Strategic Planning in the Small Business

HO 2-6

(continued)

Unit 2

Reputation

and Image are

important. These

may be

a func­

tion

of a number of

other areas,

yet its cumulative

effect is

often

seen in a general

or encompassing

way by consumers.

A

to identify

strong reputation

and

image may

lead consumers

particular products

or services

with a

particular business

and,

accordingly,

seek out the business

to purchase

the desired

items.

Personnel

can be an ;

rea of competence

if management

and

employees have

extensive

experience

or knowledge,

and know

how

to help the

customer.

When customers

recognize

these

strengths

and believe

it is superior

to the

strengths

of other

businesses,

a distinctive

competency

exists.

For example,

two

hardware

stores both

have experienced,

knowledgeable

work­

ers. One

store, however,

is primarily

self-service.

The second

emphasizes

personal

interaction

and help. Therefore,

both

pos­

sess personnel

strengths,

but only

the second

has a distinctive

competence.

Finally,

price is often

stressed.

Price is a tenuous

compe­

tency-potentially

powerful,

yet remarkably

fragile.

Its basis

are estab­

for

competency

may be

significant if

competitors

lished

and new

entries are

unlikely. Here,

consumers

may re­

spond

to a business

because of

its pricing

policies. However,

if

a competitor

is willing

or able to

alter its existing

pricing

struc­

ture, this

competency

can be stripped

qiickly.

Thus, price

is

often viewed

as a rather

short-run

compeL-ncy.

One

must remember

that these

nine areas

are competen­

cies only if

they have been

developed

and are perceived

by the

is often more

important

firm's customers.

Here,

perception

than reality.

For example,

a business

owner may

know from

experience

and

research that

its customer

service

is superior

to

that of its immediate

competition.

However,

if customers

are

unaware

of this

service and

how it is different

from and

better

than

that of competitors,

then

no distinctive

competence

exists.

At

best, in this

situation, the

firm may possess

an unexploited

must be built

or developed

into a

true

strength.

A strength

area of

distinctive

competence.

Effective

marketing

of the

a mere

strength and

a

strength may

be the

bridge between

distinctive

competence.

93

Chapter Three

Recognizing

Distinctive Competencies

and Competitive

Weaknesses

235