Analyzing a Company’s Resources and Competitive Position
Chapter Summary
Chapter 4 discusses the techniques of evaluating a company’s internal circumstances – its resource capabilities, relative cost position, and competitive strength versus rivals. The analytical spotlight will be trained on five questions: (1) How well is the company’s present strategy working? (2) What are the company’s resource strengths and weaknesses and its external opportunities and threats? (3) Are the company’s prices and costs competitive? (4) Is the company competitively stronger or weaker than key rivals? (5) What strategic issues and problems merit front-burner managerial attention? In probing for answers to these questions, four analytical tools – SWOT analysis, value chain analysis, benchmarking, and competitive strength assessment will be used. All four are valuable techniques for revealing a company’s competitiveness and for helping company managers match their strategy to the company’s own particular circumstances.
Lecture Outline
I. Question 1: How Well is the Company’s Present Strategy Working?
1. In evaluating how well a company’s present strategy is working, a manager has to start with what the strategy is.
2. Figure 4.1, Identifying the Components of a Single-Business Company’s Strategy, shows the key components of a single-business company’s strategy.
3. The first thing to pin down is the company’s competitive approach.
4. Another strategy-defining consideration is the firm’s competitive scope within the industry
5. Another good indication of the company’s strategy is whether the company has made moves recently to improve its competitive position and performance.
6. While there is 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 results.
7. The two best empirical indicators are: