Developing Competitive Advantage and Strategic

Focus

Chapter 5 Presented by : Ashraf Hatem HlouhCourse name: Marketing Management strategy

o Introduction o The definition of SWOT analysis.o Major Benefits of SWOT Analysis o The Elements of a SWOT Analysiso The SWOT Matrixo Making SWOT Analysis productive.o SWOT-Driven Strategic Planning.o Developing Marketing Goals and Objectives.o Establishing a Strategic Focuso Some definitions o Developing Marketing Goals and Objectives.

 

Outline of the chapter

Something that places a product, company, service or person above the competition

Introduction:Competitive Advantage means

A SWOT analysis (strength and weakness, opportunities and threat).

A SWOT analysis encompasses both the internal and external environment of the firm.

A SWOT analysis is one the most effective tools in the analysis of marketing data and information. For development the competitive advantage.

oThe definition of SWOT analysis

The advantage of using SWOT analysis is :1. Is a analysis that widely used framework for organizing and

utilizing the pieces of data and information gained from the situation analysis…”

2. Encompasses both internal and external environments

3. One of the most effective tools in the analysis of environmental data and information

The criticism leveled against SWOT analysis are:1. It allows the firm to create lists without serious consideration of

the issue.2. It often became a sterile academic exercise of classifying data

and information

Simplicity Lower Costs Flexibility Integration and Synthesis Collaboration EXHIBIT 5.1

oMajor Benefits of 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.

oThe Elements of SWOT Analysis

A four-cell array used to categorize information at the conclusion of a SWOT analysis. EXHIBIT 5.5

The SWOT Matrix

It is not mandatory SWOT matrix be assessed quantitatively, but it can be informative to do so.

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 matching strengths with opportunities.

EXHIBIT 5.6

The SWOT Matrix

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.  

oSWOT-Driven Strategic Planning

If you done SWOT correctly and smartly, SWOT analysis can be a viable mechanism for development of marketing plan, but if not done correctly it can be a great waste of time.

Direction to make SWOT analysis more

productive and useful. EXHIBIT 5.2

o Making SWOT analysis productive

1.Stay focus In the most firms, there should be a series

of analysis, each focusing on a specific product/market combination.

The only time a single a SWOT analysis would be appropriate is when an organization has only one product/market combination.

o Making SWOT analysis productive

2.Search extensively for competitors The firm must watch for any current or

potential direct substitutes for its product.

Even the industry giants can lose sight for their potential competitors by focusing exclusively on brand competition.

3.Collaborate with other functional area Managers in sales, advertising, promotion

research and development, finance, customer service, inventory control, quality control and other area should learn what the mangers and the other mangers see as the firm’s weakness, opportunities and threats.

Moreover, researcher should show the success of introducing a new product, especially a radically new product, is extremely depend on the ability of different functional areas to collaborate and integrate their differing perspective

4.Examine issue from the customers’ perspective

In the initial stage of SWOT analysis, it is important to identify issue exhaustively.

To do this, the manager must constantly ask question such as these:

What do customers (non customers) believe about us as a company?

What do customers (non customers) think of our product quality, customer service …in comparison to our competitors?

Which our weaknesses translate into decrease ability to serve customers?

How do trends in the external environment effect customers (and non customers) ?

What is relative importance of these issues, not as we see them but as customers see them?

Examining issues from the customers also includes internal customers its employees, they are also valuable source of information on strength, weakness and threat that management may have never consider.

Taking customer perspective is cornerstones of a well-done SWOT analysis also force the mangers to change their perception to the way customers and other important group. EXHIBIT 5.3

5.Look for causes, not characteristics

It provides a level of detail that is often very descriptive but not very constructive.

From a resource –based viewpoint, every organization can be considered as a unique bundle of tangible and intangible resources.

Major types of these resources include the following:

Financial Resources. Intellectual Resources. Legal Resources. Organizational Resources. Informational Resources. Relational Resources. Reputational Resources

6. Separate internal issues from external issues

The failure to understand the difference between internal and external issue is one of the major reasons for poorly conduct SWOT analysis.

The managers’ options, strategies, or tactics should be based on what the firm intends to do about its opportunities and threats relative to its own strength and weakness.

If the managers find it difficult to make an honest and realistic assessment of these issue, they should recognize the need to bring in outside experts or consultant to oversee the process.

The role of SWOT analysis then is to help the marketing managers make the transition from a broad understanding of the marketing environment to the development of a strategic focus for the firm`s marketing efforts. 

EXHIBIT 5.4

oSWOT-Driven Strategic Planning

Strength and weaknesses exist either because of resources possessed (or not possessed) by the firm, or in the nature of relationship between the firm and its employee, or outside organization.

Marketing manager can then develop marketing strategies that leverage these capabilities in the form of strategic competitive advantage, also develop strategy to overcome the firms’ weaknesses or find ways to minimize the negative effect of these weaknesses.

1.Strength and weaknesses

Opportunities and threats typically occur within the competitive, customers, economic, political/legal, technological, and social culture environment.

2.Opportunities and threats

Competitive advantage is advantages can arise from many external or internal sources and refer to real differences between competing firms.

The key strength most likely to be converted into capabilities will be those that have a compatibility with important and sizable opportunities.

EXHIBIT 5.7 Competitive advantages can arise from many

external or internal sources.

Competitive advantages refer to real differences between competing firms.

  Developing and Leveraging competitive Advantages

Three basic strategies for competitive advantage:

(1) Operational Excellence

(2) Product Leadership

(3) Customer Intimacy

EXHIBIT 5.8

At the conclusion of SWOT analysis, marketing managers turn his or her attention toward establishing the strategic focus of the firms marketing program.

Using the result of SWOT analysis as a guide, a firm might consider

Establishing a Strategic Focus

Four general directions for its strategic efforts:

Aggressive (many internal strength/many external strength opportunities).

Expansion and growth, with new product and new market, is the key to an aggressive approach. Google vice, YouTube.

Diversification (many internal strength/many external threats) firms in this position have a great deal to offer, but external factors weaken their ability to pursued aggressive strategy.

Marlboro, Virginia, Prince Albert Turnaround (many internal weaknesses/many external

opportunities) in this case, firms typically have to put their own house back in order before looking beyond.

GM AND Saab Defensive (many internal weaknesses / many external threats) Merck

Competitors: Any person or entity which is a rival against another. In business, a company in the same industry or a similar industry which offers a similar product or service.  

Capability: its Measure of the ability of an entity  (department, organization, person, system) to achieve its objectives, especially in relation to its overall mission.

Competitive advantage: its advantages can arise from many external or internal sources and refer to real differences between competing firms.

Competitive strategy: Long-term action plan that is devised to help a company gain a competitive advantage over its rival. This type of strategy is often used in advertising campaigns by somehow discrediting the competition's product or service.

Cooperative strategy : A strategy in which firms work together to achieve a shared objective

oSome definitions

We reiterate that marketing goals and objective must be consistent with overall mission and vision of the firms.

1. Developing Marketing GoalsAs statement of broad, desired accomplishments,

goals are expressed in general terms and do not contain specific information about where the organization presently stands or where it hope to be in the future.

oDeveloping Marketing Goals and Objectives

Goals should be : 

Attainability: setting realistic goals is important because the key parties involved reaching them must see each goal as reasonable.

Real goals motivate employee toward becoming “number one” , and unrealistic goals can be demotivational because they show employee that management is out of touch. Consistency: management must work to set goals that

are consistent with another.Comprehensiveness: this means that each functional area

should be able to develop its own goals that related to organizational goals. (goals should help clarify the roles of all parties in the organization)

Intangibility: intangibility associated with the use of terms such as best trained most creative, and most effective.

2. Developing Marketing Objectives

Goals without objective are essentially meaningless because progress is impossible to measure.

Objectives involve measurable, quantitative outcomes, with specifically assigned responsibility for their accomplishment and definite time period for their attainment.

Developing discontinuous objective is one of major benefits a company can gain from applying for the Malcolm Baldrige Quality Award.

Moving Beyond Goals and Objectives

Organizational goals and objective must lead to the establishment of consistent goals and objective for each functional area of the firm.

Objective should beAttainability: A good objective is one that is

attainable with reasonable amount of effort. Continuity: the need for realism bring up a second

consideration, that of continuity. Marketing objectives can be either continuous

A. Continuous objective: that are identical, or slightly modified, from period to period often do not need new strategies.(Employees naturally tend to be objective oriented).

B. Discontinuous objective: significantly elevate the level of performance on a given outcome factor or bring new factors into the set of objectives

EXHIBIT 5.10

Time Frame: companies often establish marketing plans or an annual basis, marketing objective may different from this period in their time frame.

Sales volume, market share, customer service and gross margin objectives.

For the objective with longer time frames, it’s important to remind employees of the objective on a regular basis and to provide feedback on progress toward its achievement.

Assignment of Responsibility: the final aspect of objectives that sets them apart from goals is that the marketing manager must identify person, team, or unit responsible for achieving each objective.

Thank you for your attention