Kế hoạch kinh doanh - Company situation analysis: The key questions

Evaluating a Company’s Resources and Competitive PositionScreen graphics created by:Jana F. Kuzmicki, Ph.D.Troy University-Florida Region 1. How well is the company’spresent strategy working?2. What are the company’s resourcestrengths and weaknesses and itsexternal opportunities and threats?3. Are the company’s prices andcosts competitive?4. Is the company competitively strongeror weaker than key rivals?5. What strategic issues meritfront-burner managerial attention?Company Situation Analysis:The Key QuestionsFig. 4.1: Identifying the Components ofa Single-Business Company’s StrategyQuestion 1: How Well Is the Company’sPresent Strategy Working?Must begin by understanding what the strategy isIdentify competitive approachLow-cost leadershipDifferentiationFocus on a particular market nicheDetermine competitive scopeBroad or narrow geographic market coverage?In how many stages of industry’s production/distribution chain does the company operate?Examine recent strategic movesIdentify functional strategiesKey Considerations Qualitative assessment –Is the strategy well-conceived?Covers all the bases?Internally consistent?Makes sense?Timely and in step with marketplace?Quantitative assessment – What are the results?Is company achieving its financial and strategic objectives?Is company an above-average industry performer?Approaches to Assess How Wellthe Present Strategy Is WorkingTrend in sales and market shareAcquiring and/or retaining customersTrend in profit marginsTrend in net profits, ROI, and EVAOverall financial strength and credit rankingEfforts at continuous improvement activitiesTrend in stock price and stockholder valueImage and reputation with customersLeadership role(s) – Technology, quality, innovation, e-commerce, etc.Key Indicators of How Wellthe Strategy Is WorkingS W O T represents the first letter inS trengthsW eaknessesO pportunitiesT hreatsFor a company’s strategy to be well-conceived, it must beMatched to its resource strengths and weaknessesAimed at capturing its best market opportunities and erecting defenses against external threats to its well-beingSWOTQuestion 2: What Are the Company’s Strengths, Weaknesses, Opportunities and Threats ?A strength is something a firm does well or an attribute that enhances its competitivenessValuable skills, competencies, or capabilitiesValuable physical assetsValuable human assetsValuable organizational assetsValuable intangible assetsImportant competitive capabilitiesAn attribute placing a company in a position of market advantageAlliances or cooperative ventures with partnersResource strengths and competitivecapabilities are competitive assets!Identifying Resource Strengthsand Competitive CapabilitiesCompetencies vs. Core Competencies vs. Distinctive CompetenciesA competence is the product of organizational learning and experience and represents real proficiency in performing an internal activityA core competence is a well-performedinternal activity central (not peripheral or incidental) to a company’s competitivenessand profitabilityA distinctive competence is a competitively valuable activity a company performs better than its rivalsIdentifying Resource Weaknessesand Competitive DeficienciesA weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantageResource weaknesses relate toInferior or unproven skills,expertise, or intellectual capitalLack of important physical,organizational, or intangible assetsMissing capabilities in key areasResource weaknesses and deficienciesare competitive liabilities!Identifying a Company’sMarket OpportunitiesOpportunities most relevant to acompany are those offeringGood match with its financial andorganizational resource capabilitiesBest prospects for profitable long-term growthPotential for competitive advantageIdentifying External ThreatsEmergence of cheaper/better technologiesIntroduction of better products by rivalsEntry of lower-cost foreign competitorsOnerous regulationsRise in interest ratesPotential of a hostile takeoverUnfavorable demographic shiftsAdverse shifts in foreign exchange ratesPolitical upheaval in a countryFig. 4.2: The Three Steps of SWOT AnalysisAssessing whether a firm’s costs are competitive with those of rivals is a crucial part of company situation analysisKey analytical toolsValue chain analysisBenchmarkingQuestion 3: Are the Company’sPrices and Costs Competitive?A company’s business consists of all activities undertaken in designing, producing, marketing, delivering, and supporting its product or service All these activities that a company performs internally combine to form a value chain—so-called because the underlying intent of a company’s activities is to do things that ultimately create value for buyers The value chain contains two types of activitiesPrimary activities (where most ofthe value for customers is created)Support activities that facilitateperformance of the primary activitiesConcept: Company Value ChainFig. 4.3: A Representative Company Value ChainFig. 4.4: Representative Value Chain for an Entire IndustryDeveloping Data to Measure a Company’s Cost CompetitivenessAfter identifying key value chain activities, the next step involves determining costs of performing specific value chain activities using activity-based costingAppropriate degree of disaggregation depends onEconomics of activitiesValue of comparing narrowly definedversus broadly defined activitiesGuideline – Develop separate costestimates for activitiesHaving different economicsRepresenting a significant or growing proportion of costs Determining whether a company’s costs are in line with those of rivals requiresMeasuring how a company’s costs compare with those of rivals activity-by-activityRequires having accounting data to measure costof each value chain activityActivity-based costing entailsDefining expense categories accordingto specific activities performed andAssigning costs to the activityresponsible for creating the costActivity-Based Costing: A KeyTool in Analyzing CostsFocuses on cross-company comparisons of how certain activities are performed and costs associated with these activitiesPurchase of materialsPayment of suppliersManagement of inventoriesGetting new products to marketPerformance of quality controlFilling and shipping of customer orders Training of employeesProcessing of payrollsBenchmarking Costs ofKey Value Chain ActivitiesFig. 4.5: Translating Company Performance of Value Chain Activities into Competitive Advantage Overall competitive position involvesanswering two questionsHow does a company rank relativeto competitors on each importantfactor that determines market success?Does a company have a netcompetitive advantage or disadvantagevis-à-vis major competitors? Question 4: Is the Company Strongeror Weaker than Key Rivals?1. List industry key success factors and other relevant measures of competitive strength2. Rate firm and key rivals on each factor using rating scale of 1 to 10 (1 = very weak; 5 = average; 10 = very strong)3. Decide whether to use a weighted or unweighted rating system (a weighted system is superior because chosen strength measures are unlikely to be equally important)4. Sum individual ratings to get an overall measure of competitive strength for each rival5. Based on overall strength ratings, determine overall competitive position of firmAssessing a Company’sCompetitive Strength vs. Key RivalsBased on results of both industry and competitive analysis and an evaluation of a company’s competitiveness, what items should beon a company’s “worry list”?Requires thinking strategically aboutPluses and minuses in the industryand competitive situationCompany’s resource strengths and weaknesses and attractiveness of its competitive positionA “good” strategy must address “what to do”about each and every strategic issue!Question 5: What Strategic IssuesMerit Managerial Attention?