Strategy - 16

In the earlier blogs we were in a discussion on emergent and intended strategy. However it is pretty much believed by most strategists that what makes a strategy successful is not the way it evolves, but whether the strategy addresses four aspects of the setting in which the firm operates

• Strength of the firm
• Weakness of the firm
• Opportunities in the environment
• Threats it faces from the environment.

These four aspects are represented as the famous acronym - SWOT is used to analyze the theory of the firm

We define the various terms as

• Strength - Firm's Resources and Capabilities that it possesses that enable it to engage in activities that generate economic value and may sometimes lead to competitive advantage.
• Weakness - Firm's Resources and Capabilities that either makes it difficult to realize economic value of the firm's strengths or actually reduce the firm's economic value if implemented
• Opportunities - the chances for a firm to improve its competitive position and performance. These could be expected or unexpected.
• Threats - are any external individual, group, or organizations that seek to reduce the firm's performance.

We could represent this in the format as shown below:

We would deal with the way we could use this framework in the next blog.

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