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The beliefs and assumptions within an organisation

Internal analysis

As well as considering strengths and weaknesses, managers can use the following models to focus their attention.

Porter’s value chain

Porter developed the value chain to help identify which activities within the firm were contributing to a competitive advantage and which were not.

The approach involves breaking down the firm into five ‘primary’ and four ‘support’ activities, and then looking at each to see if they give a cost advantage or quality advantage.

Critical success factors and core competencies

When considering strengths and weaknesses it is important to match these to the critical success factors (CSFs) in the industry – are our strengths the same as the ones necessary for success? In particular, if a business can obtain unique resources and core competencies that meet the CSFs in a market, then this should lead to its success

Product lifecycle analysis

Managers need to consider the whole product portfolio. For example, if all products are in the decline phase then the company may not have much of a future unless it develops new products quickly.

The Ms model

As a memory jogger, managers could assess strengths and weaknesses under the following headings:

  • money – e.g. cash flow
  • management – e.g. does the board of a small family company have the necessary skills?
  • manpower – e.g. is there a problem retaining good staff?
  • manufacturing – e.g. how does our quality compare to rivals?
  • markets – e.g. do we have new product development in key markets?
  • materials – e.g. are we sourcing quality components at a competitive price?
  • make-up – e.g. do we have excessive costs due to bureaucracy?