Strategic advantage combines a company’s resources, behavior strengths, weaknesses, synergistic effects, and competencies.
Internal Analysis Framework
1. Organizational Resources
Resources include many social, individual, and organizational resources. It is not enough to have a single resource that gives the firm a competitive edge. A combination of multiple resources can help you achieve this competitive advantage. It is one of the strategy of internal analysis framework.
Flipkart, for example, has become a central Indian e-commerce platform by leveraging its technology, logistics, and product sourcing. Flipkart can combine these factors to gain a competitive edge over other Indian e-commerce companies.
2. Organizational Behavior
Organizational behavior (OB) is a branch of study that studies organizations and how they behave within their external and internal environments. There are two levels to organizational studies: micro and macro. Organizational behavior studies individuals’ and groups’ behavior at the micro level. It involves evaluating many aspects, such as motivation, perception, and group interactions, by the administrative staff. It is one of the strategy of internal analysis framework. Organizational behavior, at the macro level, deals with industries and organizations. It analyzes how these adapt, create strategies, and structure their organization. Organizational behavior combines the company’s resources, leading to its strengths and weaknesses.
3. Strengths and Weaknesses
These positive characteristics enable an organization to fulfill its mission and vision. These are the characteristics that will ensure the organization’s long-term success. A company’s strengths can be intangible, such as brand equity and goodwill, or tangible, such as product, distribution, employee strength, fixed resources, etc. These are the skills that the company has mastered, such as customer service, process capability, employee skills, and goodwill. These characteristics give consistency to the organization.
On the other side, weaknesses are those factors that prevent an organization’s vision and mission fulfilment. These obstacles prevent the firm from meeting the high standards it needs to achieve. These obstacles can include untrained employees and ill-maintained machinery. Need for more product ranges, better leadership, and many others. It is one of the strategy of internal analysis framework. Company can control and minimize these factors. The company may invest in newer and more efficient technology if the current technology is performing poorly. Poor marketing, unsustainable debts, and low employee motivation are all examples of organizational weaknesses.
4. Organizational Capabilities
Organizational capability refers to the ability of an organization to use its strengths and overcome its weaknesses in its internal environment. Organizations can take advantage of the opportunities presented by the external environment. It can measure and compare with other organizations. Organizational capability is one of the strategy of internal analysis framework. It can also be described as the combination or behavior of resources, organization strengths, weaknesses, and the positive and negative effects on synergy.
5. Synergistic Effects
When functional areas work together, synergy is possible in any business system. That is possible when there’s cohesion among the constituents. Synergy is when strengths and weaknesses are combined across different departments and functional areas. It is one of the strategy of internal analysis framework. It improves the quality of business activities. Synergy, for example, can be defined as two medicines that have a more significant effect on a patient when taken together.
An organization that creates synergy between its different functional areas develops competencies. A company’s competence usually refers to a place or activity that is more successful than its competitors. The synergistic effect of internal strengths can help develop competencies. It is based on experience and the cumulative effect of learning and applying it to the organization’s activities. It is one of the strategy of internal analysis framework.
Hindustan Lever is an excellent example of an organization that has developed expertise in the distribution of its products in both rural and urban markets in India. This expertise has taken a long time to build and has required many new initiatives, experiments, and learning. These companies also need to be skilled in logistics and warehousing.
7. Competitive Advantage
If an organization has a strategic advantage, it is considered to be competitive. The term strategic advantage is synonymous with a competitive advantage and distinct competitiveness. A company’s superiority over its industry rivals is called a strategic advantage. Competitive advantage is one of the strategy of internal analysis framework. You can achieve a competitive advantage by improving efficiency, quality, speed, flexibility, innovation, and responsiveness to customers. It allows the company to be a leader over its competitors in the industry.
Flipkart, for example, has an advantage in India’s e-commerce market because it offers a broader range of products and more sellers. It also uses superior technology, state-of-the-art warehousing, logistics, and last-point delivery to customers. This strategic advantage has allowed Flipkart to be successful in India’s e-commerce market.