Value creating strategy
There are several important concepts that planners need to consider when evaluating which type of competitive advantage strategy to adopt.
One of the most important is whether the strategy is sustainable - can they continue to practice this strategy in the long-term or is it vulnerable to outside or inside forces? Being able to maintain the chosen competitive advantage strategy is critical because the costs in resources that are incurred in the planning and implementation process.
Another key component of the planning process is the evaluation and leverage of the core capabilities of the firm. The new strategic advantage strategy must utilize those capabilities and strengths that set the organization apart from others in their industry. It would be a waste of resources for a firm to ignore a strong core competency that can increase the firm's profitability. An internal audit is of great value when an organization is trying to hone or create a competitive advantage. The firm needs to thoroughly evaluate where they have core competencies and weaknesses.
The internal audit can also be valuable in identifying weaknesses in the firm's value chain. These weaknesses can be developed into strengths with the application of the proper resources. In turn these strengths can turn into distinctive competencies. A distinctive competency is a strength or capability that cannot be easily copied by the competitors. These distinctive competencies can be used to build competitive advantages.
Weakness -> Strengths ->Distinctive Competencies -> Competitive Advantage
A value chain analysis is a useful tool to determine where to develop competencies along the chain. A thorough evaluation of the entire value chain can help a firm see opportunities for integration. In addition, the firm can also identify those functions that are no longer cost effective and perhaps spin off unproductive units.
One of the most important is whether the strategy is sustainable - can they continue to practice this strategy in the long-term or is it vulnerable to outside or inside forces? Being able to maintain the chosen competitive advantage strategy is critical because the costs in resources that are incurred in the planning and implementation process.
Another key component of the planning process is the evaluation and leverage of the core capabilities of the firm. The new strategic advantage strategy must utilize those capabilities and strengths that set the organization apart from others in their industry. It would be a waste of resources for a firm to ignore a strong core competency that can increase the firm's profitability. An internal audit is of great value when an organization is trying to hone or create a competitive advantage. The firm needs to thoroughly evaluate where they have core competencies and weaknesses.
The internal audit can also be valuable in identifying weaknesses in the firm's value chain. These weaknesses can be developed into strengths with the application of the proper resources. In turn these strengths can turn into distinctive competencies. A distinctive competency is a strength or capability that cannot be easily copied by the competitors. These distinctive competencies can be used to build competitive advantages.
Weakness -> Strengths ->Distinctive Competencies -> Competitive Advantage
A value chain analysis is a useful tool to determine where to develop competencies along the chain. A thorough evaluation of the entire value chain can help a firm see opportunities for integration. In addition, the firm can also identify those functions that are no longer cost effective and perhaps spin off unproductive units.