Answer to Question #274496 in Management for linlin

Question

SWOT analysis focusses attention on both the internal (resources and capabilities) and external attributes of a firm’s environment. However, without the analytical tools or model for analysing a firm’s environment, SWOT analysis provides no guidance in how these firm’s environmental questions are answered. Describe the tools or model normally used in analysing industry forces and firm’s internal resources and capabilities.

Answer 1

Discussion

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential. Industry analysis, for an entrepreneur or a company, is a method that helps to understand a company’s position relative to other participants in the industry. It helps them to identify both the opportunities and threats coming their way and gives them a strong idea of the present and future scenario of the industry. The key to surviving in this ever-changing business environment is to understand the differences between one’s company and the competitors in the industry and use it to full advantage. Below are some tools and methods to help analyse an organisation's strengths and weaknesses in order to develop a realistic and achievable strategy;

• The Capacity Assessment Grid

This is a great tool to help understand an organisation's strengths and weaknesses. It is quite a complex tool but it can also be used in small bites. The most important question to ask when carrying out the assessment is: how fit is the company to take advantage of the opportunities and overcome the threats that it faces?

• Core competencies

This technique focuses on an organisation's internal resources to identify what makes that organisation unique. It involves reviewing the organisation's skills, competencies and expertise, both as a whole staff team and as individual team members. The aim of the exercise is to analyse the specific elements that make an organisation distinctive or different from others in its sector. A competence which is central to an organisation’s operations, but which isn’t exceptional in some way, shouldn’t be considered as a core competence, because it will not distinguish the organisation from others. The technique can be used to identify what makes an organisation unique and also to analyse what makes other organisations in the field particularly successful. It can help link staff recruitment and development to the strategic planning process. Core competencies can be a useful way to look inside an organisation to assess its strengths and weaknesses. The technique can also be used as part of a competitor analysis when scoping external environment.

• Appreciative inquiry

This involves identifying the past or current strengths of an organisation. Focusing exclusively on positive experiences, these insights are used as a starting point to build a picture of the organisation’s future. Because this vision is grounded in real experience and history, people know how to repeat or build on the organisation’s success. The core principle is to build the organisation around what works, rather than trying to fix what doesn't. Appreciative inquiry attempts to counter-act the tendency of many organisations to focus more readily on the negative or less successful elements of their work. The technique assumes that an organisation’s outlook will be self-fulfilling. By encouraging people to take an exclusively positive stance towards their work, the technique aims to boost people’s ambition for creating an even better, more successful organisation. Appreciative inquiry can re-motivate the team, putting them in a positive and more aspiration frame of mind for moving forward.

• Portfolio analysis

A portfolio analysis helps to look at all the existing products and services and to rate them according to demand and how much of the market each service holds. Mapping services in this way can help a company to decide where to invest more or less time and money, or whether to drop particular services. This tool helps a company to consider the benefits of each of their services in the light of current demand and other players offering similar services. The assumption of this tool is that long-term profitability is the main goal and existing customers are secondary. Keep the mission clearly in mind to ensure users or cause are centre stage when its decision time.

Reference

Barney, J. B. (1995). Looking inside for competitive advantage. Academy of Management Perspectives, 9(4), 49-61.