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: 1.
How well is the present strategy working? This involves evaluating the strategy from a qualitative standpoint (completeness, internal consistency, rationale, and suitability to the situation) and also from a quantitative standpoint (the strategic and financial results the strategy is producing). The stronger a company's current overall performance, the less likely the need for radical strategy changes. The weaker a company's performance and/or the faster the changes in its external situation (which can be gleaned from industry and competitive analysis), the more its current strategy must be questioned. 2.
What are the company's competitively important resources and capabilities? A company's resources, competitive capabilities, and core competencies are strategically relevant because they are the most logical and appealing building blocks for strategy. In fact, many companies pursue resource-based strategies that attempt to exploit company resources in a manner that offers value to customers in ways rivals are unable to match. The most potent resource-based strategies exploit resources which are competitively valuable, rare, hard to copy or imitate, and are not easily trumped by substitute resources. A SWOT analysis is a simple but powerful tool for sizing up a company's resource strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being. Resource weaknesses are important because they may represent vulnerabilities that need correction. External opportunities and threats come into play because a good strategy necessarily aims at capturing a company's most attractive opportunities and at defending against threats to its well-being. 3.
Are the company's prices and costs competitive? One telling sign of whether a company's situation is...
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