What should our strategic position be

Subscribe for unlimited access. Create an account to read 2 more. In contrast, […] by H. James Wilson. Read more on Strategy or related topics Strategy execution and Innovation. James Wilson is global managing director of information technology and business research at Accenture Research. Your operating environment is influenced by several general areas. These areas summarize the external environment every organization operates in and are illustrated in the diagram below.

Remember your operating environment is the outside circle influencing your business. Some of these trends and issues may even appear to come and go in slow motion. To take the next steps, you will need to find secondary data sources to conduct your analysis. It may be essential to look at periodicals, analyst reports, demographics, and anything that will give the exposure to new trends and possibilities. Any reliable secondary data source of current events and projected future trends will provide information for the PEST analysis , including:.

Swinging from one extreme to another is easy when it comes to analyzing your competition. Others track every move and assess how to react. You want to fall somewhere in the middle. The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. Here are a few other key ways a competitive analysis fits into strategic planning:. Start by identifying organizations you compete against for attention and loyalty.

To do this, perform the following:. Opportunities are situations that exist but must be acted on if the business is to benefit from them. Opportunities most relevant to a company are those that offer important avenues for profitable growth, those where a company has the most potential for competitive development, and those that match up well with the financial and organizational resource capabilities that the company already possesses or can acquire.

Threats refer to external conditions or barriers that may prevent a company from reaching its objectives. The following areas can help you identify opportunities and threats that can be collected via research and surveys. Strengths refer to what your organization does well. It gives you an advantage in meeting the needs of its target markets. An analysis of organization strengths should be market and customer-focused, because strengths are only meaningful when they assist the business in meeting customer needs.

Strengths give the organization enhanced competitiveness. Weaknesses refer to any limitations an organization faces in developing or implementing a strategy. A weakness is something an organization lacks or does poorly in comparison to others, or a condition that puts it at a disadvantage. Weaknesses should also be examined from a customer perspective, because customers often perceive weaknesses that an organization cannot see.

You can define your strengths and weaknesses by breaking them down in these areas. Then align them with the strategic direction you want to go. They can be discovered via assessments and surveys:. Customer-focused organizations recognize that they cannot appeal to all buyers in the same way.

Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Rather than trying to compete in the entire market, you must identify parts of the market that you can serve best and most profitably.

The most effective way to do this is to segment customers. The goal of creating customer segments is so you can target specific customers that have similar needs and wants with the same message, products, pricing, and through the same distribution channels. When done correctly, your target market will respond similarly to your marketing efforts. After you have identified your segments, determine what they need and how you can best satisfy them by providing value.

Many organizations are committed to doing the right things, but they fail to understand what their people value. Then evaluate how to best provide value for each segment and set goals accordingly. Some examples of customer segments include:.

After you have identified your customer segments, evaluate them based on the following criteria:. List the needs or wants of this customer segment. You are involved in an industry that is undergoing change and disruption by taking this class.

The traditional textbook industry is being disrupted by the availability of digital textbooks, and free textbooks such as this one are further impacting traditional textbook publishers. Elon Musk cofounded Tesla in with the vision of making electric cars that could rival, and even replace, traditional gas-engine cars in the consumer marketplace.

At the start of the 21st century, the external environment was beginning to show favorable signs for the development of electric cars: people were becoming more concerned about the environment and their carbon footprints, and gas prices were beginning a steep climb that had already spurred the sales of hybrid gas-electric cars such as the Toyota Prius.

The automobile industry was not responding to these environmental trends, instead relying on the fact that trucks such as the Ford F and Chevrolet Silverado were still the two top-selling vehicles in America in Musk saw a different future for vehicles, and Tesla introduced the all-electric Roadster in Four years later, the more practical Model S was introduced, and Tesla sales began to climb.

As a new entrant in the automobile industry, though, Tesla faced several challenges. Manufacturing and distribution in this industry are extremely expensive, and Tesla had to develop the capability of efficiently manufacturing large quantities of cars. To combat this, Tesla developed an extensive network of charging stations so consumers could be confident that they could charge their cars conveniently.

Tesla has also taken advantage of tax incentives to develop its charging stations and to sell its cars, because Tesla customers receive tax credits for the purchase of their cars. Tesla cars are not inexpensive, however, and that has limited their marketability. In , Tesla launched the Model 3, designed to transform the car industry by being its first mass-market, affordable model.

By mid, the reservations list had reached half a million customers, creating a new problem for Tesla. How could it possibly manufacture that many cars when production levels for all of were less than 84, cars?

Which factors posed challenges? How does strategic analysis help a firm develop its own strategic position? Chapter Review Questions Why do managers use strategic analysis? What information does a SWOT analysis provide managers?

What information might it miss? What are firm resources and capabilities, and what information does VRIO provide about them? When does a firm have a competitive advantage over its rivals? What do strategic group members have in common with each other? What impact do firms outside a strategic group have on those in that group? Why should that position be unique?