Strategic Business Analysis Frameworks & Competitive Edge

SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A **SWOT analysis** is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.

Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time, but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You cannot change them.

VRIO Analysis: Resource Evaluation for Advantage

VRIO Analysis is an analytical technique brilliant for the evaluation of a company’s resources and thus its competitive advantage. VRIO is an acronym from the initials of the names of the evaluation dimensions: **Value**, **Rareness**, **Imitability**, **Organization**. The **VRIO Analysis** was developed by Jay B. Barney as a way of evaluating the resources of an organization (a company’s micro-environment), which are as follows:

• Financial resources
• Human resources
• Material resources
• Non-material resources (information, knowledge)

Hofstede's Cultural Dimensions: Understanding Global Business

Hofstede studied people who worked for IBM in more than 50 countries. Initially, he identified four dimensions that could distinguish one culture from another. Later, he added a fifth and sixth dimension, in cooperation with Drs. Michael H. Bond and Michael Minkov. These are:

1. Power Distance Index (high versus low).
2. Individualism Versus Collectivism.
3. Masculinity Versus Femininity.
4. Uncertainty Avoidance Index (high versus low).
5. Long- Versus Short-Term Orientation.
6. Indulgence Versus Restraint.

Porter's Generic Competitive Strategies

A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above-average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage, combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above-average performance in an industry: **cost leadership**, **differentiation**, and **focus**. The focus strategy has two variants: **cost focus** and **differentiation focus**.