Employing Strategy in a Competitive Environment

Employing Strategy in a Competitive Environment

La-Tia Jackson

BUS 599

July 28, 2013

Dr. Larry Hughes

Introduction

Appraising a company’s resource strengths and weaknesses and its external opportunities and threats, commonly known as SWOT analysis, provides a good overview of whether the company’s overall situation is fundamentally healthy or unhealthy. Just as important, a first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company’s resources, aims squarely at capturing the company’s best opportunities, and defends against the threats to its well-being (Thompson, Strickland & Gamble, 2010). The purpose of the situation analysis of the external environment is to find what is happening in the company environment now and in the future and how these factors will influence the activities and existence of the company.

Environmental Threats

Often, certain factors in a company’s external environment pose threats to its profitability, competitive well-being, and growth prospects. Threats can stem from the emergence of cheaper or better technologies, rivals’ introduction of new or improved products, the entry of lower-cost foreign competitors into a company’s market stronghold, new regulations that are more burdensome to a company than to its competitors, vulnerability to a rise in interest rates, the potential of a hostile takeover, unfavorable demographic shifts, adverse changes in foreign exchange rates, political upheaval in a foreign country where the country has facilities, and the like (Thompson, Strickland & Gamble, 2010). An environmental threat is an external element that can develop into anon crisis or crisis problem and potentially prevent the organization from achieving its goals. It is management’s job to identify the threats to the company’s prospects and to evaluate what strategic actions can be taken to neutralize or lessen their impact (Thompson, Strickland &...