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Developing Competitive

Advantage and Strategic


Focus
Dr. Ananda Sabil Hussein

SWOT Analysis
(Strengths, Weaknesses, Opportunities,
Threats)
A widely used framework for organizing and utilizing the pieces
of data and information gained from the situation analysis

Encompasses both internal and external environments

One of the most effective tools in the analysis of environmental


data and information

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Major Benefits of SWOT Analysis


Simplicity
Lower Costs
Flexibility
Integration and Synthesis
Collaboration
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Common Criticisms
of SWOT Analysis
Allows firms to create lists without
serious consideration of the issues

Often becomes a sterile academic


exercise of classifying data and
information

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Making SWOT Analysis


Productive
Stay Focused
Search Extensively for Competitors
Collaborate with other Functional Areas
Examine Issues from the Customers Perspective
Look for Causes, Not Characteristics
Separate Internal Issues from External Issues

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Stay Focused
It is a mistake to complete one generic SWOT analysis for
the entire organization or business unit.

When we say SWOT analysis, we mean SWOT analyses.

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Search Extensively for


Competitors
Information on competitors is an important aspect of a
SWOT analysis.

Look for all four types of competition:


Brand competitors
Product competitors
Generic competitors
Total budget competitors

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Collaborate with Other Functional


Areas
Information generated from the SWOT analysis can be
shared across functional areas.

SWOT analysis can generate communication between


managers that ordinarily would not communicate.
Creates and environment for creativity and innovation.

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Examine Issues from


the Customers Perspective
To do this, the analyst should ask:
What do customers (and noncustomers) believe about us as a
company?
What do customers (and noncustomers) think of our product
quality, customer service, price, overall value, convenience, and
promotional messages in comparison to our competitors?
What is the relative importance of these issues as customers see
them?

Taking the customers perspective is the cornerstone of a well


done SWOT analysis.

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Look for Causes, Not


Characteristics
Causes for each issue in a SWOT analysis can often be
found in the firms and competitors resources.
Major types of resources:

- Financial

- Organizational

- Intellectual
- Legal
- Human

- Informational
- Relational
- Reputational

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Separate Internal from External


Issues
Failure to understand the difference between internal and
external issues is one of the major reasons for a poorly
conducted SWOT analysis.
Socratic Advice:
Know thyself
Know thy customer
Know thy competitors
Know thy environment

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The Elements of a SWOT


Analysis
Strengths and Weaknesses
Scale and Cost Economies
Size and Financial Resources
Intellectual, Legal and Reputational Resources

Opportunities and Threats


Trends in the Competitive Environment
Trends in the Technological Environment
Trends in the Sociocultural Environment

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SWOT-Driven Strategic Planning


Four issues the marketing manager must recognize:

1. The assessment of strengths and weakness should look


beyond products and resources to examine processes
that meet customer needs. Offer solutions to customer
problems instead of specific products.
2. Achieving goals and objectives depends on
transforming strengths into capabilities by matching
them with opportunities.
3. Weaknesses can be converted into strengths with
strategic investment. Threats can be converted into
opportunities with the right resources.
4. Weaknesses that cannot be converted become
limitations which must be minimized if obvious or
meaningful to customers.
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Analysis of the SWOT


Matrix
SWOT Matrix
A four-cell array used to categorize information at
the conclusion of a SWOT analysis.

Should be based on customer perceptions,


not the perceptions of the analyst.
Elements with the highest total ratings
should have the greatest influence in
marketing strategy.
Focus on competitive advantages by
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matching strengths with
opportunities.

The SWOT Matrix

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Exhibit
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Quantitative Assessment of
Elements Within the SWOT Matrix

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Developing and Leveraging


Competitive Advantages
Competitive advantages can arise from
many external or internal sources.
Competitive advantages refer to real
differences between competing firms.
Three basic strategies for competitive
advantage:
1. Operational Excellence
2. Product Leadership
3. Customer Intimacy
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Competitive Advantage
Strategies
Operational Excellence
Focus on efficiency of operations and processes
Lower cost operations leads to lower prices for
customers

Product Leadership
Excellence in technology and product development
Most advanced, highest quality product offering in
industry

Customer Intimacy
Understanding customers better than the competition
Develop long-term customer relationships
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Common Sources
of Competitive Advantage

Relational Advantages

Product Advantages

Legal Advantages

Pricing Advantages

Organizational Advantages

Promotion Advantages

Human Resources Advantages Distribution Advantages

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Establishing a Strategic
Focus
Four major directions for strategic efforts:
Aggressive (many internal strengths / many external
opportunities)

Diversification (many internal strengths / many external


threats)

Turnaround (many internal weaknesses / many external


opportunities)

Defensive (many internal weaknesses / many external


threats)

These are the most common, but other


combinations of strengths and weaknesses
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are possible.

Strategy Canvas
Identifies factors that the industry currently competes on and
what customers receive from existing product offerings
(captured by the horizontal axis)

Identifies the offering level received by buyers for each factor


(captured by the vertical axis)
High levels mean that a company invests more and offers buyers
more of that factor.

Identifies a companys relative performance across its industrys


factors of competition (captured by the value curve)
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The Four Actions Framework


Which factors that the industry takes for granted should be
eliminated?
These factors may no longer have value for buyers

Which factors should be reduced well below the industrys


standard?
Have products been over designed in a race to beat competition?

Which factors should be raised well above the industrys


standard?
Has the industry forced customers to make compromises?

Which factors should be created that the industry has never


offered?
What are the potential new sources of value for buyers?
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What Makes Good Strategy?


Ultimately, good strategy is in the eye of the beholder.
In marketing, there are no rules to follow and no one to hold your
hand. There is only the cold hard truth of customers and
competition.
Good strategy is about matching the firm's strengths to the
available opportunities.
Blue Ocean Strategy defines good strategy as having these three
characteristics:
1. Focus Good strategy does not diffuse the company's efforts across all key
factors of competition (the value curve clearly shows focus in the strategy).
2. Divergence Good strategy differs from other competitors in the market
(the value curve is unique from competitors).
3. Compelling Tagline Good strategy can be summarized in a clear-cut
statement that delivers a clear, compelling message to customers.
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Developing Marketing
Goals and Objectives
Developing Marketing Goals
Attainability
Consistency
Comprehensiveness
Intangibility

Developing Marketing Objectives


Attainability
Continuity
Time Frame
Assignment of Responsibility
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