Presentation is loading. Please wait.

Presentation is loading. Please wait.

Evaluating a Company’s Resources and Competitive Position

Similar presentations

Presentation on theme: "Evaluating a Company’s Resources and Competitive Position"— Presentation transcript:

1 Evaluating a Company’s Resources and Competitive Position
Chapter 4 Evaluating a Company’s Resources and Competitive Position

2 Objectives How evaluate and identify the strengths
Why certain activities performed? Cost structure ? Strengths and key rivals Industry, analysis.. What could a manager do?

3 Questions 1) Strategy ? 2) SWOT ?
3) Prices and costs are competitive ? 4) Competitively stronger/weaker than key rivals ? 5) Strategic issues/problems the most importants

4 Tools SWOT Value chain Benchmarking Competitive strength assessment

5 How well is the company’s present strategy working ?
Q1. How well is the company’s present strategy working ?

6 What the strategy is ? Financial Human ressources Marketing
Effort to buil competitive advantage Planned, proactive moves to outcompete rivals Moves to respond and react to changing conditions in the macroenvironment and industry and competitive conditions Scope of geographic coverage Collaborative partnerships and strategic alliances with others Financial Human ressources Marketing R&D and Supply chain Manufacturing

7 Business strategy

8 How well a company’s strategy is working
Sales Customers Profit margins Net profits Financial strength and credit rating Internal measures Shareholders Image

9 Profit margins and sales
Revenues – Cost of good sold Revenues

10 Profits after taxes Revenues
Net profits Profits after taxes Revenues

11 Financial strength Current assets Current liabilities Current assets – Inventory Current assets – Liabilities

12 Internal performance measures
Inventory Cost of goods sold/365 Profits after taxes Total stockholders’ equity

13 Shareholders Annual dividends per share Current market price per share Or Earnings per share After tax profits + Depreciation

14 Performance increase Performance decrease = Do not Change
= Need to change

15 Q2. What are the company’s resource strengths and weaknesses and its external opportunities and threats ?

16 Strength

17 Identifying company resource strengths, competencies, and competitive capabilities
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

18 Assessing a company’s competencies and capabilities-What activities does it perform well?
Competence - something an organization is good at doing Core competence - internal activity that is central to a company’s strategy and competitiveness Distinctive competence - valuable activity that a company performs better than its rivals

19 A distinctive competence is a competitively potent resource strength
It gives a company competitively valuable capability that is unmatched by rivals It has potential for being the cornerstone of the company’s strategy It can produce a competitive edge

20 What is the competitive power of a resource strength?
Is the resource really competitively valuable? Is the resource strength rare—is it something rivals lack? Is the resource strength hard to copy? Can the resource strength be trumped by substitute resource strengths and competitive capabilities?

21 Resource-based strategies - attempt to exploit company resources in a
Competitively valuable resource strengths and competencies call for the use of a resource-based strategy Resource-based strategies - attempt to exploit company resources in a manner that offers value to customers in ways rivals are unable to match - be directed at eroding or a least neutralizing the competitive potency of a particular rival’s resource strengths

22 Weakness

23 Inferior or unproven skills, expertise, or
Identifying company resource weaknesses, missing capabilities, and competitive deficiencies Inferior or unproven skills, expertise, or intellectual capital in competitively important areas of the business Deficiencies in competitively important physical, organizational, or intangible assets Missing or competitively inferior capabilities in key areas

24 Opportunities

25 Identifying a company’s external market opportunities
A company’s opportunities can be plentiful or scarce, fleeting or lasting, and can range from wildly attractive to marginally interesting to unsuitable Big opportunities are nonetheless hard to see in advance.

26 Identifying a company’s external market opportunities
Managers have to guard against viewing every industry opportunity as a company opportunity The market opportunities most relevant to a company are those that match up well with the company’s financial and organizational resource capabilities

27 Threats

28 Identifying the external threats to profitability
Can stem from the emergence of cheaper or better technologies, rivals’ introduction of new or improved products and so on. They may be so imposing as to make a company’s situation and outlook quite tenuous

29 What to look for in identifying a company’s strengths, weaknesses, opportunities, and threats

30 Potential resource strengths and competitive capabilities
A powerful strategy Core competencies in A distinctive competence in A product that is strongly differentiated from those or rivals Competencies and capabilities that are well matched to industry key success factors A strong financial condition; ample financial resources to grow the business Strong brand-name image/company reputation An attractive customer base Economy of scale or learning/experience curve advantages over rivals Proprietary technology/superior technological skills/important patents Superior intellectual capital relative to key rivals Cost advantages over rivals Strong advertising and promotion Product innovation capabilities Proven capabilities in improving production processes Good supply chain management capabilities Good customer service capabilities Better product quality relative to rivals Wide geographic coverage and/or strong global distribution capability Alliances/joint ventures with other firms that provide access to valuable technology, competencies, and/or attractive geographic markets

31 Potential resource weaknesses and competitive
deficiencies Weak dealer networks; lack of adequate global distribution capability Behind on product quality, R&D, and/or technological know-how In the wrong strategic group Losing market share Lack of management depth Inferior intellectual capital relative to leading rivals Subpar profitability Plagued with internal operating problems or obsolete facilities Behind rivals in e-commerce capabilities Short on financial resources to grow the business and pursue promising initiatives Too much underutilized plant capacity No clear strategic direction Resources that are not well matched to industry key success factors No well-developed or proven core competencies A weak balance sheet, burdened with too much debt Higher overall unit costs relative to key competitors Weak or unproven product innovation capabilities A product/service with ho-hum attributes or features inferior to those of rivals Too narrow a product line relative to rivals Weak brand image or reputation

32 Potential market opportunities
Openings to win market share from rivals Sharply rising buyer demand for the industry’s product Serving additional customer groups or market segments Expanding into new geographic markets Expanding the company’s product line to meet a broader range of customer needs Utilizing existing company skills or technological know-how to enter new product lines or new businesses Online sales Integrating forward or backward Falling trade barriers in attractive foreign markets Acquiring rival firms or companies with attractive technological expertise or capabilities Entering into alliances or joint ventures to expand the firm’s market coverage or boost its competitive capability Openings to exploit emerging new technologies

33 Potential external threats to a company’s prospects
A shift in buyer needs and tastes away from the industry’s product Adverse demographic changes that threaten to curtail demand for the industry’s product Vulnerability to unfavorable industry driving forces Restrictive trade policies on the part of foreign governments Costly new regulatory requirements Increasing intensity of competition among industry rivals—may squeeze profit margins Slowdowns in market growth Likely entry of potent new competitors Loss of sales to substitute products Growing bargaining power of customers or suppliers

34 What can be learned from a SWOT analysis?

35 What can be gleaned from the SWOT listings?
Identify company resource strengths and competitive capabilities Conclusions concerning the company’s overall business situation: Where on the scale from “alarmingly weak” to “exceptionally strong” does the attractiveness of the company’s situation rank? What are the attractive and unattractive aspects of the company’s situation? Identify company resource weaknesses and competitive deficiencies Identify the company’s market opportunities Implications for improving company strategy: Use company strengths and capabilities as cornerstones for strategy Pursue those market opportunities best suited to company strengths and capabilities Correct weaknesses and deficiencies Use company strengths to lessen the impact of important external threats Identify external threats to the company’s future well-being


THE COMPETITIVENESS IN PRICES AND COSTS. It should be in line with rivals TWO TOOLS ARE USED to determine the competitiveness of costs and prices VALUE CHAIN ANALYSIS BENCHMARKING APPROACH

First step in understanding cost structure. It shows specific activities through which firms can create customer value and competitive advantage. Two broad catagories. The primary activities The requisite support activities

39 This is the value chain !!

A company's cost competitiveness depends not only on the costs of internally performed activities but also on costs in the value chains of its suppliers and forward channel allies Look at page 120, Figure 4.4

A tool for determining the costs of value chain activities. Second step for evaluating a company’s competitiveness KEY POINT is !! costs estimates are need at least for each broad category of primary and secondary activity.

42 BENCHMARKING A tool for assessing whether a company’s value chain activities are competitive potent tool for learning which companies are best at performing , using their techniques(OR BEST PRACTICE) to improve company's own activities.


how to gain access to information about other companies practices and costs “”The leader companies are often unlikely to share their competitiveness.

45 Strategic options for Remedying a cost disadvantage
Internal cost disadvantage Implement the use of best practices. Try to eliminate some cost-producing activities altogether by revamping the value chain. Relocate high-cost activities to geographically cheap areas. See if certain internally performed activities can be outsourced. Others are in page 125.

46 Strategic options for Remedying a cost disadvantage
A supplier-related cost disadvantage. pressure suppliers for lower prices collaborate closely with suppliers The forward channel allies. Pressure dealer-distributors and other forward channel allies. Change to a more economical distribution strategy. Work closely with forward channel allies

47 Translating Activities into competitive advantage
Two Options perform value chain activities more proficiently. perform value chain activities more cheaply. Ggeut!! Thank you :D

48 Is the company competitively stronger or weaker than key rivals?
Q4. Is the company competitively stronger or weaker than key rivals?

49 Overall competitive strength
How does the company rank relative to competitors on each of the important factors that determine market success? Does the company have a net competitive advantage of disadvantage VS major competitors?

50 Quantitative competitive strength assessments
Indicate where a company has a competitively strong and weak Provide insight into the company’s ability to defend or enhance its market position

51 To make a list of the industry’s key success factors
and most telling measures of competitive strength or weakness factor To rate the firm and its rivals on each factor To sum the strength rating on each factor to get an overall measure of competitive strength for each company being rated To use the overall strength ratings to draw conclusion

52 Unweighted System Rating Weighted Competitive Assessments Strength

53 Unweighted Rating System
Each key success factor/competitive strength measure is assumed to be equally important 2. Weighted Rating System Different measures of competitive strength are unlikely to be equally important

54 Interpreting the Competitive Strength Assessments
High Competitive Strength Rating Strong competitive position Possession of competitive advantage Low Competitive Strength Rating Weak position Competitive disadvantage

55 Company’ Competitive Strength
Scores against rivals Weaknesses strength and Pinpoint its Point directly actions it can use to offensive/defensive to the kinds of competitive exploit its strengths vulnerabilities Reduce its

56 "Worry List“… -draws on the results of both industry and competitive analysis and company situation analysis -to identify the specific issues/problems -centers on such concerns as "how to...," "what to do about...,"and "whether to..."

57 A Good Strategy -contains ways to deal with all the strategic issues and obstacles -is a valuable precondition for good strategy making *Managers need such understanding to craft a strategy that is well suited to the company's competitive circumstances.

Download ppt "Evaluating a Company’s Resources and Competitive Position"

Similar presentations

Ads by Google