sm04 - co. resources & comp. capabilities

8/4/2019 Sm04 - Co. Resources & Comp. Capabilities

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Prepare a TOWS Matrix for Pakistan Squash Federation

S

T R A T E G I C

M A N

A G E M E N T

A1

Must be Handwritten.

Submission in Session-5.



EVALUATING COMPANY RESOURCES

& COMPETITIVE CAPABILITIES

S

T R A T E G I C

M A N

A G E M E N T

4

Understand what really makes a company „tick‟.

Charles R. Scott

If a company is not „best in world‟ at a critical activity, it is sacrificing

competitive advantage by performing that activity with its existing technique.

James Brian Quinn



Strategic Thinking & Analysis Leads to Good Strategic Choices

1. Industry‟s dominant economic traits.

2. Nature of competition & strength of competitive

forces.

3. Drivers of industry change.

4. Competitive position of rivals.

5. Strategic moves of rivals.6. Key success factors.

7. Conclusions about industry attractiveness.

Assess Industry & Competitive Conditions

1. Assessment of company‟s present strategy.

2. Resource Strengths and Weaknesses, market

Opportunities, and external Threats.

3. Company‟s costs compared to rivals.

4. Strength of company‟s competitive position.

5. Strategic issues that need to be addressed.

Assess Company Situation

Identify

Strategic

Options

for the

Company

Select

the

Best

Strategy

E V A

L U A T I N G

C O . R E S O U R C E S &

C O M P E T I T I V E C

A P A B I L I T I E S



1. What is the Performance of a firm with respect to its present strategy?

2. What are the firm’s resource Strengths and Weaknesses and its market

Opportunities and external Threats?

3. Are firm’s Prices and Costs competitive?

4. How strong is firm’s Competitive Position relative to Rivals?

5. What Strategic Issues does firm face?

E V A L U A T I N G


C O M P E T I T I V E

C A P A B I L I T I E S

Company Situation Analysis – The Key Questions



Identify the major components of firm‟s strategy.

Identify competitive approach:

Low-cost leadership.

Broad Differentiation.

Focus on a particular market niche.

Determine competitive scope:

No. of Stages of industry’s production/distribution chain.

Geographic coverage.

Customer base, Segment Size & Makeup of the Target Market.

Identify functional strategies to better understand firm‟s strategy.

Examine recent Strategic Moves, like Expansion, Price-cut, etc.

Examine KPIs:

vs. Objectives, vs. Industry Average and vs. Key Rivals.

E V A L U A T I N G




Q1Performance

Evaluate Current Strategy of the Company



E V A L U A T I N G






http://slidepdf.com/reader/full/sm04-co-resources-comp-capabilities 7/67 E V A L U A T I N G




Q1Performance

Competitive Approach

M a r k e t T a r g e t

Type of Advantage Sought

Overall Low-Cost

Provider Strategy(OLC)

Broad Differentiation

Strategy(BD)

Focused Low-Cost

Strategy(FLC)

Focused Differentiation

Strategy(FD)

Best-Cost Provider

Strategy(BCP)

Lower Cost Differentiation

Broad

Range of

Buyers

NarrowBuyer

Segment

or Niche



Identify the major components of firm‟s strategy.

Identify competitive approach:

Low-cost leadership.

Broad Differentiation.

Focus on a particular market niche.

Determine competitive scope:

No. of Stages of industry’s production/distribution chain.

Geographic coverage.

Customer base, Segment Size & Makeup of the Target Market.

Identify functional strategies to better understand firm‟s strategy.

Examine recent Strategic Moves, like Expansion, Price-cut, etc.

Examine KPIs:

vs. Objectives, vs. Industry Average and vs. Key Rivals.

E V A L U A T I N G




Q1Performance




Trend in sales and market share.

Acquiring and/or retaining Customers.

Trend in Profit Margins.

Trend in Net Profits, ROI, and EVA.

Overall financial strength and credit ranking.

Efforts at continuous improvement activities.

Trend in stock price and stockholder value.

Image and reputation with customers.

Leadership role(s) - technology, quality, innovation, e-commerce, etc.

E V A L U A T I N G




Q1Performance

Examine KPIs






Q1Performance

Evaluate Resources

Tangible Resources: Relatively easy to identify, and include physical and

financial assets used to create value for customers. Processes, Trade Secrets, etc.

Intangible Resources: Difficult for competitors (and the firm itself) to account

for or imitate, typically embedded in unique routines and practices that have

evolved over time. Experience, Trust, Skill, etc.

Organizational Capabilities: Competencies or skills that a firm employs to

transform inputs to outputs, and capacity to combine tangible and intangible

resources to attain desired end. Customer Services, Innovativeness, etc.






Q1Performance

Sustainable Competitive Advantage

Is the Resource Valuable?

Is the Resource Rare?Can the Resource be Imitated?

Are Substitutes Readily Available?

Valuable Rare Difficult Without Implicationsto Imitate Substance for Competitiveness

No No No No Competitive disadvantage

Yes No No No Competitive parity

Yes Yes No No Temporary competitiveadvantage

Yes Yes Yes Yes Sustainable competitive

advantage

Is a resource or capability…



E V A L U A T I N G




Q1Performance

Approaches to Evaluating Firm‟s Performance

Financial Ratio Analysis.

Balance Sheet, Income Statement, Cash-Flow Statements.

Balanced Scorecard.

Financial, Internal, Customers and Learning & Growth Perspectives.



E V A L U A T I N G

C O .

R E S O U R C E S &



Q1Performance

Financial Ratio Analysis – Historical Perspective



E V A L U A T I N G

C O .

R E S O U R C E S &



Q1Performance

Financial Ratio Analysis – Comparison with Industry

Grocery Skilled-NursingFinancial Ratio Semiconductors Store Facilities

Quick Ratio (times) 1.5 0.5 1.1

Current ratio (times) 3.2 1.6 1.9

Total liabilities to net worth (%) 34.8 114.0 93.0

Collection period (days) 54.8 2.9 40.2

Assets to sales (%) 98.1 21.2 108.7

Return on sales (%) 3.1 0.9 2.0



E V A L U A T I N G

C O .

R E S O U R C E S &



Q1Performance

Financial Ratio Analysis – Comparison with Key Competitors

Sales R&D budgetCompany (or division ($ billions) ($ billions)

P&G Drug Division $ 0.8 $ 0.38

Bristol-Myers Squibb 20.2 1.80

Pfizer 27.4 4.00

Merck 32.7 2.10



E V A L U A T I N G

C O .

R E S O U R C E S &



Q1Performance

Balanced Scorecard

Customer Perspective.

Time, Quality, Performance & Service, Cost.

Internal Business Perspective.

Processes, Decisions, Actions, Coordination, Resource & Capabilities.

Growth & Learning Perspective.

NPD, Greater Value for Customers, Increased Operating Efficiency.

Financial Perspective.

Profitability, Growth, Shareholder’s Value, Market Share, Reduced OpEx,

High Asset Turnover.




2. What are the firm‟s resource Strengths and Weaknesses and its external

Opportunities and Threats?


4. How strong is firm’s competitive position relative to Rivals?


E V A L U A T I N G

C O .

R E S O U R C E S &






A strength is something a firm does well or a characteristic that enhances its

competitiveness - Competitive Assets.

A weakness is something a firm lacks, does poorly, or a condition placing it at a

disadvantage - Competitive Liabilities.

Opportunities are the avenues for growth that match up with the Company’s

financial and organizational resource capabilities.

Threats are the external factors that may hinder organizational growth.

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

SWOT



E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

SWOT



Strengths:

Valuable competencies or know-how.Valuable physical assets.

Valuable human assets.

Valuable organizational assets.

Valuable intangible assets.Important competitive capabilities.

An attribute that places a company in a position of market advantage.

Alliances or cooperative ventures with capable partners…..

Weaknesses:

Deficiencies in know-how or expertise or competencies.

Lack of important physical, organizational, or intangible assets.

Missing capabilities in key areas…... E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

SWOT - Examples



Opportunities most relevant to a company are those offering…..

…..best prospects for profitable long-term growth.

…..potential for competitive advantage.

…..good match with its financial and organizational resource capabilities.

E V A L U A T I N G

C O .

R E S O U R C E S &



A company is well-advised to pass on a particular market opportunity

unless it has or can build the resource capabilities to capture it! Q2SWOT

Market Opportunities



Emergence of cheaper/better technologies.

Introduction of better products by rivals.

Intensifying competitive pressures.

Onerous regulations.

Rise in interest rates.

Potential of a hostile takeover.

Unfavorable demographic shifts.

Adverse shifts in foreign exchange rates.

Political upheaval in a country.

E V A L U A T I N G

C O .

R E S O U R C E S &



Successful strategists aim at capturing a company‟s best growth

opportunities and creating defenses against external threats to its

competitive position and future performance! Q2SWOT

External Threats



Potential ResourceStrengths

Potential ResourceWeaknesses

Potential CompanyOpportunities

Potential ExternalThreats

• Powerful strategy

• Strong finances

• Strong brand nameimage/reputation

• Widely recognizedmarket leader

• Proprietarytechnology

• Cost advantages

• Strong advertising

• Product innovationskills

• Good customer

service

• Better product quality

• Alliances or JointVentures

• No clear strategic

direction

• Obsolete facilities

• Weak balance sheet;

excess debt

• Higher overall costs

than rivals

• Missing some key

skills/competencies

• Sub-par profits

• Internal operating

problems . . .

• Falling behind inR&D

• Too narrow product

line

• Weak marketing

skills

• Serving additional

customer groups

• Expanding to new

geographic areas

• Expanding product

line

• Transferring skills to

new products

• Vertical integration

• Take market share

from rivals

• Acquisition of rivals

• Alliances or JVs toexpand coverage

• Openings to exploit

new technologies

• Openings to extend

brand name/image

• Entry of potent newcompetitors

• Loss of sales tosubstitutes

• Slowing marketgrowth

• Adverse shifts inexchange rates &trade policies

• Costly newregulations

• Vulnerability tobusiness cycle

• Growing leverage of customers orsuppliers

• Reduced buyer needsfor product

• Demographic changes

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

What to look for in a SWOT Analysis

S



A company competence is the product of organizational learning and experience

and represents real proficiency in performing an internal activity.

A core competence is a well-performed internal activity that is central (not

peripheral or incidental) to a company’s competitiveness and profitability - often

results from collaboration among different parts of an organization.

A distinctive competence is a competitively valuable activity that a company

performs better than its rivals. A distinctive competence empowers a company to

build competitive advantage.

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

Competencies

S



Competitive

Advantage

Strategic Assets andMarket Achievements

Core and Distinctive

Competencies

Competitive Capabilities

A competence deemed valuable & beneficial bythe customer

CompetenceA Valuable Company Resources

or a Real Proficiency

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

Mobilizing Resources to Gain Competitive Advantage

S



Stem from skills, expertise, and experience usually representing an:

Accumulation of learning over time, and

Gradual buildup of real proficiency in performing an activity.

Involve deliberate efforts to develop the ability to do something, often entailing:

Selection of people with requisite knowledge and expertise.

Upgrading or expanding individual abilities.

Molding work products of individuals into a cooperative effort to create

organizational ability.

A conscious effort to create intellectual capital.

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

Competencies

S



Expertise in building networks and systems to enable e-commerce.

Speeding new/next-generation products to market.

Better After-Sale-Service capability.

Skills in manufacturing a high quality product.

Innovativeness in developing popular product features.

Speed/agility in responding to new market trends.

System to fill customer orders accurately and swiftly.

Expertise in integrating multiple technologies to create families of new products.

E V A L U A T I N G

C O .

R E S O U R C E S &



Q2SWOT

Competencies - Examples

S



To qualify as the basis for sustainable competitive advantage, a “resource” must

pass 4 tests:

1. Is the resource really competitively superior?

2. Does the resource have staying power -- is it durable?

3. Is the resource hard to copy?

4. Can the resource be trumped by the different capabilities of rivals?

E V

A L U A T I N G

C O .

R E S O U R C E S &



Successful strategists seek to capitalize on and leverage a company‟s resourcestrengths - its expertise, core competencies, and strongest competitivecapabilities - by molding the strategy around the resource strengths!

Q2SWOT

Determining the Competitive Value of a Firm

S



Developing a clear understanding of a company‟s:

Resource Strengths.

Resource Weaknesses.

Best Opportunities.

External Threats.

Drawing conclusions about:

How company’s strategy can be matched to both its resource capabilities

and market opportunities.

How urgent it is for company to correct resource weaknesses & guard

against external threats.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q2

SWOT

Role of SWOT in Crafting a Better Strategy

S



Strengths may not lead to an advantage, and vice versa.

SWOT’s focus on the external environment is too narrow – it is only with respect

to Company’s close environment and direct impacts.

SWOT gives a one-shot view of a moving target.

SWOT, at times, overemphasizes a single dimension of strategy.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q2

SWOT

Limitations of SWOT Analysis

S




2. What are the firm’s resource Strengths and Weaknesses and its external Opportunities

and Threats?

3. Are firm‟s Prices and Costs competitive?



E V

A L U A T I N G

C O .

R E S O U R C E S &




S



Assessing whether a firm‟s costs are competitive with those of rivals is a crucial

part of company analysis.

Key analytical tools:

Strategic cost analysis.

Value chain analysis.

Benchmarking.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Are the Company‟s Cost & Price Competitive?

S



Companies do not have the same costs because of differences in:

Prices paid for raw materials, component parts, energy, and other supplier

resources.

Basic technology and age of plant & equipment.

Economies of scale and experience curve effects.

Wage rates and productivity levels.

Marketing, promotion, and administration costs.

Inbound and outbound shipping costs.

Forward channel distribution costs.

E V

A L U A T I N G

C O .

R E S O U R C E S &



The higher a company‟s costs are above those of close rivals, the

more competitively vulnerable it becomes! Q3

Price/Cost

Why Rival Companies Have Different Cost Structures

S



Focuses on a firm’s costs relative to its rivals.

Compares a firm’s costs activity by activity against costs of key rivals, from raw

materials purchase to Price paid by ultimate customer.

Pinpoints which internal activities are a source of cost advantage or disadvantage.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Determining whether a company’s costs are in line with those of rivals requires

measuring how a company’s costs compare with those of rivals activity-by-activity,

from end-to-end.

Strategic Cost Analysis

ABC – Activity Based Costing

S



A company consists of all the activities and functions it performs in trying to

deliver value to its customers.

A company‟s value chain shows the linked set of activities, functions, and

business processes that it performs in the course of designing, producing,

marketing, delivering, and supporting its product / service and thereby creating

value for its customers.

A company‟s value chain consists of two types of activities

Primary activities (where most of the value for customers is created)

Support activities that are undertaken to aid the individuals ands groups engaged

in doing the primary activities

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E

Q3

Price/Cost

Company Value Chain

S



Distribution

And

Outbound

Logistics

Operations

Purchased

Supplies

and

Inbound

Logistics

Sales and

Marketing

After-Sales

Service

Profit

Margin

Product R&D, Technology, Systems Development

Human Resources Management

General Administration

Primary Activities and Costs

Support

Activities

and Costs

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

A Typical Value Chain

E S



Associated with receiving, storing and distributing inputs to the product:

Location of distribution facilities.

Material and inventory control systems.

Systems to reduce time to send ―returns‖ to suppliers.

Warehouse layout and designs.

Primary Activities – Inbound Logistics

E V

A L U A T I N G

C O .

R E S O U R C E S &



E S



E V

A L U A T I N G

C O .

R E S O U R C E S &



Associated with transforming inputs into the final product form:

Efficient plant operations.

Appropriate level of automation in manufacturing.

Quality production control systems.

Efficient plant layout and workflow design.

Primary Activities – Operations

E S



Associated with collecting, storing, and distributing the product or service to

buyers.

Effective shipping processes.

Efficient finished goods warehousing processes.

Shipping of goods in large lot sizes.

Quality material handling equipment.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E Primary Activities – Outbound Logistics

E S



E V

A L U A T I N G

C O .

R E S O U R C E S &



Primary Activities – Marketing & Selling

Associated with purchases of products and services by end users and theinducements used to get them to make purchases:

Highly motivated and competent sales force.

Innovative approaches to promotion and advertising.

Selection of most appropriate distribution channels.

Proper identification of customer segments and needs.

Effective pricing strategies.

E S



E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E Primary Activities – After Sales Services

Associated with providing service to enhance or maintain the value of the product:

Effective use of procedures to solicit customer feedback & to act on

information.

Quick response to customer needs and emergencies.

Ability to furnish replacement parts.

Effective management of parts and equipment inventory.

Quality of service personnel and ongoing training.

Warranty and guarantee policies.

E S



Typically supports the entire value chain and not individual activities:

Effective planning systems.

Ability of top management to anticipate and act on key environmental trends

and events.

Ability to obtain low-cost funds for capital expenditures & working capital.

Excellent relationships with diverse stakeholder groups.

Ability to coordinate and integrate activities across the value chain.

Highly visible to inculcate organizational culture, reputation, & values.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E Support Activities – General Administration

E S



E V

A L U A T I N G

C O .

R E S O U R C E S &



Activities involved in the recruiting, hiring, training, development, and

compensation of all types of personnel:

Effective recruiting, development, and retention mechanisms for employees.

Quality relations with trade unions.

Quality work environment to maximize overall employee performance and

minimize absenteeism.

Reward and incentive programs to motivate all employees.

Support Activities – HR Management

E S



Related to a wide range of activities and those embodied in processes and

equipment and the product itself:

Effective R&D activities for process and product initiatives.

Positive collaborative relationships between R&D and other departments.

State-of-the art facilities and equipment.

Culture to enhance creativity and innovation.

Excellent professional qualifications of personnel.

Ability to meet critical deadlines.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E Support Activities – Technology Development

E S



E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I E Support Activities – Procurement

Function of purchasing inputs used in the firm’s value chain:

Procurement of raw material inputs.

Development of collaborative ―win-win‖ relationships with suppliers.

Effective procedures to purchase advertising and media services.

Analysis and selection of alternate sources of inputs to minimize dependence

on one supplier.

Ability to make proper lease versus buy decisions.

E S



E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Costs, performance

and quality of inputs

provided by the

suppliers influence a

firm’s own costs and

product performance

Forward channel allies’

costs and margins are

part of price paid by

ultimate end-user and

the activities performed

affect end-user

satisfaction

Activities,

Costs, &Margins of

Forward ChannelAllies & Strategic

Partners

Internally

PerformedActivities,Costs, &Margins

Activities,Costs, &

Margins of Suppliers

Buyer/UserValue

Chains

A company‟s cost competitiveness depends on how well it manages its extended

value chain relative to how well competitors manage their chains

A Typical Value Chain

E S



Traditional Cost

Accounting Categories inDepartment Budget

Wages & Salaries $350,000

Employee Benefits 115,000

Supplies 6,500

Travel 2,400

Depreciation 17,000

Other Fixed Charges 124,000

Miscellaneous

Operating Expenses 25,520

$640,150

$135,750

82,100

23,500

15,840

94,300

48,450

110,000130,210

$640,150

Departmental Activities

Using Activity-Based

Cost Accounting

Evaluate Suppliers

Process Purchase Orders

Expedite Deliveries

Expedite Internal Process

Check Item Quality

Check Deliveries Against

Purchase Orders

Resolve ProblemsInternal Administration

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Traditional Cost-Accounting vs ABC

E S



Focuses on cross-company comparisons of how certain activities are performed

and the costs associated with these activities:

Purchase of materials.

Payment of suppliers.

Management of inventories.

Training of employees.

Processing of payrolls.

Getting new products to market.

Performance of quality control.

Filling and shipping of customer orders.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Benchmarking Cost of Key Value-Chain Activities

E S



Determine whether a company is performing particular value chain activities

efficiently by studying the practices and procedures used by other companies.

Understand the best practices in performing an activity — learn what is the ―best‖

way to do a particular activity from those who have demonstrated they are ―best-in-

industry‖ or ―best-in-world‖.

Assess if company’s costs of performing particular value chain activities are in line

with competitors.

Learn how other firms achieve lower costs.

Take action to improve company’s cost competitiveness.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Objectives of Benchmarking

E S



Avoid talk about pricing or competitively sensitive costs.

Don’t ask rivals for sensitive data.

Don’t share proprietary data without clearance.

Have impartial third party assemble and present competitively sensitive cost data

with no names attached.

Don’t disparage a rival’s business to outsiders based on data obtained.

E V

A L U A T I N G

C O .

R E S O U R C E S &



Q3

Price/Cost

Ethical Standards in Benchmarking

E S

Wh D i Wh h C i C Eff i



A company’s cost competitiveness depends on how well it manages its extended

value chain relative to how well competitors manage their extended value chains.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

What Determines Whether a Company is Cost-Effective

I E S

C i S li R l d C Di d



Push/Negotiate more favorable prices with suppliers -or-

Use lower-priced substitute inputs.

Change to a low cost supplier.

Integrate backwards.

Collaborate closely with suppliers to identify cost-saving opportunities.

Work with suppliers to help them achieve lower costs.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

Correcting Supplier Related Cost Disadvantages

I E S



E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

Push/Negotiate for more favorable terms with distributors and other forward

channel allies.

Work closely with forward channel allies and customers to identify win-win

opportunities to reduce costs.

Change to a more economical distribution strategy.

Integrate forwards.

Correcting Distribution Related Cost Disadvantages

I E S

C ti I t l C t Di d t



If possible:

Reengineer the high-cost activities or business processes.

Eliminate some cost-producing activities altogether.

Relocate high-cost activities to lower-cost geographic areas.

Outsource at cheaper rates the high-cost activities.

Invest in cost-saving technology.

Simplify product designs.

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

Correcting Internal Cost Disadvantages

I E S

F V l Ch i A l i t C titi Ad t



A company can create competitive advantage by managing its value chain to:

Integrate knowledge and skills of employees in competitively valuable ways.

Leverage economies of learning / experience.

Coordinate related activities in ways that build valuable capabilities.

Build dominating expertise in a value chain activity critical to customer

satisfaction or market success.

Sustainable competitive advantage can be created by:

Managing value chain activities better than rivals and/or

Developing distinctive value chain capabilities to serve customers!

E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

From Value-Chain Analysis to Competitive-Advantage

I E S

Li it ti f V l Ch i A l i



E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

Limitations of Value Chain Analysis

Organizational Structure Not Connected With The Value Chain.

Apparently Designed For Assembly-line Operations.

Use Of Info-tech & Feedback, Not Given Due Importance.

Plan [Make & Deliver] Portion Missing.

Too Linear & Sequential.

Not Cyclic.

Generic – Fit For All.

I E S

The Val e Deli er C cle



E V

A L U A T I N G

C O .

R E S O U R C E S &


C A P A B I L I T I

Q3

Price/Cost

The Value Delivery Cycle

D e m a n d

F o r e c a s t

MarketReadiness

Capacity

B A L A N C I N G F A C T O R S

OpportunityMarketDefinition

InnovationCustomer& Channel

Insights-

PLANNING

BusinessModel

BusinessMission & Vision

ORGANIZATION

Human Resource, Technology,Infra Structure & Procurement

SUPPORT

OperationsInboundLogistics

OutboundLogistics

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Company Situation Analysis The Key Questions




2. What are the firm’s resource Strengths and Weaknesses and its external

Opportunities and Threats?


4. How strong is firm‟s competitive position relative to Rivals?


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A L U A T I N G

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R E S O U R C E S &


C A P A B I L I T I Company Situation Analysis – The Key Questions

I E S

How Strong is the Company‟s Competitive Position



The strength of a company‟s competitive position in the marketplace

hinges on:

Whether firm’s position can be expected to improve or deteriorate if

present strategy is continued.

How firm ranks relative to key rivals on each industry KSF & relevant

measure of competitive strength .

Whether firm has a sustainable competitive advantage or finds itself at

disadvantage relative to certain rivals.

Ability of firm to defend its position in light of:

Industry driving forces.

Competitive pressures.

Anticipated moves of rivals.

E V

A L U A T I N G

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R E S O U R C E S &


C A P A B I L I T I

Q4

Position

How Strong is the Company‟s Competitive Position

I E S

Objectives of Strength Assessment



Reveals strength of firm’s competitive position vis-à-vis key rivals.

Shows how firm stacks up against rivals, measure-by-measure.

Indicates whether firm is at a competitive advantage / disadvantage against each rival.

Identifies possible offensive attacks (pit company strengths against rivals’ weaknesses).

Identifies possible defensive actions (a need to correct competitive weaknesses).

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A L U A T I N G

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R E S O U R C E S &


C A P A B I L I T

Q4

Position

Objectives of Strength Assessment

I E S

Assessing a Company‟s Competitive Strength versus its Key Rivals



1. List industry key success factors and other relevant measures of competitive

strength.

2. Rate firm and key rivals on each factor using rating scale of 1-10 (1 = very weak;

5 = average; 10 = very strong).

3. Decide whether to use a weighted or unweighted rating system (weighted system

is usually superior because the chosen strength measures are unlikely to be

equally important).

4. Sum individual ratings to get an overall measure of competitive strength for each

rival.

5. Determine whether firm enjoys a competitive advantage or suffers from a

competitive disadvantage based on the overall strength ratings.

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R E S O U R C E S &


C A P A B I L I T

Q4

Position

Assessing a Company s Competitive Strength versus its Key Rivals

T I E S

Competitive Strength Unweighted



Rating Scale: 1 = very weak; 5 = average; 10 = very strong

Reputation/image

Manufacturing capability

Technological skills

Dealer network/distribution

New product innovation

Financial resources

Relative cost position

Customer service capability

Overall strength rating

8 7 10

2 10 4

10 1 7

9 4 10

9 4 10

5 10 7

5 10 3

5 7 10

61 58 71

1

5

3

5

5

3

1

1

25

KSF/Strength Measure

Quality/product performance

ABC Co. Rival 1 Rival 2

8 5 10

Rival 3

1

Rival 4

6

6

1

8

1

1

1

4

4

32

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R E S O U R C E S &


C A P A B I L I T

Q4

Position

Competitive Strength - Unweighted

T I E S

Competitive Strength - Weighted



Rating Scale: 1 = very weak; 5 = average; 10 = very strong

KSF/Strength Measure

Quality/product performance

Reputation/image

Manufacturing capability

Technological skills

Dealer network/distribution

New product innovation

Financial resources

Rival 1 Rival 2

5/0.50 10/1.00

7/0.70 10/1.00

10/1.00 4/0.40

1/0.05 7/0.35

4/0.20 10/0.50

4/0.20 10/0.50

10/1.00 7/0.70

ABC Co.

8 / 0.80

8/0.80

2/0.20

10/0.50

9/0.45

9/0.45

5/0.50

Rival 3

1/0.10

1/0.10

5/0.50

3/0.15

5/0.25

5/0.25

3/0.30

Rival 4

6/0.60

6/0.60

1/0.10

8/0.40

1/0.05

1/0.05

1/0.10

Weight

0.10

0.10

0.10

0.05

0.05

0.05

0.10

Relative cost position

Customer service capability

10/3.00 3/0.90

7/1.05 10/1.50

5/1.50

5/0.75

1/0.30

1/0.15

4/1.20

4/1.60

0.30

0.15

Sum of weights 1.00

Overall strength rating 5.95 7.70 6.85 2.05 2.70

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R E S O U R C E S &


C A P A B I L I T

Q4

Position

Competitive Strength - Weighted

T I E S





2. What are the firm’s resource Strengths and Weaknesses and its external Opportunities

and Threats?




E V A L U A T I N G

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R E S O U R C E S &


C A P A B I L I T


T I E S

What are the Key Strategic Issues?



Based on the answers to the preceding 4 questions and the 7 questions posed in

conducting industry and competitive analysis, what items should be on the

company‟s “Worry List”?

Requires thinking strategically about:

Pluses and minuses in the industry and competitive situation.

Company’s resource strengths and weaknesses and attractiveness of its

competitive position.

E V A L U A T I N G



C A P A B I L I T

Q5

Issues

A “good” strategy must address “what to do” about each and every

strategic issue!


T I E S




Is the present strategy adequate in light of competitive pressures and driving forces?

Is the strategy well-matched to the industry’s future key success factors?

Does the company need new or different resource strengths and competitive capabilities?

Does present strategy adequately protect against external threats & resource deficiencies?

Is firm vulnerable to competitive attack by rivals?

Where are strong/weak spots in present strategy?

E V A L U A T I N G



C A P A B I L I T

Q5

Issues


T I E S

State the Key Strategic Issues Very Clearly



A well-stated issue involves such phrases as:

―What should be done about …….?‖

―How to …….?‖

―Whether to …….?‖

―Should we …….?‖

Issues need to be precise, specific, and “cut straight to the chase”.

Issues on the “the worry list” raise questions about:

What actions need to be considered.

What to think about doing.

L U A T I N G



C A P A B I L I T

State the Key Strategic Issues Very Clearly

sm04 - co. resources & comp. capabilities

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