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Thursday, June 9, 2011

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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