Internal Analysis: Distinctive Competencies, Competitive Advantage and Profitability
Internal Analysis: Distinctive Competencies, Competitive Advantage and Profitability
Posted on November 8, 2010 by Domingo Salazar, MBA
The Roots of Competitive Advantage
The Internal analysis is concerned with the identifying the strengths and weaknesses of the company. The main implications on the read material about strategy formulation are as follows: Starting on distinctive competencies, we can differentiate its products from its rivals, in order to determine our/them strengths, including two complementary sources: tangible resources and intangible resources, which in turn are referred to the assets of a company; following this complementary sources, are the capabilities of the company, which coordinates the company’s skills, the resources, capabilities and competencies, which in turn generates the true distinctive competency.
Now, all this distinctive competencies shapes the strategies that the company pursues; however, is critical to realize that the strategies a company adopts can build brand new resources.
There are three main reasons for failure over time, which are inertia, prior strategic commitments, and the Icarus paradox:
The first one is related to the problematic situation changing their strategies for new and fresh ones, even more, to adapt the whole company or vision of the company, to the new competitive and environmental conditions; the second one is referring to the actual market’ limitations of the company to compete with its rivals is the main cause of competitive disadvantage, so the main point on this is timming; and the last one, is referring to the paradox of the greatest company assets, are the main cause of failure, if is not updated over time. Danny Miller, author of this statement, refers that many companies can become overwhelmed by their early success, as a result, they become so specialized that mislead the time-changing markets, leading to failure in most cases.
Talking now about the lower-cost producers, I would like
Posted on November 8, 2010 by Domingo Salazar, MBA
The Roots of Competitive Advantage
The Internal analysis is concerned with the identifying the strengths and weaknesses of the company. The main implications on the read material about strategy formulation are as follows: Starting on distinctive competencies, we can differentiate its products from its rivals, in order to determine our/them strengths, including two complementary sources: tangible resources and intangible resources, which in turn are referred to the assets of a company; following this complementary sources, are the capabilities of the company, which coordinates the company’s skills, the resources, capabilities and competencies, which in turn generates the true distinctive competency.
Now, all this distinctive competencies shapes the strategies that the company pursues; however, is critical to realize that the strategies a company adopts can build brand new resources.
There are three main reasons for failure over time, which are inertia, prior strategic commitments, and the Icarus paradox:
The first one is related to the problematic situation changing their strategies for new and fresh ones, even more, to adapt the whole company or vision of the company, to the new competitive and environmental conditions; the second one is referring to the actual market’ limitations of the company to compete with its rivals is the main cause of competitive disadvantage, so the main point on this is timming; and the last one, is referring to the paradox of the greatest company assets, are the main cause of failure, if is not updated over time. Danny Miller, author of this statement, refers that many companies can become overwhelmed by their early success, as a result, they become so specialized that mislead the time-changing markets, leading to failure in most cases.
Talking now about the lower-cost producers, I would like
References: June 1, 1994 | Partridge, Mike; Perren, Lew | Copyright COPYRIGHT 1999 Chartered Institute of Management Accountants (CIMA)