Business Strategy Capability Gap Analysis Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Undergraduate
  • Page:
    5
  • Words:
    3362
  1. Business Strategy Gap Analysis
    1. Capability Gap Analysis Table
Functional Area Capability Description of the Company Ability In comparison to your closest two (2) competitors describe your Company’s Capabilities

Based on Table 1.2

Corporate Functions 1.Financial control

2. Adapt quickly to new competitive situation.

3. Organizational learning

1. Predictive Financial Performance Measures: measuring the potential value of the operations of the company

2. Technical capabilities will be reconfigured and redeployed to capitalize on emerging market opportunities.

3. The organization will focus on generating, accumulating, and applying knowledge to enhance effectiveness, efficiency, and creativity.

This can be subjective depending on the company you are comparing yours to.

2. This capability has helped the organization to capitalize on emerging markets opportunities or neutralize competitive threats.

3. Organizational learning has helped the organisation gain advantage by developing superior capability and knowledge in serving customers betters.

Management Information Creating new market opportunity Implement eCommerce so that the company can increase sales. The company will be able to expand into other countries.
Research & Development i..Designing quality products.

ii. introducing product efficiency

iii. Producing quality products.

i.The organization has the ability to desing and introduce new products into the market.

ii.The organization will invest in large-sized machines that specialized in producing only one product.

iii. Company’s technical process allows and capability allow it to achieve high quality in its products.

i.The organization outspends it rival on R&D with well-paid researchers, boasts advanced equipment and expensive research labs, and fosters a campus-like research atmosphere.

iii.The organization’s superior technical routine in designing and manufacturing products has enable the organization to enjoy both cost and differentiation advantages.

Operations 1. Fast-paced business environment.

2. Coordinating routines.

3.Quality Introduction

1. The organization technical know-how and capability will enable it respond quickly to customer’s needs.

2. Has enabled the organization to coordinate and integrate multiple competencies to produce one particular product.

3. It will help in designing products that conforms to customer needs.

1. This will enable the organization to speed its production design, manufacturing and production introduction which is an important factor in winning customers.

2. This capability has encourage employee creativity, loyalty, and commitment, it competitive culture and its uplifting attitude and spirit among the organization employees.

3. The organization technical process and capability will enable the organization to achieve high quality in its products and production gains and this will give the organization an edge in creating customer value.

Product Design 1. Introduction of product flexibility 1. Organization will respond more quickly to market and offer products that suit the changing customer demands and tastes. 1.The organization has been able to employ several techniques that are designed to reduce setup times for production equipment between job batches.
Marketing 1. Identifying new market opportunities. 1. The organization predict in increasing sales. 1. The organization has been able to gain advantage because of its superior capability in forecasting trends in the industry and general environment.
Sales & Distribution 1.multiple product markets

2.Identifying the right customer

1. The organization will leverage those competencies in the technical aspects, as well as entrepreneurial aspect.

2. Data that have been gather will be used to find the right customer.

1. Integrated capabilities have underlain the organization’s kinetic advantage.

2. The organization will gain intimate knowledge about the customer will give the organization competitive advantage over its rivals

    1. 5 -4 -3 -2 -1 0+1 +2 +3 +4 +5

      Worse than About the same Better than REPORT 18

      ating of Capability by resource:

REPORT 18 1

Resources

Capability

Note: Match each capability from column 2 in Table 1.1 with each resource listed on left by row Note: Rank (√ or X) each capability relative to closest two (2) competitors you used in Table 1.1here by seeing how far away your capability is from your closest competitors; e.g., based on the assessment of Your Company’s capability, how far away is it from the average assessment you gave the closest competitors in column 4 of Table 1.1? If for example, you think that Your Company is 2 points worse than your competitors, then you would rank it -2; if Your Company is 2 points better than competitors, you would rank it +2.If the same, rank it 0
1.2 Rate each capability by resource:
Tangible resources

e.g. Physical

Intangible resources

e.g. Brands

multiple product markets
Identifying new market opportunities
Introduction of product flexibility
Adapt quickly to new competitive situation
multiple product markets
Processes & systems

e.g. Decision tools

Designing quality products.
introducing product efficiency
Identifying the right customer
Producing quality products.
Fast-paced business environment.
Coordinating routines
Quality Introduction
Organisation culture

e.g. Attitudes/work ethic

Designing quality products
Producing quality products
introducing product efficiency
Adapt quickly to new competitive situation
Financial control
Organizational learning

1.3 Capability Narrative:

Capability 1: Identifying the right customer

Capability 2: Identifying new market opportunities

Capability 3: Introducing product flexibility

Capability 4: Organizational learning

Capability 5: Adapt quickly to new competitive situation

    1. Collect Evidence:

i.Identifying the right customer. Knowledge of customers or consumers is important for the organization success (Prahalad and Hamel, 2003). The ability for the organization to identify customers, especially those customers who form the backbone of the organization’s customer base- predictable, loyal etc- and gain intimate knowledge about the customer will give the organization competitive advantage over its rivals (Stalk, Evans and Shulman, 2000). If the organization attracts wrong consumers or customers’ in-order to make quick profit, it will be a disservice to the organization. Customers that are lured by promotional savings and discount often defect. While serving the right customers and giving them what they need will benefit both the organization and the customers in the long run (Teece, Pisano and Shuen,1997). For example, MBNA’s credit card venture, the firms provides cards primarily to members of affinity groups such as university students. By targeting this group, the firm can better understand the need of this group and serve them accordingly.

ii. Identifying new market opportunities. As certain environmental changes, some organization see opportunities, while some see threats and other organizations tend not to see at all. An organization that can identify a new market opportunities where there is change will gain the advantages (Teece, Pisano and Shuen, 1997). For example, American highways, where the traditional simple diners/service are growing into mall-like supercenters that consist of dining rooms, gas stations, shopping facilities, and even barber shops and movie theaters. Those companies that were quickly identified the opportunity of service supercenters enjoyed first mover advantage (Prahalad and Hamel, 2003). Therefore, an organization that is able to establish it reputation among this focused, and often highly profitable group of customers, such quick recognition of opportunity could turn into a lasting advantage.

iii. Introducing product flexibility. If an organization design and production process is more flexible than those of its competitors, the organization is able to enjoy kinetic advantage by responding more quickly to the market and producing products that suit consumers demand and taste (Stalk, Evans and Shulman, 2000). For example, Toyota’s flexible production system has enable the company to produce diverse range of products at a lower cost than its competitors. Toyota has been able to used several methods designed to reduce the setup times for manufacturing equipment between job batches (Teece, Pisano and Shuen,1997). Such systems have made small production runs profitable and allow the company to change its product mix quickly in response to customer orders.

iv. Organizational learning. This is a shared, collective processthat involves employees from low level to top management, and focuses on generating, accumulating, and applying knowledge to enhance effectiveness, creativity, and efficiency (Prahalad and Hamel, 2003). When employees learn rather than planning dominates the organization strategy-making process, organization’s employees at all level of the organization can be strategists, and contributing to the shape and evolution of its strategy. This capability will help the organization gain advantage by developing superior capability and knowledge in serving customers better. For example of Kao, which has often been on Japan’s list of excellent companies? All information is shared horizontally, not filtered vertically (Prahalad and Hamel, 2003). With sharing of information comes equality of participation for all aspects of the firm, and such information sharing form commitment and trust.

v. Adapt quickly to new competitive situation. If organization reconfigured and redeployed its capabilities to capitalize on emerging market opportunities, or the organization will be able to neutralize its competitive threats. When the organization has superior managerial capability it is able to survive and thrive through multiple rounds of transformations of its core businesses or technological trajectories (Stalk, Evans and Shulman, 2000). For example, 3M succeed in transforming its core business from mining, to sandpapers and related adhesive and abrasive products, to today’s multiple areas and variety of high-tech businesses. In 3M company, what has remained consistent is the organization’s superior managerial capability that weaves together technical, entrepreneurial and organizational skills and capabilities (Teece, Pisano and Shuen,1997). This has helps sustain an organization to thrives on institutionalized innovation.

  1. Gap Analysis II
    1. Capability matching
Key Success Factors Capabilities
Sales & Distribution Identifying the right customer
Marketing Identifying new market opportunities
Research & Development Introducing product flexibility
Corporate Functions Organizational learning
Management Information Creating new market opportunity
    1. Capability Rating/Ranking
KSFs Capabilities
Identifying the right customer
Identifying new market opportunities
Introducing product flexibility
Organizational learning
Adapt quickly to new competitive situation
Total (points)
    1. Ranking Narrative:

1. Identifying new market opportunities. This capability has been ranked the highest (a score of 10). There is nothing as important as an organization finding new market to exploits, even if the organization is robust, there is need to hunt for new market opportunities in order to guard against the time when a strong product will declining or become static (Porter, 1987). The skill in finding new market opportunities is the lifeblood of the organization. Similarly, if the organization does not have the capability to seize an opportunity and don’t, it can damage the organization in the long run (Ansoff, 1999). Factors that can affect new market opportunities identification may include new consumer trends and changes in the market.

2. Identifying the right customers. This capability has been ranked the second with a score of 9. The targeting the right customer is a fastest way to build an organization. Every niche or market has a small number of ‘ideal buyers’ v ‘all buyers’ (Ansoff, 1999). Identifying the right customers can help the organization to focus on the right market. At same time, it will help the organization to sell more. The more an organization knows about their customer and their needs, the easier the organization is able to identify opportunities to sell to customer new products and target the customers with appropriate offers (Moore, 2003). Profiling existing customers also makes it easier to find new ones. You can look for similar prospects, and sell to them in a similar way. If consumers have high bargaining power means reduced profits for the organization, concentration of buyers, volume purchases and even switching costs.

3. Adapt quickly to new competitive situation. This capability has been ranked the third with a score of 8. Uncertainty is the essence of current business environment. Securing a flexible culture for our business environment, keep a sustainable adaptability to the macro business environment in harmony with micro elements of the organization’s business can lubricate the hose for the organization success. The goal of the organization is to build an enduring competitive advantage by assembling the right competencies and capabilities for delivering or making an offering (Porter, 1987). It should be noted, highly competitive environments organization need to adapt quickly since historical advantages can quickly disappear. Factors that affect organization adaptation to competitive situation will include environmental influence and managerial choices coexist.

4. Introducing product flexibility. This capability has been ranked position 4 with a score of 6. The reasons why it is ranked at that position is that product flexibility (Moore, 2003). If an organization design and production process is more flexible than those of its competitors, the organization is able to enjoy kinetic advantage by responding more quickly to the market and producing products that suit consumers demand and taste (Stalk, Evans and Shulman, 2000). For example, Toyota’s flexible production system has enable the company to produce diverse range of products at a lower cost than its competitors. Toyota has been able to used several methods designed to reduce the setup times for manufacturing equipment between job batches (Teece, Pisano and Shuen,1997). Such systems have made small production runs profitable and allow the company to change its product mix quickly in response to customer orders.

5. Organizational learning. The organization need to learn more than ever as it confront it competitors. The company must become a learning organization (Moore, 2003). Continuous improvement requires a commitment to learning (Porter, 1987). For example, the organization solving a problem, introducing a product, and reengineering a process all require seeing the world in a new light and acting accordingly (Ansoff, 1999). In the absence of learning, companies—and individuals—simply repeat old practices. Change remains cosmetic, and improvements are either fortuitous or short-lived.

3.0 Gap Analysis III

3.1 Choose the five highest ranked strategies

  1. Advertisement

One technique in which the business will gain competitive advantage is through strategic use of advertising (Cockburn et el, 2004). Good marketing and advertising will make customers be aware of what product the business has to offer or a new product being introduced into the market. Advertisement will bring in potential customers, thus advertisement strategies will enable the business to gain the upper hand (Ghemawat, 2000). A business can win sales by doing a good job at advertising that the competitors, by attacking them in the advertisement, or even preventing them from advertising (Moore, 2003). But also, the competitors may be doing the same thing to the business strategy, so the business should put in place defensive plan.

  1. eCommerce

The internet will dramatically reduce the entry barrier for the business to compete with multinational companies. The business will be able to use eCommerce to boost sales and trim costs, both of which may sometimes be difficult to do in a saturated market (Ghemawat, 2000). The business will gain competitive advantage, for example, it will be possible for customers who previously had placed custom orders via the telephone to place them on the business website. In addition, customers could get price quotes. eCommerce will also allow customers to view their order status, and it offered support services (Moore, 2003). With an automated purchasing process, the business will be able to handle the growing sales volume without increasing staff. Lastly, eCommerce will allow the business to keep inventory at a minimum.

  1. Branding

When a business owns a brand that can be easily recalled or more respected by customers it gives a business a big edge over its competitors. The competitive advantage is when a business has unique rapport with its customers, or if the business has one of a kind product, in the mind of customers, there will be no substitutes for its distinctiveness (Ghemawat, 2000). If the business brand name will achieve such a distinctive reputation among customers, the business will effectively shut off potential challenges from other brands because of the fixed image customers have of its product uniqueness (Huggins and Izushi, 2012). To customers, there will be no demand for substitute products.

  1. Innovation

Another strategy is the introduction of niche products or innovations, this will counter tract the threat of product substitutes, competition among existing businesses, and new entrants into the market (Moore, 2003). By using direct access to consumers, the business will be able to collect information, target consumers, and better introduce product to meet its customer needs (Cockburn et el, 2004). The business can also collect information on new products that are desired by small segments of the markets. When the business create new product that meet the needs and wants of its consumers in the niche markets, the business will be able to command higher prices (Huggins and Izushi, 2012). strategy that is associated with innovation is customer-centric strategy; this will enable the business to pull information from consumers to improve and customize products that are offered by the business.

  1. Training

The business will have competitive advantage if employees are better trained, highly motivated, and loyal, with sound skills and knowledge (Best, 2001). The business should focus some on its revenue on employees training and education, this will help the business to enhance it product and service quality. Similarly, highly skilled and experienced employees will form the foundation of the company’s efficiency and productivity (Cockburn et el, 2004). The skill, commitment, knowledge and enthusiasm of the employees will play an integral part in the business overall strategy and this will contribute greatly on overall customer satisfaction (Best, 2001).

3.2 Matrixes

a. Corporate Level Matrix

Products/Services

Market Penetration New products/services
  • Competitive pricing strategies (such as low pricing etc).
  • Advertising,
  • Sales promotion
  • Loyalty schemes
  • Research & development and innovation
  • Detailed insights into customer needs (and how they change)
  • Being first to market with new products.
Market development Diversification
  • Selling using e-commerce and mail order.
  • Market segmentation.
  • Expansion through foreign Market
  • Complementary products
  • Range of products
  • Follow-up services
  • Brand extension

3.3 Questions

i. Does the organization plan to grow?

The organization set out an expansion strategy to grow its core business and diversify its new products in new markets. This strategy will enable the organization to deliver strong, sustainable growth in the next 10 years. The organization is planning to follow customer into large expanding markets in Australia, Central and Eastern European (CE) countries. Currently, there is high growth rate that have been experienced by the convenience market.

ii.What product & services does it plan to produce?

As health and beauty sector continue to grow, the company intend to introduce health and skin products. In addition, the organization will adapt a product mix model that will be able to produce organic foods.

iii. What customers does it plan to service?

The organization is known as a traditional value keeper, with it traditional products and traditional ingredients. It does pay attention to suiting consumers’ life style needs. Since the organization is going towards producing health and beauty products, it market segment will based on mostly women particularly pregnant women and young children.

iv. Which generic strategies will it follow?

Differentiation strategy will be employed by the company. This strategy involves creating differentiated products for different market segments. A variety of products, each branded will be promoted differently with levels of functions. This will allow the organization to ‘desensitize’ prices and on the basis of being different. This strategy will provide a hedge against different markets and product life cycles, the organization will have a cash flow even if a few products decline, while other products mature or grow.

v.What position in the industry will it occupy?

The organization has a firm position with each of its ethnic group, target audiences and latest fashion. It is known that the market for the retail sector is at high demand level, and the fact that fashion in the retail sector is always updated and makes the retail sector act efficient and fast towards achieving and satisfying customers and consumers needs and wants. Introduction of these new product will propel the organization to number one position.

References

Ansoff, I 1999, Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5,Sep-Oct

1957, pp. 113-124

Best, M 2001, New Competitive Advantage, Oxford Universitiy Press, London.

Cockburn, I.M., Henderson, R.M., and Stern, S 2004, Untangling the Origins of Competitive

Advantage, MIT Sloan School of Management, New York.

Ghemawat, P 2000, Commitment: The Dynamic of Strategy, Free Press, New York.

Huggins, R and Izushi, H 2012, Competition, Competitive Advantage and Clusters: The Ideas of

Michael Porter, Wiley– Blackwell Publisher, Oxford.

Moore, J.F 2003, The Death of Competition: Leadership and Strategy in the Age of Business

Ecosystems, Harper Business Publisher, New York.

Stalk, G, Evans, P and Shulman, L.E. 2000, «Competing on Capabilities,» Harvard Business

Review, pp. 57-69.

Prahalad, C.K. and Hamel, G 2003, «The Core Competence of Corporations,» Harvard Business

Review, pp. 79-91.

Porter, M 1987, «From Competitive Advantage to Corporate Strategy». Harvard Business

Review. May–June (3): 43–59.

Teece, D.J, Pisano, G and Shuen, A 1997, «Dynamic Capabilities and Strategic Management,»

Strategic Management Journal, pp. 509-533.