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Evaluating Company Resources and Competitive Capabilities
“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
Primary Activities and Costs
Product R&D, Technology, Systems Development
Human Resources Management
A Company’s Own
1.How well is firm’s present strategy working?
2.What are the firm’s resource strengths and weaknesses and its external opportunities and 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 the firm face?
functional strategies when
evaluating the effectiveness of
the business strategy.
a firm with a competitive advantage.
Costly to Imitate
UNDERSTAND WHY EACH LEADS TO DIFFERENT PERFORMANC LEVELS)
Potential Resource Strengths
Potential Resource Weaknesses
Potential External Opportunities
Potential External Threats
A company is well-advised to pass on a particular market opportunity unless it has or can build the resource capabilities to capture it!
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 to 10 (1 = very weak; 5 = average; 10 = very strong)
3.Decide whether to use a weighted or unweightedrating system (a 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