Developing a strategic plan for competitive advantage must start with the understating of what the internal strengths
Discussion Board 4: Internal Environment, Power / Weakness, and Decision ModelsMichael W. Wellet Jr.
BUSI – 770 B02
School of Business, Liberty University Online Author Note
Michael W. Wellet, Jr.I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to Michael W. Wellet Jr.
Introduction
Developing a strategic plan for competitive advantage must start with the understating of what the internal strengths, and conversely, weaknesses, are. Knowing the strengths and weaknesses enables executives to more easily identify opportunities and threats. Furthermore, those four aspects aid in determining what the company’s value proposition, or how and what they provide, from an internal perspective, that differentiates them from their competition is critical to plan success. That value proposition, although formed by internal factors, such as intellectual knowledge, human capital, cost structure or manufacturing techniques, must always be measured by what value the company provides to market and what advantage it delivers over its competitors.
Process:
Evaluating the Internal Environment
When evaluating the internal environment, it is helpful for me personally to remove oneself from the day-to-day activities, take a step back to focus on what the company does well and what it offers that is different or can be further developed. Evaluation of the internal environment can be somewhat more challenging because it is large measure a matter of subjectivity in that it is directly dependent on the managers, their competence, willpower, commitment, aspiration, skills and experience in organizing and doing business (Maslova, et al., 2017). Accurately assessing the effectiveness of objective items such as a company’s cost structure, intellectual property and customer value proposition is less challenging (Gamble, et al., 2021, p.77).
A SWOT analysis of the organization can be extremely helpful, especially when performed using a cross section of managers within the organization. In the effort of strategy making, for several decades, an increasing number of companies are using the SWOT analysis as fundamental “filter” for their strategic process, specifically in review of internal functions (Vlados, 2019).
The SWOT analysis aids in the development of advantage, which is rooted in differences, in the asymmetries among rivals (Rumelt, 2011). If the adversaries are equally matched, then there can be no advantage and the key for management is to determine what the differences are. An example of this is developing a value proposition which assess customer needs and determines how well an organization can satisfy those needs with clearly differentiated benefits, relative to price, when compared with competitors (Payne, et al., 2020).Strategic Thinking: Discussion of a Key source of Power / Weakness
Quoting Socrates, “To know thyself is the beginning of wisdom” underwrites the concept of organizational internal environment and the basis for making for making strategic decisions. One way to gain advantage over the rival is to exploit the various internal dynamics within a given organization (Rumelt, 2011). This approach is based on the principle of dynamic capabilities, which holds that companies need to continually adapt their resources to respond to rapidly changing and unpredictable environments. Dynamic-capabilities-based models are the subject of a large and growing body of strategic management literature. (Teece, et al., 2020).
Understanding the internal dynamics of a company, i.e. people places and things can help to develop effective differentiators aimed at competitive advantage. Developing an effective strategic plan, must take the internal environment into account. Ecclesiastes 4:9-12 (English Standard Version, 2011) makes a point for this, “Two are better than one, because they have a good reward for their toil. For if they fall, one will lift up his fellow. But woe to him who is alone when he falls and has not another to lift him up! Again, if two lie together, they keep warm, but how can one keep warm alone? And though a man might prevail against one who is alone, two will withstand him, a threefold cord is not quickly broken”.Decision Modeling: How do my decision models aid / hinder this process and why? What other models are being considered?
Understanding the internal landscape of a company can be somewhat challenging because many of the milestones can be somewhat subjective, especially as it relates to human capital resources in areas such as knowledge base or work process. I usually attempt evaluate the more objective standards first, direct and indirect costs, revenue generation, physical location, and many others before I move on to the more subjective like differentiated work process or knowledge base.
Recognizing that no method is fool proof, I further supplement the subjective evaluations with harder forms of evaluation, such as SWOT or Results Optimization, which can be an iterative process leading the best possible outcome (Krogerus & Tschäppeler, 2017). Regardless of model used, knowing, as an executive, what I want the end result to be aids tremendously in the process and provides the map of what the end product looks like.Conclusion
Understanding the internal environment by which a business operates is crucial to not only strategic planning but to overall operation of the company. Internal factors such as internal politics, demographics, workforce as well as internal policies and procedures can alter a company’s direction as much as the competition, vendors, and clients’ needs. Because internal factors are many times intertwined with human capital factors, they can be very complex so, it is important, for me anyway, to look to the Lord for guidance and to light the path as in Proverbs 33:6 (English Standard Version, 2011), “Train up a child in the way he should go; even when he is old he will not depart from it”.
Annotated References
Gamble, J. E., Peteraf, M. A., & Thompson, A. A. (2021). Essentials of strategic management (7 e, international student edition ed.). McGraw-Hill.
The general insight of the text is an overview of the basics of strategic management. The book in its entirety applies to the assignment.Krogerus, M., & Tschäppeler, R. (2017). The Decision Book. Profile Books.
This updated edition distils the 50 best decision-making models used on MBA courses, and elsewhere, that will help you tackle these important questions – from the well known (the Eisenhower matrix for time management) to the less familiar but equally useful (the Swiss Cheese model).
Maslova, E. V., Kulchitskya, E. V., Melyakova, E. V., Kizyan, N. G., & Penzina, O. S. (2017). Model of an Organization\’s Internal Environment Development on The Basis of Human Resource Audit. Journal of Advanced Research in Law and Economics, 8(1(23)), 118. 10.14505/jarle.v8.1(23).14
The article deals with the theoretical aspect of an organization\’s internal environment development on the basis of HR audit. An innovative approach to structuring an organization\’s internal environment based on a tomographic approach is presented. Processes linking the elements of an organization\’s internal environment are specified, and indicators for assessing each element are provided.
Rumelt, R. (2011). Good Strategy/Bad Strategy (1st ed. ed.). Profile Books.
Even though everyone is talking about it, there is no concept in business today more muddled than \’strategy\’. The book discusses this problem head-on in a jargon-free explanation of how to develop and act on strategy, in business, politics and beyond.
Teece, D. J., Raspin, P. G., & Cox, D. R. (2020). Plotting Strategy in a Dynamic World. MIT Sloan Management Review, 62(1), 28-33.
Cox et al discuss the need for companies to strengthen their vision instead of relying on traditional forecasting exercises to spot and capitalize on–emerging threats and opportunities. To remain competitive over time, a company must be able to move quickly in response to major changes in society, technology, competition, regulation, labor markets, and myriad other areas.
Vlados, C. (2019). On a correlative and evolutionary SWOT analysis. Journal of Strategy and Management, 12(3), 347-363. 10.1108/JSMA-02-2019-0026
The purpose of this paper is to counter-propose a new approach of SWOT analysis, which can be used in the strategic planning of the contemporary organizations. Design/methodology/approach This paper, after presenting the conceptual context of the existing (conventional) SWOT analysis, presents the existing criticism within the international literature.
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