Discuss the value of the SWOT Analysis in gaining competitive advantage.
According to Carpenter & Sanders (2008), a SWOT Analysis allows a company to maximize the internal resources and capabilities that they have as well as to analyze and understand the resources and capabilities of competitors. This in turn helps managers make informed decisions when prioritizing activities that they conduct internally versus externally via outsourcing.
Read the attached paper by Alan Murray on the 5 cubed model. Address its contribution to the discussion of SWOT.
Murray (2000) discusses some of the disadvantages of the traditional SWOT; primarily being the lack of insight into the strategic implications of any one specific external factor and instead generalizes the decision to choose one direction or another should be done under consideration of external factors (Murray, 2000). The other disadvantage is that the SWOT assumes that change in incremental rather than abrupt, which has been becoming less frequent in the modern business world (Murray, 2000).
Following the theme of disadvantages of the SWOT Analysis, Pahl & Richter (2007) also attribute an inherent bias subjected by the individual(s) who are collecting the data as they assess their own strengths and weaknesses as well as their own perceived threats. Another example by Pahl & Richter (2007) is that there are no weighting mechanisms included in a SWOT, which creates a one-dimensional view of internal and external factors.
How are the firmâ€s Resources and Capabilities – Valuable, Rare, Inimitable or Nonsubstitutable, Exploitable?
According to Carpenter & Sanders (2008), companies can leverage the internal capabilities and resources they have access to in order to create a competitive advantage. In order for a resource to be valuable, it must promote the ability to exploit opportunities or to mitigate threats (Carpenter & Sanders, 2008). If it is valuable, and the resource in short supply, high demand and or possessed or sought after by competitors, then it is also rare (Carpenter & Sanders (2008). If the prior two apply, is the resource / capability and cannot be easily replicated or substituted, then it is nonsubstitutable and cannot be imitated (Carpenter & Sanders, 2008). Lastly, if all of the above apply, can it be exploited by the firm?
Tying in my own company, the Independent Broker Dealer (IBD) space is fairly homogenous. All IBDs provide customer support, supervisory services, record keeping, and clearing services. All IBDs also provide some medium in the way of technology for advisors to conduct business. The way that a IBD can stand out, according to our executive leadership, is by offering exceptional service and by building relationship with our customers, who are independent financial advisors. This is accomplished through the employees that interact with our customers on a daily basis. From a VRINE perspective, excellent service is valuable, it is rare, semi-difficult to imitate and certainly nonsubstitutable.
Define dynamic capabilities and explain their role in role in both strategic change and a firmâ€s performance.
Dynamic Capabilities is the firmâ€s ability to augment resources and capabilities in order to absorb or produce changes within their operating space (Carpenter & Sanders, 2008). This augmentation can occur by integrating with new resources, organizational realignment such as shifting of departments into other business units to optimize efficiencies and performance, and through activities such as mergers and acquisitions or new partnerships (Carpenter & Sanders, 2008). Amazonâ€s recent move into healthcare can be an example of dynamic capability. According to Farfan (2017), Amazonâ€s Vision statement is “… to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online†(para 3). Moving into the Healthcare marketspace absolutely stayed true to that vision and was accomplished by way of new alliances (Farr, 2018).
References:
Farr, C. (2018, January 30). Amazon’s health care move could be a big win for consumer health start-ups. Retrieved February 01, 2018, from https://www.cnbc.com/2018/01/30/amazon-health-move…
Farfan, B. (2017, December 24). What is Amazon.coms Mission Statement? Retrieved February 01, 2018, from https://www.thebalance.com/amazon-mission-statemen…
Pahl, N., & Richter, A. (2007). SWOT analysis: idea, methodology and a practical approach. Munchen: GRIN Verlag.
Murray, A. (2000). Strategic Choice under Knowledge Competition. In Thunderbird on Global Business Strategy (1st ed., pp. 47-87). New York, NY: John Wiley & Sons Inc.
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