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Let us take a look at your proposed company’s capabilities and what your competitors have. Part 3 of our series discusses organizational analysis.
What is organizational analysis
It is the process of examining the internal structure, processes, and resources of a business particularly its internal strengths and weaknesses and how these relate to external threats and opportunities that can affect its performance.
Why is organizational analysis important
An organizational analysis is conducted to determine how a company or an organization can be more effective.
It can identify problems and needs which can be addressed before bigger problems arise.
It can also highlight how a company’s strengths can be matched with opportunities to create a competitive advantage.
One of the models commonly used in organizational analysis is the SWOT analysis.
You know already that SWOT stands for strengths, weaknesses, opportunities, and threats.
- Strengths – Resources and capabilities of your proposed business that give it an advantage over competitors.
In launching your furniture business, you may have tangible resources like a strong financial backing from lenders or investors; or, you may have a strategically situated showroom and office. Your resources may be intangible ones like a connection to a well-known foreign brand which is interested to be part of your furniture marketing business.
- Weaknesses – Internal situations or characteristics that put your proposed business at a disadvantage relative to competitors.
One of the most common weaknesses is being a newcomer to the industry and not knowing personally the key players in the trade – both in the supply side and the distribution side.
- Opportunities – External situation or events that your company can exploit to its advantage.
A major housing program by the government or an aggressive development of condominiums in emerging urban centers can be good opportunities particularly if you have conducted the necessary research that can give you the relevant demographic data.
- Threats – External situations or events that can pose real or potential problems for your company.
Usually, you have no control over these threats. The possible entry of global furniture retail giants can be a formidable problem to deal with.
What is important to note here is how you relate the SWOT analysis to your marketing objectives.
We discussed before that objectives and strategies always go together. To achieve a given objective, you have to follow a well-defined strategy. A strategy can only be successfully executed if you have the required resources and capabilities (your strengths) that match an existing opportunity. The strategy selected may ideally include tactics that can mitigate your company weaknesses and external threats.
If your objective, for example, is:
To reach target households and target corporate clients in Metro Manila in the 2nd quarter, in the island of Luzon in the 3rd quarter, and in the islands of Visayas and Mindanao in the 4th quarter.
Your strategy may be:
To get the local distributorship of the well-known “ABODE” and “WORKPLACE” brands of furniture and to maintain an optimum inventory level; position it as the brands of choice for condominium occupants in major urban centers.
What we have done here is to craft a strategy using your strengths (connection to well-known brands and strong finances for inventory purchases as well as promotions) to match an opportunity (condominium developments in emerging urban centers). This strategy is aimed at your objective of reaching target households and corporate clients as stated above.
Knowing your company’s internal strengths and weaknesses and how you can relate these to opportunities and threats in the external environment, you have to know next how your major competitors are faring. You have to conduct a competitive analysis.
Competitive analysis is an objective process of identifying your competitors, evaluating their respective strategies, and determining their respective strengths and weaknesses based on research.
Your goal in doing a competitive analysis is to establish the uniqueness of your product offering and how you can competitively position your business for survival and growth.
A competitive analysis typically covers the following criteria:
- Your major competitors
- Their product offerings
- Their prices
- Their sales value
- Their organization
- Their cost structure
- Their strengths
- Their weaknesses
- Their strategies
The simplest way of presenting a competitive analysis is using a table such as this:
You can evaluate these data against the backdrop of competitive rivalry and the foreseeable trends in your market.
After conducting a competitive analysis and overall assessment of the market, you are now ready to define your company’s unique value proposition and why customers should prefer you over competitors.
I am sure you can inject more creative and innovative ideas into this discussion. Please feel free to let me know your comments. Check out also how I can be of further assistance to you.