SWOT analysis

Internal to the firm

Strengths
What a company is
good at
Some characteristic
that enhances
competitiveness
Weaknesses
What a company lacks
or does poorly
A disadvantageous
condition

External to the firm
Opportunities
Important profit
possibilities
Important competitive
advantages
Exploit a firms capabilities
Threats
Potential problems with
continued firm viability &
growth

Making 4 lists isnt enough:
what can the firm control?
Alignment analysis
How does overall strategy match resources &
opportunities?
How quickly does the firm need to correct for
weaknesses & environmental threats?
Prioritization & trade-off analysis
What matters most?
What must the firm give up to pursue prioritized
opportunities?
Does the firm have the backbone to make the hard
choices, and stick to them?

Core Competencies A Valuable Company Resource
A competence becomes a core competence when the
well-performed activity
is central to a companys competitiveness and
profitability
is recognized by and resides in the people who work
for the firm
represents a valuable competitive capability and
sustainable competitive asset
Examples??
Thus only 1-3 activities a firm performs are considered
core competences
The Concept of a Company Value Chain
Bottom line: cost control
A companys business consists of all activities
undertaken in designing, producing, marketing,
delivering, and supporting its product or service
A companys value chain consists of a linked set of
value-creating activities performed internally
The value chain contains two types of activities
Primary activities where most of
the value for customers is created
Support activities facilitate
performance of the primary activities
Representative Company Value Chain
Example: Value Chain Activities for a Bakery Goods
Maker
Primary Activities
Supply chain management
[most efficiently getting flour,
sugar, equipment, etc]
Recipe development and
testing
Mixing and baking
Packaging
Sales and marketing
Distribution
Support Activities
[indirect or
overhead
expenses]
Quality control
Human resource
management
Administration
Focuses on cross-company comparisons of how certain
activities are performed and costs associated with these
activities
Purchase of materials
Payment of suppliers
Management of inventories
Getting new products to market
Performance of quality control
Filling and shipping of customer orders
Training of employees
Processing of payrolls
Why is benchmarking here a good idea?
New business models: CDs vs digital downloads
Benchmarking Key Value Chain Activities
Cost competitiveness depends on how well a company
manages its value chain relative to how well
competitors manage theirs
When a companys costs are out-of-line, look to three
parts of industry value chain
1. Suppliers: can we buy it for less?
2. Internal activities: can we make it for less?
3. Forward channel allies: can we get it to market
for less?
Activities,
Costs, &
Margins of
Forward
Channel Allies
Internally
Performed
Activities,
Costs, &
Margins
Activities,
Costs, &
Margins of
Suppliers
Buyer/User
Value
Chains
Cost control as a competitive advantage
Limits of cost competitiveness & v.c.
As Porter tells us: there is only so much you can
squeeze out of the value chain without
innovation
Wal-Mart is hitting that wall
Cost containment, especially in supply chain,
eventually gets to the threshold
When threshold is reached what parts of the
v.c. can be re-done or removed completely?
Auto makers and robotics [removing humans]
No frills airlines vs legacy carriers [removing
labor unions, in-flight services, etc]