/ARTICLE LINK: Murray_on_competitive_advantage_5_cubed_model(2).pdf
Discuss the value of the SWOT Analysis in gaining competitive advantage.
A SWOT analysis allows a firm to determine the business’s strengths and weaknesses, while identifying the potential opportunities and threats due to external influencers. The SWOT Analysis helps a firm paint a clear picture of what the business is strong in as far as attributes, and also helps a firm prepare for any outside threats that could impact the success of the business. The analysis helps a firm determine the appropriate direction of the business (Murray, n.d.). A SWOT Analysis therefore allows a firm to gain better insight into developing a strategy and how to remain competitive by linking the businesses’ environment to its strategy (Murray, n.d.). A key component to assessing competitive advantage within a company is understanding what activities competitors are doing (Carpenter & Sanders, 2008). Although SWOT Analysis is incredibly valuable, Murray (n.d.) mentions that the analysis doesn’t allow a firm to react to radical changes in the market, only incremental. This slow reaction time could impact a firm’s competitive advantage. Murray (n.d.) therefore offers the 53 model, which includes customers, context, change, competition, and capabilities. The model lists the five constraints that impact a firm’s competitive advantage, and allows the firm to better assess competitor activities and make decisions off various threats.
My department uses SWOT analysis when we develop go-to-market plans for new product development projects. The SWOT Analysis allows us to weight the various internal and external factors that give the new product being developed a competitive advantage in the market. The analysis helps illustrate what areas the product would do well in, what resources we have available that would allow the firm to support the project, and helps us see any external threats that would hinder the products success. We often share the analysis with other departments who work first hand with the new development project. I think Murray’s (n.d.) 53 model would also add value in how we weight threats and make decisions based on competitor activities.
How are the firm’s Resources and Capabilities – Valuable, Rare, Inimitable or Nonsubstitutable, Exploitable? (Apply your own organizational and/or SSM company experiences using the VRINE model) [NOTE: see TEXT, Summary #6, page 88]
The VRINE Model helps a firm test if their resources and capabilities add to the firm’s overall competitive advantage (Carpenter & Sanders, 2008). Within my current company we have various valuable resources that allow us to gain opportunity as well as fend off threats in the market. One valuable resource my firm promotes is having various field service resources accessible globally. We offer onsite field service with any sale of our machine. This allows us to support customers, stay competitive in regional markets, and identify new opportunities as they arise.
“Rarity is defined as scarcity relative to demand.” (Carpenter & Sanders, 2008, p.75). This pertains to when a firm maintains a scare resource that competitors don’t have accessibility to. When I think of rarity in my current company I think of our ability to mass-produce capital equipment that many of our competitors can’t match. When we get large orders from key accounts, we are able to boost production with a flip of a switch, and generate inventory quickly, that many of our customers catch match. This is primarily due to our efficient supply chain and vendor capabilities. We have various suppliers that we order parts from, that competitors just can’t compete with. We are able to order large amounts of inventory to meet these large orders due to well-established processes and relationships with suppliers.
“The criterion of inimitable is satisfied if competitors cannot acquire the valuable and rare resource quickly or if they face a cost disadvantage.” (Carpenter & Sanders, 2008, p. 76). “The nonsubstitutable criterion is satisfied if a competitor cannot achieve the same benefit using different combinations of resources and capabilities.” (Carpenter & Sanders 2008, p. 76). One way my current company uses inimitability is by using legal patents to protect product designs and technologies. “Competitors can be prevented from copying resources if they are protected by ownership rights.” (Carpenter & Sanders, 2008, p. 77). By using legal patent laws, my firm is able to minimize competitors from copying designs of products, gaining a competitive advantage. In addition, my company uses acquisitions to gain a competitive advantage when it comes to nonsubstitutable resources and capabilities. If there is a business that offers benefits and a competitive advantage in the market, my corporation will often buy out the company to gain the technologies, and market advantages. By acquiring companies that have resource and capabilities that we once couldn’t’ obtain, we gain a competitive advantage over competition in the market.
And lastly exploitable, which is the focus of using a company’s ability to generate value by using resources and capabilities to the best of the firm’s advantage to gain competitive advantage (Carpenter & Sanders, 2008). One example of exploitable ability that my firm uses is through our key accounts to help generate added revenue each quarter. Over the years we have generated key accounts with large name customers that not only allow us to maintain high market share in the semiconductor industry, but also exploit our key accounts technologies to generate new technologies that other secondary account will soon need. We develop new technologies based on these leading competitors needs, gaining a competitive advantage by having insight into future market trends before secondary companies demand the technology.
Define dynamic capabilities and explain their role in both strategic change and a firm’s performance.
Carpenter and Sanders (2008) define dynamic capabilities as, “Processes by which a firm integrates, reconfigures, acquires, or divests resources in order to achieve new configurations of resources and capabilities.” (p. 81). Dynamic capabilities allow a firm to shift resources based on environmental influencers, allowing for more flexible adjustments internally as new opportunities in the market arise. By being able to adjust based on environmental factors, a firm can gain a competitive advantage. “The ability to integrate different resources and capability to create new revenue-producing products and services is a dynamic capability.” (Carpenter & Sanders, 2008, p.81). By being able to make adjustments a firm will be able to stay competitive, differentiated, and properly positioned in the marketplace to stay competitive. Firm’s that lack the ability to make resource and capability adjustments will get caught flat footed, and underprepared when markets shift, customers needs change, or when competitors launch a new product that the firm hadn’t prepared for. Staying aware of environmental factors allows a firm to stay competitive.
Carpenter, M.A., & Sanders, W.G., (2008). Strategic management: A dynamic perspective. Upper Saddle River, NJ: Pearson Prentice Hall.
Murray, A. I. (n.d.). Strategic choice under knowledge competition. Retrieved from http://csumb.elearningctr.com/pluginfile.php/30629…