Strategic analysis tools help management figure out what is working for their business or company and how to improve their strategies in all things business, whether its marketing, price or the actual product itself. Immediately when mentioning strategic analysis tools, one may think of the S.W.O.T. Analysis and that is looking both internally and externally in categories such as strengths, weaknesses, opportunities and threats. This helps give you an insight of what you are doing right as well as what the competition is doing right and how it impacts what you are doing with your business. This paper will go over two different strategies besides the S.W.O.T. analysis in hopes to better understand your own company and maybe find ways to improve your business tactics.
First Strategic Analysis and the Pro’s and Con’s
The first strategic analysis in this paper that will be broken down to better understand is called the VRIO Framework. The idea of the VRIO is mostly common sense in the sense that if you have something that has many competitors and many similar products then the risk is too high to try and compete. In this scenario the more competitors there are the less likely you will enjoy the outcome. According to Ovidijus (2013) there are five factors that give you what he calls “sustained competitive advantage” and they are “valuable, rare, imperfectly imitable and non-substitutable” (Par.2). So, using this method and trying to utilize it to be successful Ovidijus goes on to state there are a few things that will ensure your competitors won’t come close to your product is to make sure your product is rare or that the resources are rare, you have a high-quality product and protect the resources that set you apart so your competition can’t create something close to your product.
Second Strategic Analysis with Pros and Cons
The second Strategic Analysis this paper is going to address is Porter’s Five Forces and this is like the earlier mentioned analysis tool in that it picks apart the uniqueness of your business and compares it to the competition, emphasizing the resources you utilize but differs in the sense that the bigger the risk the bigger gain type mentality. According to John Rice (No Date) Some of the benefits of using the Five Forces are; “Promote and capture brainstorming among groups, Document the identification of potential risks from the brainstorming session, and Categorize the risks into one of the five I’s” (P379). No matter what source you use or what tool you use to help you understand how you and the competition are different and what sets you apart in the right direction, it is always something good to know because you can grow and improve so you remain in business.
Pro’s and Cons of Cost and Differentiation types of competitive analysis
When comparing Cost and Differentiation types of competitive analysis you must ask yourself two questions and they are “is this about money” or “what the reason for this business is”. With cost competitive analysis it is when you are selling the same product but at a lower price. Some people can get the same products for cheaper because they buy in bulk or wait for sales or whatever and they can save other people money by doing it this way. The next way is Differentiation types of competitive analysis and this is having a better-quality product and selling it for a good profit as well. The best way to understand where your business fits into all of this it is best to understand why you are in business in the first place and be open about how you are gaining support over your competition.
Ovidijus Jurevicius, VRIO Framework. (2013). Strategic Management Insight. Retrieved From; https://www.strategicmanagementinsight.com/tools/vrio.html
Rice, J. F. (2010). ADAPTATION OF PORTER’S FIVE FORCES MODEL TO RISK MANAGEMENT. Defense AR Journal, 17(3), 375-388.