO COPY?) SUBSTITUTABLE’?
LACK?)
MORE EFFECTIVE
COMPETITORS)
COMPANY’S RESOURCES AND CAPABILITIES MUST
BE MANAGED DYNAMICALLY

A COMPANY REQUIRES A DYNAMIC EVOLVING PORTFOLIO OF RESOURCES AND CAPABILITIES TO SUSTAIN ITS
COMPETITIVENESS AND HELP DRIVE IMPROVEMENTS IN ITS PERFORMANCE.

A DYNAMIC CAPABILITY IS AN ONGOING CAPACITY OF A COMPANY TO MODIFY ITS EXISTING RESOURCES AND
CAPABILITIES OR CREATE NEW ONES.
HOW DO A COMPANY’S VALUE CHAIN ACTIVITIES IMPACT ITS COST STRUCTURE AND
CUSTOMER VALUE PROPOSITION?
HOW DO A COMPANY’S VALUE CHAIN ACTIVITIES
IMPACT ITS COST STRUCTURE AND CUSTOMER VALUE
PROPOSITION?
THE VALUE CHAIN ACTIVITIES PLANNED TO SUPPORT THE CUSTOMER VALUE PROPOSITION MAY AFFECT COMPANY
COST STRUCTURE

THE GREATER THE AMOUNT OF CUSTOMER VALUE THAT COMPANY CAN OFFER PROFITABLY RELATIVELY CLOSE TO
RIVALS, THE LESS COMPETITIVELY VULNERABLE THE COMPANY BECOME

THE HIGHER A COMPANY A COMPANY’S COSTS ARE ABOVE THOSE OF CLOSE RIVALS, THE MORE COMPETITIVELY
VALUABLE THE COMPANY BECOME
 THE CONCEPT OF A COMPANY VALUE CHAIN
• A COMPANY’S VALUE CHAIN IDENTIFIES THE PRIMARY ACTIVITIES AND RELATED SUPPORT
ACTIVITIES THAT CREATE CUSTOMER VALUE.
DEFINITION
• IT IS SO CALLED ‘VALUED CHAIN’ BECAUSE THE UNDERLYING INTENT OF A COMPANY
ACTIVITIES IS ULTIMATELY TO CREATE VALUE FOR BUYERS.

PRIMARY
ACTIVITIES SUPPLY CHAIN SALES AND
OPERATION DISTRIBUTION SERVICE PROFIT MARGIN
AND MANAGEMENT MARKETING
COSTS

SUPPORT PRODUCT R&D, TECHNOLOGY AND SYSTEM DEVELOPMENT

ACTIVITIES
HUMAN RESOURCES MANAGEMENT
AND
COSTS GENERAL ADMINISTRATION
THE CONCEPT OF A COMPANY VALUE CHAIN
• ACTIVITIES, COSTS, AND ASSETS ASSOCIATED WITH PURCHASING FUEL, ENERGY, RAW MATERIALS,
SUPPLY CHAIN
PART AND COMPONENTS, MERCHANDISE AND CONSUMABLE ITEMS FROM VENDORS: RECEIVING,
MANAGEMENT STORING AND DISSEMINATING INPUT FROM SUPPLIER; INSPECTION AND INVENTORY MANAGEMENT
• ACTIVITIES, COSTS, AND ASSETS ASSOCIATED WITH CONVERTING INPUTS INTO FINAL PRODUCT
OPERATION FORM (PRODUCTION, ASSEMBLY, PACKAGING, EQUIPMENT MAINTENANCE, QUALITY ASSURANCE,
ENVIRONMENTAL PROTECTION)

• ACTIVITIES, COSTS, AND ASSETS ASSOCIATED WITH PHYSICAL DISTRIBUTING THE PRODUCT TO
DISTRIBUTION BUYERS (FINISHED GOODS WAREHOUSING, ORDER PROCESSING AND PACKING, SHIPPING,
DELIVERY VEHICLE OPERATION, ESTABLISH AND MAINTAIN NETWORKS OF DEALER AND DISTRIBUTOR

SALES AND • ACTIVITIES, COSTS, AND ASSETS RELATED TO SALES FORCE EFFORTS, ADVERTISING AND
MARKETING PROMOTION, MARKET RESEARCH AND PLANNING, AND DEALERS AND DISTRIBUTOR SUPPORT

• ACTIVITIES, COSTS, AND ASSETS ASSOCIATED WITH PROVIDING ASSISTANCE TO BUYERS, SUCH AS
SERVICES INSTALLATION, SPARE PARTS DELIVERY, MAINTENANCE AND REPAIR, TECHNICAL ASSISTANCE, BUYER
INQUIRIES AND COMPLAINTS
 THE CONCEPT OF A COMPANY VALUE CHAIN
PRODUCT R&D, • ACTIVITIES, COSTS, AND ASSETS RELATING TO PRODUCT R&D, PROCESS R&D, RESEARCH DESIGN
IMPROVEMENT, EQUIPMENT DESIGNS, COMPUTER SOFTWARE DEVELOPMENT, TELECOMMUNICATION
TECHNOLOGY AND
SYSTEMS, COMPUTER-ASSISTED DESIGN AND ENGINEERING, DATABASE CAPACITIES AND DSS.
SYSTEM DEVELOPMENT

• ACTIVITIES, COSTS, AND ASSETS ASSOCIATED WITH THE RECRUITMENT, HIRING, TRAINING,
OPERATION DEVELOPMENT, AND COMPENSATION OF ALL TYPES OF PERSONNEL; LABOR RELATION ACTIVITIES
AND DEVELOPMENT OF KNOWLEDGE-BASED SKILLS AND CORE COMPETENCIES.

• ACTIVITIES, COSTS, AND ASSETS RELATING TO GENERAL MANAGEMENT, ACCOUNTING AND

FINANCE, LEGAL AND REGULATORY AFFAIRS, SAFETY AND SECURITY, MANAGEMENT INFORMATION
DISTRIBUTION
SYSTEM, FORMING STRATEGIC ALIGNMENT AND COLLABORATION WITH STRATEGIC PARTNERS AND
OTHER ‘OVERHEAD’ FUNCTIONS.
EXERCISE: ACTIVITIES AND COST ITEMS OF A
COMPANY’S VALUE CHAIN
COMPONENTS ACTIVITIES COSTS ITEMS

SUPPLY CHAIN MANAGEMENT

OPERATION
DISTRIBUTION
SALES AND MARKETING
SERVICES
PRODUCT R&D, TECHNOLOGY
AND SYSTEM DEVELOPMENT

OPERATION
DISTRIBUTION
DISCUSSION: BUSINESS MODEL, SUPPLY CHAIN
COSTS, AND DIFFERENTIATION CAPABILITY?
DOES COMPANY’S BUSINESS MODEL EFFECT TO SUPPLY
CHAIN COST AND PRODUCT DIFFERENTIATION
CAPABILITY?
IMPLICATION: COMPARING THE COMPANY VALUE
CHAIN WITH RIVAL COMPANIES
WITH A FOCUS ON VALUE-CREATING ACTIVITIES, THE VALUE CHAIN IS AN IDEAL TOOL FOR EXAMINING THE
WORKING OF A COMPANY’S CUSTOMER ‘VALUE PROPOSITION’ AND ‘BUSINESS MODEL’

VALUE CHAIN ANALYSIS FACILITATES A COMPARISON OF HOW RIVALS, ACTIVITIES, DELIVER VALUE TO CUSTOMER

COMPANY A COMPANY B

• THE ‘OPERATION’ COMPONENT OF THE • THE ‘OPERATION’ COMPONENT OF THE

VALUE CHAIN FOR MANUFACTURER A VALUE CHAIN FOR MANUFACTURER B BUY
EXAMPLE: MAKE ITS OWN PARTS AND COMPONENTS THE NEEDED PARTS AND COMPONENTS
AND ASSEMBLY THEW INTO FINISHED FROM OUTSIDE SUPPLIER AND PERFORM
PRODUCT ONLY ASSEMBLY OPERATION
** HOW EACH ACTIVITY IS PERFORMED MAY AFFECT A COMPANY’S RELATIVE ‘COST POSITION’, AS WELL AS ITS
CAPACITY FOR ‘DIFFERENTIATION’
 THE VALUE CHAIN SYSTEMS
• A COMPANY’S VALUE CHAIN IS EMBEDDED IN A LARGER SYSTEM OF ACTIVITIES THAT
INCLUDES THE VALUE CHAINS OF ITS SUPPLIERS AND THE VALUE CHAIN OF WHATEVER
WHOLESALE DISTRIBUTORS AND RETAILER IT UTILIZES IN GETTING PRODUCT OR SERVICE
DEFINITION TO END USERS.
• IT AFFECTS ATTRIBUTES LIKE PRODUCT QUALITY THAT ENHANCE DIFFERENTIATION AND
HAVE IMPORTANCE FOR THE COMPANY’S CUSTOMER VALUE PROPOSITION, AS WELL AS
ITS PROFITABILITY.

• A WELL MANAGED VALUE CHAIN SYSTEM COULD CONTRIBUTE TO THE GREATER

VALUE CHAIN SYSTEM
EFFICIENCY AND LOWER COTS RELATIVE TO COMPETITORS, AS WELL AS A BASIS FOR
AND COMPETITIVE
DIFFERENTIATION THAT MAKE CUSTOMER WILLING TO PAY RELATIVELY MORE FOR THE
ADVANTAGE
COMPANY’S GOODS AND SERVICES
 THE VALUE CHAIN SYSTEM
INTERNALLY PERFORMED
ACTIVITIES, COSTS AND
ACTIVITIES, COSTS AND
MARGINS OF SUPPLIERS
MARGINS
SUPPLIER-RELATED VALUE A COMPANY’S OWN
CHAIN VALUE CHAIN
PRODUCT QUALITY AND IMPROVE ON PRODUCT
DIFFERENTIATION BASED REDESIGNS,
ON RELATIONSHIP AND OUTSOURCING
PRESSURE ON COST ACTIVITIES, RELOCATE
SAVING OPPORTUNITY RESOURCES TO MEET
VIA PROCESS (I.E. JIT), BUYER PURCHASE
SUBSTITUTE INPUTS CRITERIA
ACTIVITIES, COSTS AND
MARGINS OF FORWARD BUYER OR END USER
CHANNELS AND VALUE CHAIN
PARTNERS
FORWARD CHANNEL
VALUE CHAIN
PRESSURE TO REDUCE
COSTS AND MARKUP,
MORE ECONOMICALLY
DISTRIBUTION
(SWITCHING TO CHEAPER
DISTRIBUTOR OR
VERTICAL INTEGRATION)
 HOW TO IMPROVE OUR SUPPLY CHAIN SYSTEM?
GATHERING INFORMATION
SUPPLIER: THE COST, PERFORMANCE
FEATURE, AND QUALITY OF INPUT
(ANYTHING A COMPANY CAN DO TO
HELP?)
DISTRIBUTION: COST AND MARGIN OF
DISTRIBUTORS AND RETAILER, ACTIVITIES
THAT DISTRIBUTORS PERFORM THAT
AFFECT SALES VOLUME AND CUSTOMER
SATISFACTION?
BENCHMARKING AND BEST PRACTICE
BENCHMARKING: A POTENTIAL TOOL
FOR IMPROVING COMPANY’S OWN
INTERNAL ACTIVITIES THAT BASED ON
LEARNING HOW OTHER COMPANY
PERFORM THEIR ‘BEST PRACTICE.’
BEST PRACTICE: A METHOD OF
PERFORMING AN ACTIVITY THAT
CONSISTENTLY DELIVER SUPERIOR
RESULT COMPARE TO OTHER
APPROACHES
STRATEGIC OPTIONS
AFTER IDENTIFYING THE ‘GAP’ THE
COMPANY MAY HAVE BASIC STRATEGIC
OPTIONS FOR THE SUPPLY CHAIN
SYSTEM IMPROVEMENT:
1. IMPROVE INTERNAL PERFORMED
VALUE CHAIN ACTIVITIES
2. IMPROVE VALUE CHAIN ACTIVITIES
OF DISTRIBUTION PARTNERS
3. IMPROVE SUPPLIER-RELATED VALUE
CHAIN ACTIVITIES
DISCUSSION: VALUE CHAIN PERFORMANCE,
RESOURCES, CAPACITY AND COMPETITIVE ADVANTAGE
HOW DOES VALUE CHAIN PERFORMANCE RELATED TO
COMPANY’S RESOURCES, CAPACITY AND
COMPETITIVENESS?
IS THE COMPANY COMPETITIVELY STRONGER OR WEAKER THAN KEY RIVALS?
IS THE COMPANY COMPETITIVELY STRONGER OR
WEAKER THAN KEY RIVALS?
THE COMPANY’S OVERALL COMPETITIVE STRENGTH CAN BE MEASURED BY TWO BASIC QUESTIONS

HOW DOES THE COMPANY RANKED RELATIVE TO ALL THINGS CONSIDERED, DOES THE COMPANY HAVE
COMPETITORS ON EACH OF THE IMPORTANT FACTORS A NET COMPETITIVE ADVANTAGE OR DISADVANTAGE
THAT DETERMINE MARKET SUCCESS? VERSUS MAJOR COMPETITORS?

AN EASY TO USE METHOD FOR ANSWERING THESE QUESTION INVOLVES DEVELOPING QUANTITATIVE STRENGTH
RATING FOR THE COMPANY AND ITS KEY COMPETITORS ON EACH INDUSTRY KEY SUCCESS FACTOR ON EACH
INDUSTRY KEY SUCCESS FACTOR AND EACH COMPETITIVE PIVOTAL RESOURCES, CAPABILITY AND VALUE CHAIN
ACTIVITY.

INDUSTRY AND COMPETITIVE ANALYSIS REVEALS THE KEY SUCCESS FACTORS AND EACH COMPETITIVE FORCES THAT
SEPARATE WINNER FROM LOSERS.
 EXAMPLE: A REPRESENTATIVE WEIGHTED
COMPETITIVE STRENGTH ASSESSMENT
Competitive strength assessment (1=very weak, 10= strong)

ABC C0. Rival 1 Rival 2

Key success factor/strength measure Important weight Strength rating Weight score Strength rating Weight score Strength rating Weight score
Quality/ product performance 0.1 8 0.8 5 0.5 1 0.1
Reputation/image 0.1 8 0.8 7 0.7 1 0.1
Manufacturing capability 0.1 2 0.2 10 1 5 0.5
Technologucal skills 0.05 10 0.5 1 0.05 3 0.15
Dealer & distribution network capacity 0.05 9 0.45 4 0.2 5 0.25
New product development capacity 0.05 9 0.45 4 0.2 5 0.25
Financial resources 0.1 5 0.5 10 1 3 0.3
Relative cost positions 0.3 5 1.5 10 3 1 0.3
Customer service capacity 0.15 5 0.75 7 1.05 1 0.15

Sum of important weights 1 0 0 0

Overall weighted competitive strength rating 0 0 0
EXERCISE 4.4: A REPRESENTATIVE WEIGHTED
COMPETITIVE STRENGTH ASSESSMENT
WHAT IS/ARE THE STRATEGIC IMPLICATION ON THE MEASUREMENT METRIC?
WHAT ARE THE COMPANY’S STRENGTH AND WEAKNESS IN RELATION TO THE MARKET
OPPORTUNITIES AND EXTERNAL THREAT?
 THE SWOT ANALYSIS
• SWOT ANALYSIS IS A TOOL FOR SIZING UP A COMPANY’S STRENGTHS AN WEAKNESSES,
DEFINITION
ITS MARKET OPPORTUNITIES AND THE EXTERNAL THREATS TO ITS FUTURE WELL-BEING.

COMPONENTS OF SWOT ANALYSIS

STRENGTH WEAKNESS OPPORTUNITY THREATS

IT IS SOMETHING GOOD AT IT IS SOMETHING A A COMPANY’S CERTAIN FACTORS IN A

DOING OR AN ATTRIBUTE COMPANY LACK OR DOES OPPORTUNITIES CAN BE COMPANY’S EXTERNAL
THAT ENHANCE ITS POORLY (IN COMPARISON PLENTIFUL OR SCARE, ENVIRONMENT POSE
COMPETITIVENESS IN THE TO OTHERS) OR A FLEETING OR LASTING, AN THREATS TO ITS
MARKET. NAY RESOURCES CONDITION THAT PUT IT AT CAN RANGE FROM WIDE TO PROFITABILITY AND
THAT PASS VRIN TEST ARE DISADVANTAGE IN THE MARGINAL. COMPETITIVE WELL BEING.
AMONG STRENGTH MARKET PLACE.
 WHAT TO LOOK FOR IN IDENTIFYING A COMPANY’S
STRENGTHS, WEAKNESS, OPPORTUNITIES AND THREATS
POTENTIAL STRENGTHS AND COMPETITIVE ASSETS
• COMPETENCIES THAT ARE WELL MATCHED TO INDUSTRY
KEY SUCCESS FACTORS.
• AMPLE FINANCIAL RESOURCES TO GROW BUSINESS
• STRONG BRAND IMAGE/ REPUTATION
• ECONOMY OF SCALE/ EXPERIENCE CURVE OVER RIVALS
• ATTRACTIVE CUSTOMER BASE
• PROPRIETARY TECHNOLOGY, SUPERIOR TECHNOLOGICAL
SKILLS AND IMPORTANT PATENT
• SUPERIOR PRODUCT QUALITY
• WIDE GEOGRAPHIC COVERAGE/STRONG DISTRIBUTION
CAPACITY
• ALLIANCE AND JOINT VENTURE THAT PROVIDE ACCESS
POTENTIAL WEAKNESSES AND COMPETITIVE DEFICIENCIES
• NO CLEAR STRATEGIC DIRECTION
• NO PROVEN CORE AND DISTINCTIVE COMPETENCIES
• LACK OF ATTENTION TO CUSTOMER NEEDS
• PRODUCT/SERVICE WITH FEATURES AND ATTRIBUTES THAT
ARE INFERIOR TO THOSE OF RIVALS
• WEAK BALANCE SHEET AND INSUFFICIENT FINANCIAL
RESOURCES
• HIGHER OVERALL UNIT COSTS
• TOO NARROW PRODUCT LINE THAN RIVALS
• WEAK BRAND IMAGES OR REPUTATIONS
• WEAKER DEALER NETWORKS
• INTERNAL OPERATION PROBLEMS
• RESOURCES AND CAPACITIES ARE EASY TO SUBSTITUTE
 WHAT TO LOOK FOR IN IDENTIFYING A COMPANY’S
STRENGTHS, WEAKNESS, OPPORTUNITIES AND THREATS
POTENTIAL MARKET OPPORTUNITY
• BUYER DEMAND OF THE INDUSTRY’S PRODUCT
• SERVING ADDITIONAL CUSTOMER GROUPS OR MARKET
SEGMENTS
• BROADER RANGE OF PRODUCT DEMAND
• OPPORTUNITY FOR NEW BUSINESS OR PRODUCT FROM
EXISTING SKILLS OR TECHNOLOGY.
• TAKING ADVANTAGE OF FALLING TRADE BARRIER
• TAKING ADVANTAGE OF AN ADVERSE CHANGE IN THE
FORTUNE OF RIVAL FIRMS
• TAKING ADVANTAGE OF EMERGING TECHNOLOGICAL
DEVELOPMENT
• OPPORTUNITY FROM SUPPLIERS OR NETWORKS
POTENTIAL EXTERNAL THREATS TO COMPANY’S FUTURE
PROFITABILITY
• INCREASE TENSIONS ON COMPETITIONS
• SLOWDOWN IN MARKET GROWTH
• ENTER OF NEW ENTRANCE
• GROWING BARGAINING POWER OF CUSTOMER OR
SUPPLIER
• SHIFT IN BUYER NEEDS AND TASTES
• DEMOGRAPHIC CHANGES ON INDUSTRY’S DEMANDS
• ADVERSE ECONOMIC CONDITIONS THAT THREATEN
SUPPLIER OR DISTRIBUTORS
• CHANGE IN TECHNOLOGY – DISRUPTIVE TECHNOLOGY
• RESTRICT FOREIGN TRADE POLICY
• TIGHT CREDIT CONDITIONS
• RISING PRICE ON ENERGY OR OTHER KEY INPUTS
WHAT’S THE IMPLICATION ON SWOT ANALYSIS
IDENTIFY COMPANY’S CONCLUSION CONCERNING THE COMPANY’S OVERALL
STRENGTH AND BUSINESS SITUATION:
COMPETITIVE ASSETS • WHERE ON THE SCALE FROM “ALARMINGLY WEAK” TO
“EXCEPTIONAL STRONG” DOES THE ATTRACTIVENESS OF
IDENTIFY COMPANY THE COMPANY SITUATION RANK?
WEAKNESSES AND • WHAT ARE THE ATTRACTIVE/UNATTRACTIVE ASPECTS OF
COMPETING DEFICIENCIES THE COMPANY'S SITUATION?

IDENTIFY THE IMPLICATION FOR IMPROVING COMPANY STRATEGY

COMPANY’S MARKET • USE COMPANY STRENGTH AS A FOUNDATION FOR
OPPORTUNITY STRATEGY
• PURSUE MARKET OPPORTUNITIES
IDENTIFY EXTERNAL • CORRECT WEAKNESS AND DEFICIENCIES
THREAT TO THE • USE COMPANY STRENGTH TO LESSEN THE IMPACT OF
COMPANY’S FUTURE IMPORTANT EXTERNAL THREAT
WHAT STRATEGY ISSUES AND PROBLEMS MERIT FRONT-BURNER MANAGERIAL
ATTENTION?
WHAT STRATEGY ISSUES AND PROBLEMS MERIT
FRONT-BURNER MANAGERIAL ATTENTION?
THIS ANALYTIC STEPS ZEROS IN THE STRATEGIC ISSUES AND PROBLEMS THAT STAND IN THE WAY OF THE COMPANY
SUCCESS.

IT INVOLVES USING THE RESULT OF INDUSTRY ANALYSIS AS WELL AS RESOURCES AND VALUE CHAIN ANALYSIS OF
THE COMPANY COMPETITIVE SITUATION TO IDENTIFY A ‘PRIORITY LIST’ OF ISSUES TO BE RESOLVED FOR THE
COMPANY TO BE FINANCIALLY AND COMPETITIVELY SUCCESSFUL IN THE YEAR AHEAD.

E.G., HOW TO COMBAT THE PRICE DISCOUNT, HOW TO HANDLE FOREIGN COMPETITORS, HOW TO REDUCE COMPANY’S HIGH
COSTS, HOW TO SUSTAIN BUYER’ GROWTH RATE IN THE RECESSION PERIOD, WHETHER TO CORRECT THE COMPANY
COMPETITIVE DEFICIENCIES BY ACQUIRING A RIVAL COMPANY WITH THE MISSING STRENGTH, HOW TO EXPAND TO FOREIGN
MARKET, WHAT POSITION SHOULD THE COMPANY STAND IN THE MARKET, WHAT TO DO ABOUT GROWING BUYER INTEREST IN
SUBSTITUTE PRODUCT.

DECIDING ON A STRATEGY AND WHAT SPECIFIC ACTIONS TO TAKE IS WHAT COME AFTER DEVELOPING A LIST IF
STRATEGIC ISSUES AND PROBLEMS THAT MERIT FRONT BURNER MANAGEMENT ATTENTION
 HOMEWORK: KEY SUCCESS FACTORS AND
ENVIRONMENT ANALYSIS

CASE STUDY 1

CASE STUDY 2 READ CASE STUDY 1-3 AND ANSWERS INDUSTRY

KSF FACTORS IN THE ANSWER SHEET

ANSWER SHEET

CASE STUDY 3
 QQ&&AA
“A VALID ANSWER COME
WHEN THE QUESTION IS
LIVED”

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