Strategic Planning in the Small Business

Unit 2

HO 2-6

(continued)

As

a caveat, one must

recognize

that a business

may exist

without

any specific

distinctive competence.

In particular,

this

may occur

if consumer demand

is strong

in relation to industry

supply.

Here, simply

presenting

the product

or service to

a

desirous

market i sufficient

to assure

at least short-term

suc­

cess. However,

if t asiness

returns are

attractive and

industry

entry barriers

are nc : prohibitive,

new businesses

will enter

and

an

eventual competitive

shakeout

will occur. Under

these con­

ditions,

the businesses

with firmly

established

competencies

possess the

greatest likelihood

of surviving.

COMPETITIVE

WEAKNESSES

Just as careful

environmental

and internal

analysis enables

the

identification

of

areas of distinctive

competency,

they also sug­

gest

areas of competitive

weakness.

A competitive

weakness

represents

an area

of vulnerability-an

area where

competitors

recognize

a meaningful

competitive

edge. Thus,

in a highly

competitive

situation,

one firm's competency

is cften

another

firm's

competitive

weakness. Just

as competencit:

are devel­

oped

gradually,

competitive

weaknesses also

typically evolve

over a period

of time.

Through its

business life,

the things the

company has done

and the things

it has failed

to do have all

impacted this

deter­

mination

of competitive

weaknesses.

Once recognized,

compe­

ive weaknesses

have motivational

effects on

the strategy process.

Managers

may wish to

respond strategically,

not only

to capi­

talize on areas

of distinctive

competency, but

to minimize,

mit­

igate, or overcome

areas of

competitive weakness.

Areas

where

competitive

weaknesses

may be realized

are similar

to those

previously noted

for distinctive

competence.

Small

businesspersons

are a proud

group. Often,

they are

enthusiastically

enamored

with their

products and

businesses.

They

may have great

difficulty

in recognizing

competitive

weaknesses. Generally,

this results

from an

unrealistic environ­

mental analysis

of the competition

and an

unrealistic internal

analysis. This

is why it is

so important

to provide sound

and

96
PartOne The.Analysis
Phase

238