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

36. ARE THE COMPANY’S PRICES AND COSTS COMPETITIVE ??
ECONOMICS AND TRADE
LEE SEONG JIN

37. THE SIGN OF COMPANY’S POSITION
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

38. THE CONCEPT OF COMPANY’S VALUE CHAIN
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 !!

40. THE VALUE CHAIN SYSTEM FOR AN ENTIRE INDUSTRY
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

41. ACTIVITY-BASED COST ACCOUNTING
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.

43. BENCHMARKING FOUR STAGES MAKING PLAN COLLECTING INFORMATION ANALYSIS
UNIFICATION
IMPLEMENTAION

44. BENCHMARKING PROBLEM is
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.