Download Developing Competitive Advantage and Strategic Focus

Developing Competitive
Advantage and Strategic
Focus
Dr. Ananda Sabil Hussein
SWOT Analysis
(Strengths, Weaknesses, Opportunities, Threats)
 “A widely used framework for organizing and utilizing the pieces of
data and information gained from the situation analysis…”
 Encompasses both internal and external environments
 One of the most effective tools in the analysis of environmental data and
information
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Major Benefits of SWOT Analysis
 Simplicity
 Lower Costs
 Flexibility
 Integration and Synthesis
 Collaboration
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Common Criticisms
of SWOT Analysis
 Allows firms to create lists without serious
consideration of the issues
 Often becomes a sterile academic exercise of
classifying data and information
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Making SWOT Analysis Productive
 Stay Focused
 Search Extensively for Competitors
 Collaborate with other Functional Areas
 Examine Issues from the Customers’ Perspective
 Look for Causes, Not Characteristics
 Separate Internal Issues from External Issues
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Stay Focused
 It is a mistake to complete one generic SWOT analysis for the
entire organization or business unit.
 When we say SWOT analysis, we mean SWOT analyses.
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Search Extensively for Competitors
 Information on competitors is an important aspect of a SWOT
analysis.
 Look for all four types of competition:
 Brand competitors
 Product competitors
 Generic competitors
 Total budget competitors
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Collaborate with Other Functional Areas
 Information generated from the SWOT analysis can be shared
across functional areas.
 SWOT analysis can generate communication between managers
that ordinarily would not communicate.
 Creates and environment for creativity and innovation.
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Examine Issues from
the Customers’ Perspective
 To do this, the analyst should ask:
 What do customers (and noncustomers) believe about us as a company?
 What do customers (and noncustomers) think of our product quality,
customer service, price, overall value, convenience, and promotional
messages in comparison to our competitors?
 What is the relative importance of these issues as customers see them?
 Taking the customers’ perspective is the cornerstone of a well done
SWOT analysis.
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Look for Causes, Not Characteristics
 Causes for each issue in a SWOT analysis can often be found in
the firm’s and competitors’ resources.
 Major types of resources:
- Financial
- Organizational
- Intellectual
- Legal
- Human
- Informational
- Relational
- Reputational
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Separate Internal from External Issues
 Failure to understand the difference between internal and
external issues is one of the major reasons for a poorly conducted
SWOT analysis.
 Socratic Advice:
 “Know thyself”
 “Know thy customer”
 “Know thy competitors”
 “Know thy environment”
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The Elements of a SWOT Analysis
 Strengths and Weaknesses
 Scale and Cost Economies
 Size and Financial Resources
 Intellectual, Legal and Reputational Resources
 Opportunities and Threats
 Trends in the Competitive Environment
 Trends in the Technological Environment
 Trends in the Sociocultural Environment
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SWOT-Driven Strategic Planning

Four issues the marketing manager must recognize:
1. The assessment of strengths and weakness should look
beyond products and resources to examine processes that
meet customer needs. Offer solutions to customer
problems instead of specific products.
2. Achieving goals and objectives depends on transforming
strengths into capabilities by matching them with
opportunities.
3. Weaknesses can be converted into strengths with strategic
investment. Threats can be converted into opportunities
with the right resources.
4. Weaknesses that cannot be converted become limitations
which must be minimized if obvious or meaningful to
customers.
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Analysis of the SWOT
Matrix
 SWOT Matrix
 A four-cell array used to categorize information at the
conclusion of a SWOT analysis.
 Should be based on customer perceptions, not the
perceptions of the analyst.
 Elements with the highest total ratings should have
the greatest influence in marketing strategy.
 Focus on competitive advantages by matching
strengths with opportunities.
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The SWOT Matrix
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Exhibit
Quantitative Assessment of
Elements Within the SWOT Matrix
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Developing and Leveraging
Competitive Advantages

Competitive advantages can arise from many
external or internal sources.

Competitive advantages refer to real differences
between competing firms.

Three basic strategies for competitive advantage:
1.
2.
3.
Operational Excellence
Product Leadership
Customer Intimacy
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Competitive Advantage Strategies

Operational Excellence

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
Product Leadership

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Focus on efficiency of operations and processes
Lower cost operations leads to lower prices for
customers
Excellence in technology and product development
Most advanced, highest quality product offering in
industry
Customer Intimacy


Understanding customers better than the competition
Develop long-term customer
relationships
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Common Sources
of Competitive Advantage
· Relational Advantages
· Product Advantages
· Legal Advantages
· Pricing Advantages
· Organizational Advantages
· Promotion Advantages
· Human Resources Advantages · Distribution Advantages
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Establishing a Strategic
Focus
 Four major directions for strategic efforts:
 Aggressive (many internal strengths / many external
opportunities)
 Diversification (many internal strengths / many external threats)
 Turnaround (many internal weaknesses / many external
opportunities)
 Defensive (many internal weaknesses / many external threats)
 These are the most common, but other
combinations of strengths and weaknesses are
possible.
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Strategy Canvas
 Identifies factors that the industry currently competes on and what
customers receive from existing product offerings (captured by the
horizontal axis)
 Identifies the offering level received by buyers for each factor (captured
by the vertical axis)
 High levels mean that a company invests more and offers buyers more of that
factor.
 Identifies a company’s relative performance across its industry’s
factors of competition (captured by the value curve)
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The Four Actions Framework
 Which factors that the industry takes for granted should be
eliminated?
 These factors may no longer have value for buyers
 Which factors should be reduced well below the industry’s
standard?
 Have products been over designed in a race to beat competition?
 Which factors should be raised well above the industry’s standard?
 Has the industry forced customers to make compromises?
 Which factors should be created that the industry has never
offered?
 What are the potential new sources of value for buyers?
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What Makes Good Strategy?
 Ultimately, good strategy is in the eye of the beholder.
 In marketing, there are no rules to follow and no one to hold your
hand. There is only the cold hard truth of customers and
competition.
 Good strategy is about matching the firm's strengths to the
available opportunities.
 Blue Ocean Strategy defines good strategy as having these three
characteristics:
1. Focus – Good strategy does not diffuse the company's efforts across all
key factors of competition (the value curve clearly shows focus in the
strategy).
2. Divergence – Good strategy differs from other competitors in the market
(the value curve is unique from competitors).
3. Compelling Tagline – Good strategy can be summarized in a clear-cut
statement that delivers a clear, compelling message to customers.
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Developing Marketing
Goals and Objectives
 Developing Marketing Goals
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Attainability
Consistency
Comprehensiveness
Intangibility
 Developing Marketing Objectives
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Attainability
Continuity
Time Frame
Assignment of Responsibility
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