chapter 4 Evaluating a Company’s Resources,

Transcript:chapter 4 Evaluating a Company’s Resources,:
chapter 4 Evaluating a Company’s Resources, Capabilities, and Competitiveness © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill. Copyright Image Source/Getty Images Learning Objectives After reading this chapter, you should be able to: Evaluate how well a company’s strategy is working. Assess the company’s strengths and weaknesses in light of market opportunities and external threats. Explain why a company’s resources and capabilities are critical for gaining a competitive edge over rivals. Understand how value chain activities affect a company’s cost structure and customer value proposition. Explain how a comprehensive evaluation of a company’s competitive situation can assist managers in making critical decisions about their next strategic moves. Chapter Overview This chapter focuses on six strategic questions: How well is the company’s present strategy working? What are the company’s strengths and weaknesses in relation to the market opportunities and external threats? What are the company’s most important resources and capabilities, and will they give the company a lasting competitive advantage over rival companies? How do a company’s value chain activities impact its cost structure and customer value proposition? Is the company competitively stronger or weaker than key rivals? What strategic issues and problems merit front-burner managerial attention? 3 Tools and Techniques of Strategic Analysis Answering the six strategic questions about how well a company’s current competitive capabilities and strategy are matched to its present and future circumstances: Resource and capability analysis. SWOT analysis. Value chain analysis. Benchmarking. Competitive strength assessment. 4 QUESTION 1: How Well Is the Company’s Present Strategy Working? The three best indicators of how well a company’s strategy is working are: Whether it is achieving its stated financial and strategic objectives. Whether its financial performance is above the industry average. Whether it is gaining customers and gaining market share. FIGURE 4.1 Identifying the Components of a Single-Business Company’s Strategy Access the text alternative for slide images. Specific Indicators of Strategic Success Sales and earnings growth trends. Firm’s overall financial strength. Stock price trends. Rate of new customers acquired. Customer retention rate. Evidence of improvement in internal processes: defect rate, order fulfillment, delivery times, days of inventory, and employee productivity. TABLE 4.1 Key Financial Ratios: How to Calculate Them and What They Mean 1 TABLE 4.1 Key Financial Ratios: How to Calculate Them and What They Mean 2 TABLE