The stronger a company's financial
performance and market
position, the more likely it
has a well-conceived, well executed
strategy.
SWOT analysis is a simple but
powerful tool for sizing up a
company's resource capabilities
and deficiencies, its market
opportunities, and the external
threats to its future well-being.
A company is better positioned
to succeed if it has a competitively
valuable complement of
resources at its command.
A competence is something an
organization is good at doing; it
is nearly always the product of
learning and experience.
A core competence is a competitively
important activity that
a company performs better
than other internal activities.
A distinctive competence is a
competitively valuable activity
that a company performs better
than its rivals.
A company's success in the
marketplace is more
likely when it has appropriate
and ample resources with
which to compete, and especially
when it has strengths and
capabilities with competitive
advantage potential.
A company's resource
strengths represent competitive
assets; its resource weaknesses
represent competitive
liabilities.
A company is well advised to
pass on a particular market opportunity
unless it has or can
acquire the resources to capture
it.
Simply making lists of a company's
strengths, weaknesses,
opportunities, and threats is not
enough; the payoff from SWOT
analysis comes from the conclusions
about a company's situation
and the implications for
strategy improvement that flow
from the four lists.
The higher a company's costs
are above those of close rivals,
the more competitively vulnerable
it becomes.
A company's value chain identifies
the primary activities that
create customer value and the
related support activities.
A company's cost-competitiveness
depends not only on the
costs of internally performed
activities (its own value chain)
but also on costs in the value
chains of its suppliers and forward
channel allies.
Benchmarking the costs of
company activities against rivals
provides hard evidence
of a company's cost competitiveness.
Benchmarking has proved to
be a potent tool for learning
which companies are best at
performing particular activities
and then using their techniques
(or "best practices") to improve
the cost and effectiveness of a
company's own internal
activities.
Performing value chain activities
in ways that give a company
the capabilities to
outmatch rivals is a source of
competitive advantage.
A weighted competitive strength
analysis is conceptually
stronger than an unweighted
analysis because of the inherent
weakness in assuming that
all the strength measures are
equally important.
High competitive strength ratings
signal a strong competitive
position and possession of
competitive advantage; low ratings
signal a weak position and
competitive disadvantage.
A good strategy must contain
ways to deal with all the strategic
issues and obstacles that
stand in the way of the company's
financial and competitive
success in the years
ahead.
