MGT 250 Chapter Notes - Chapter 6: Swot Analysis
9 May 2018
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MGT 150 Ch. 6: Organizational Strategy: Oct. 24th, 2017
▪ 6-1: Sustainable Competitive Advantage: competitive advantage other companies have tried unsuccessfully to
duplicate & have, for the moment, stopped trying to duplicate.
➢ Resources: assets, capabilities, processes, employee time, info, & knowledge that organization controls.
➢ Competitive Advantage: providing greater value for customers than competitors can.
➢ Valuable Resources: allows companies to improve efficiency & effectiveness.
➢ Rare Resource: not controlled/possessed by many competing firms.
➢ Imperfectly Imitable Resource: impossible/extremely costly/difficult for other firms to duplicate.
➢ Nonsubstituable Resource: produces value/competitive advantages & has no equivalent
substitutes/replacements.
▪ 6-2: Strategy-Making Process: to create sustainable competitive advantage, company must have a strategy.
➢ 3 Steps of the Strategy-Making Process:
1. Assess Need for Strategic Change:
• Avoid Competitive Inertia.
• Look for Strategic Dissonance
o Are strategic actions consistent with the company’s strategic intent?
2. Conduct Situational Analysis:
• Internal Strengths & Environmental Weaknesses:
o Distinctive Competence
o Core Capability
• External Opportunities & Environmental Threats:
o Environmental Scanning
o Strategic Groups
o Shadow-Strategy Task Force
3. Choose Strategic Alternatives:
• Risk-Avoiding Strategies
• Strategic Reference Points
• Risk-Seeking Strategies
➢ Competitive Inertia: reluctance to change strategies/competitive practices that have been successful in past.
➢ Strategic Dissonance: discrepancy between company’s intended strategy & strategic actions managers take
when implementing that strategy.
• 6-2b: Situational Analysis (SWOT): assessment of strengths & weaknesses in organization’s internal
environment & opportunities & threats in external environment.
➢ Distinctive Competence: what company can make, do, or perform better than competitors.
➢ Core Capabilities: internal decision-making routines, problem-solving processes, & organizational cultures
that determine how efficiently inputs can be turned into outputs.
➢ Environmental Scanning: searching environment for important events/issues that might affect organization.
o EX: pricing trends, new products & technology.
➢ Shadow-Strategy Task Force: committee w/in company that analyzes company’s own weaknesses to
determine how competitors could exploit them for competitive advantage.
➢ Strategic Group: group of companies w/in industry against which top managers compare, evaluate, &
benchmark strategic threats & opportunities.
➢ Core Firms: central companies in strategic group.
➢ Secondary Firms: firms in strategic group that follow strategies related to but somewhat different from those
of core firms.
• 6-2c: Choosing Strategic Alternatives:
➢ Strategic Reference Point Theory: managers choose between 2 basic alternative strategies.
1. Conservative, risk-avoiding strategy that aims to protect existing competitive advantage.
2. Aggressive, risk-seeking strategy that aims to extend/create sustainable competitive advantage.
➢ Strategic Reference Points: strategic targets managers use to measure whether firm has developed core
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Document Summary
Oct. 24th, 2017: 6-1: sustainable competitive advantage: competitive advantage other companies have tried unsuccessfully to duplicate & have, for the moment, stopped trying to duplicate. Resources: assets, capabilities, processes, employee time, info, & knowledge that organization controls. Competitive advantage: providing greater value for customers than competitors can. Valuable resources: allows companies to improve efficiency & effectiveness. Rare resource: not controlled/possessed by many competing firms. Imperfectly imitable resource: impossible/extremely costly/difficult for other firms to duplicate. Nonsubstituable resource: produces value/competitive advantages & has no equivalent substitutes/replacements: 6-2: strategy-making process: to create sustainable competitive advantage, company must have a strategy. Competitive inertia: reluctance to change strategies/competitive practices that have been successful in past. Strategic dissonance: discrepancy between company"s intended strategy & strategic actions managers take when implementing that strategy: 6-2b: situational analysis (swot): assessment of strengths & weaknesses in organization"s internal environment & opportunities & threats in external environment. Distinctive competence: what company can make, do, or perform better than competitors.
