TAILIEUCHUNG - Lecture Crafting and executing strategy: Chapter 4 - Thompson, Peteraf, Gamble, Strickland

Chapter 4 - Evaluating a company’s resources, capabilities, and competitiveness. The objectives of this chapter are to: Learn how to assess how well a company’s strategy is working, understand why a company’s resources and capabilities are central to its strategic approach and how to evaluate their potential for giving the company a competitive edge over rivals, discover how to assess the company’s strengths and weaknesses in light of market opportunities and external threats. | CHAPTER 4 EVALUATING A COMPANY’S RESOURCES, CAPABILITIES, AND COMPETITIVENESS STUDENT VERSION QUESTION 1: HOW WELL IS THE FIRM’S PRESENT STRATEGY WORKING? Best indicators of a well-conceived, well-executed strategy: The firm is achieving its stated financial and strategic objectives. The firm is an above-average industry performer. SPECIFIC INDICATORS OF STRATEGIC SUCCESS Growth in firm’s sales and market share Acquisition and retention of customers Strengthening image and reputation with customers Increasing profit margins, net profits and ROI Growing financial strength and credit rating Leadership in factors relevant to market\industry success Continuing improvement in key measures of operating performance QUESTION 2: WHAT ARE THE FIRM’S COMPETITIVELY IMPORTANT RESOURCES AND CAPABILITIES? Competitive Assets Are the firm’s resources and capabilities. Are the determinants of its competitiveness and ability to succeed in the marketplace. Are what a firm’s strategy depends on to develop sustainable competitive advantage over its rivals. 4–4 QUESTION 3: IS THE COMPANY ABLE TO SEIZE MARKET OPPORTUNITIES AND NULLIFY EXTERNAL THREATS? SWOT Analysis Is a powerful tool for sizing up a firm’s: Internal strengths (the basis for strategy) Internal weaknesses (deficient capabilities) Market opportunities (strategic objectives) External threats (strategic defenses) 4–5 IDENTIFYING A COMPANY’S INTERNAL STRENGTHS A Competence Is an activity that a firm has learned to perform with proficiency—a capability. A Core Competence Is a proficiently performed internal activity that is central to a firm’s strategy and competitiveness. A Distinctive Competence Is a competitively valuable activity that a firm performs better than its rivals. IDENTIFYING A FIRM’S WEAKNESSES AND COMPETITIVE DEFICIENCIES A Weakness (Competitive Deficiency) Is something a firm lacks or does poorly (in comparison to others) or a condition that puts it at a competitive disadvantage in the marketplace. Types of

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