CRAFTING BUSINESS STRATEGY (VI)
Evaluation of company’s resources and competitive position (Internal Analysis)
It’s been a long time since my last article of CRAFTING BUSINESS STRATEGY series and is time to continue with a new article. In last article I’d tried to introduce several techniques of evaluating a company’s resources capabilities, its cost position and competitive strength over rivals. The powerful analytical tool SWOT analysis was introduced and today we’ll continue describing companies deficiencies, opportunities and the external threats to the immediate future.
Weaknesses
A resource weaknesses is something that a company does bad or lacks. This is a competitive disadvantage and the company must first identify its deficiencies, analyze the reason of them and finally to put all effort and tools to overcome liabilities. A competitive weakness can be related to inferior skills, experience in competitive important areas and inferior organizational and asset capabilities. The following points are main resource weaknesses:
* No strategy direction
* Not enough resources
* Higher costs than rivals
* Not well developed core competences
* Lack of product innovation
* Weak brand
* Etc.
Opportunities
Opportunities are basic to craft our strategy. Without opportunities is impossible for a company to develop. Always there are opportunities in the market although sometimes is difficult to identify them. Opportunities can be classified depending its potential turnover and risk. Normally as much big potential as much is related risk. Managers tailing skills are basic to find those opportunities and discard or chose the best ones depending our resources and capabilities. One important advise for a
company is to discard a potential market if this company does not have or can not acquire the resources to capture it. Several potential market opportunities are:
* Expand to new geographivcal areas
* Acquire rival firms or joint ventures
* Integrating forward and backward
* Serving new customers groups or market segments
* Rise buyer demand creating new needs
* Look for new markets and win market shares from rivals
* etc
Threats
Threats are not part of an Internal Analysis of a company competitive position. The same may apply for market opportunities. In fact those factors are part of external analysis. Anyway threats and opportunities are normally englobed in Internal Analysis taking for of SWOT analytical tool because directly affect our competitive capabilities and resources.
Threats put our company competitive position in jeopardy. Threats can come from new or improved products from rivals, the entry of lower cost foreign companies or new regulations. There are a lot of threats and always are arising new ones. We must identify them and be prepared. Potential threats may be:
* Increasing intensity of competition among rivals.
* Economical crisis
* Substitutive products
* New regulations
* Shift in buyer needs
* Increase price of providers
Read the older articles about Crafting Business Strategy here:
CRAFTING BUSINESS STRATEGY (V)
CRAFTING BUSINESS STRATEGY (IV)
CRAFTING BUSINESS STRATEGY (III)
CRAFTING BUSINESS STRATEGY (II)
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