Abusiness does not perform well by accident. Good performances occur because the people directing the affairs of the business interact well with the environment, capitalizing on its strengths and eliminating underlying weaknesses. In other words, to operate successfully in a changing environment, the business should plan its future objectives and strategies around its strengths and downplay moves that bear on its weaknesses. Thus, assessment of strengths and weaknesses becomes an essential task in the strategic process. In this article, a framework will be presented for identifying and describing a business’s strengths and weaknesses. The framework also provides a systematic scheme for an objective appraisal of the performance and strategic moves of the marketing side of business. The appraisal of the marketing function has traditionally been pursued in the form of a marketing audit that stresses the review of current problems. From the strategic point of view, the review should go further to include the future as well. Strengths and weaknesses in the context of marketing are relative phenomena. Strengths today may become weaknesses tomorrow and vice versa. This is why a penetrating look at the different aspects of a business’s marketing program is essential. This article is directed toward these ends searching for opportunities and the means for exploiting them and identifying weaknesses and the ways in which they may be eliminated.

MEANING OF STRENGTHS AND WEAKNESSES

Strengths refer to the competitive advantages and other distinctive competencies that a company can exert in the marketplace. Andrews notes that “the distinctive competence of an organization is more than what it can do; it is what it can do particularly well.”1 Weaknesses are constraints that hinder movements in certain directions. For example, a business short of cash cannot afford to undertake a large-scale promotional offensive. In developing marketing strategy, the business should, among other things, dig deeply into its skills and competencies and chart its future in accordance with these competencies.

As an example, in many businesses, service speed, efficiency, personal attention makes a crucial difference in gaining leverage in the marketplace. Companies that score higher than their rivals in the category of service have a real competitive strength. McDonald’s may not be everyone’s idea of the best place in town to dine, but at its level, McDonald’s provides a quality of service that is the envy of the industry. Whether at a McDonald’s in a rural community or in the downtown area of a large city, the customer gets exactly the same service. Every McDonald’s employee is supposed to strictly follow the rules. Cooks must turn, never flip, hamburgers one, never two, at a time. If they haven’t been purchased, Big Macs must be discarded ten minutes after being cooked; french fries after seven minutes. Cashiers must make eye contact with and smile at every customer. Similarly, visitors to Disney World come home impressed with its cleanliness and with the courtesy and competence of the staff. The Disney World management works hard to make sure that the 14,200 employees are, as described in a Fortune article, “people who fulfill an expectation of wholesomeness, always smiling, always warm, forever positive in their approach.”2

STUDYING STRENGTHS AND WEAKNESSES: STATE OF THE ART

Asystematic scheme for analyzing strengths and weaknesses is still in embryonic form. One finds few scholarly works on the subject of strengths and weaknesses. An interesting study on the subject was done by Stevenson, who examined six companies. He was interested in the process of defining strengths and weaknesses in the context of strategic planning. He was concerned with the company attributes examined, the organizational scope of the strengths and weaknesses identified, the measurement employed in the process of definition, the criteria used for distinguishing a strength from a weakness, and the sources of information used. Companies should make targeted efforts to identify their competitive strengths and weaknesses. This is a far from easy process, however. Many companies, especially the large ones, have only the vaguest notion of the nature and degree of the competencies that they may possess. The sheer multiplicity of production stages and the overlapping among product lines hinder clear-cut assessment of the competitive strength of a single product line.

Despite such problems, development of competitive strategy depends on having a complete perspective on strengths and weaknesses. Success requires putting the best foot forward. Unique strengths may lie in different areas of the business and may impact the entire company. Stevenson found a general lack of agreement on suitable definitions, criteria, and information used to measure strengths and weaknesses. In addition to the procedural difficulties faced by managers in their attempts to measure strengths and weaknesses, the need for situational analysis, the need for self-protection, the desire to preserve the status quo, and the problems of definition and computational capacity complicated the process. Stevenson makes the following suggestions for improvement of the process of defining strengths and weaknesses. The manager should:

• Recognize that the process of defining strengths and weaknesses is primarily an aid to the individual manager in the accomplishment of his or her task.

• Develop lists of critical areas for examination that are tailored to the responsibility and authority of each individual manager.

• Make the measures and the criteria to be used in evaluation of strengths and weaknesses explicit so that managers can make their evaluations against a common framework.

• Recognize the important strategic role of defining attributes as opposed to efficiency or effectiveness.

• Understand the difference in the use of identified strengths and identified weaknesses.

Despite the primitive state of the art, today many more companies review their strengths and weaknesses in the process of developing strategic plans than did 10 years ago. Strengths and weaknesses may be found in the functional areas of the business, or they may result from some unusual interaction of functions. The following example illustrates how a study of strengths and weaknesses may uncover opportunities that might otherwise have not been conceived. A national distiller and marketer of whiskeys may possess such strengths as sophistication in natural commodity trading associated with its grain purchasing procedures; knowledge of complex warehousing procedures and inventory control; ability and connections associated with dealing in state political structures (i.e., state liquor stores, licensing agencies, and so on); marketing experience associated with diverse wholesale and retail outlets; and advertising experience in creating brand images. If these strengths are properly analyzed with a view to seeking diversification opportunities, it appears that the distiller has unique abilities for successfully entering the business of selling building products, such as wood flooring or siding and composition board. The distiller’s experience in commodity trading can be transferred to trading in lumber; its experience in dealing with political groups can be used to gain building code acceptances; and its experience in marketing can apply to wholesalers (e.g., hardware stores and do-it-yourself centers) of building products.

The case of XYZ Corporation, on the other hand, illustrates how a company can get into trouble if it does not carefully consider its strengths and weaknesses. XYZ was a Northfield, Illinois, company with a penchant for diversifying into businesses that were in vogue in the stock market. Until it was reorganized as the Lori Corporation in 1985, it had been in the following businesses: office copying machines, mobile homes, jewelry, speedboats and cabin cruisers, computers, video recording systems, and small buses. Despite entry into some glamorous fields, XYZ did not share the growth and profits that other companies in some of these fields achieved. This is because XYZ entered new and diverse businesses without relating its moves to its basic skills and competencies. For example, despite the fact that it was the first company to develop a photocopy process, developing its process even before Xerox, its total market share for all types of copier machines and supplies in 1984 was well under 3 percent. XYZ Corporation could not keep pace with technological improvements nor with service on installed machines, an essential competency in the copier business. In addition, it overextended itself so much so that managerial controls were rendered inadequate. The company finally got out of all its trendy businesses and was reorganized in 1985 to design, manufacture, and distribute costume jewelry, fashion jewelry, and fashion accessories. Beginning in 1990, the company started making some money for its owners.

SYSTEMATIC MEASUREMENT OF STRENGTHS AND WEAKNESSES

The strengths and weaknesses of a business can be measured at different levels in the organization: corporate, SBU, and product/market level. The thrust of this article is on the measurement of strengths and weaknesses at the SBU level. However, as the strengths and weaknesses of the SBU are a composite of the strengths and weaknesses of different products/markets, the major portion of the discussion will be devoted to the measurement of the marketing strengths and weaknesses of a product/market. These factors, along with competitive perspectives, describe the strengths and weaknesses of the product.

Current Strategic Posture Current strategic posture constitutes a very important variable in developing future strategy. Although it is difficult and painful to try to understand current strategy if formal planning has not been done in the past, it is worth the effort to probe current strategy to achieve a good beginning in strategic planning. The emphasis here is on the study of the current strategy of a product/ market. Before undertaking such a study, however, it is desirable to assess company- wide perspectives by raising such questions as:

1. What underlies our company’s success, given competitors’ patterns of doing business?

2. Are there any characteristics and traits that have been followed regularly?

3. To what strategic posture do these characteristics and traits lead?

4. What are the critical factors that could make a difference in the success of the strategy?

5. To what extent are critical factors likely to undergo a change? What may be the direction of change?

These questions cannot be answered entirely objectively; they call for creative responses. Managers often disagree on various issues. For example, the vice president of marketing of a company that had recently made a heavy investment in sales training considered this investment to be a critical success factor. He thought a well-trained sales staff was crucial for developing new business. On the other hand, the vice president of finance saw only that the investment in training had increased overhead. Though disagreements of this sort are inevitable, a review of current strategy is very important. The operational scheme for studying current strategy from the point of view of the entire corporation outlined below has been found useful.

1. Begin with an identification of the actual current scope of the company’s activities. The delineation of customer/product/market emphasis and concentration will give an indication of what kind of a company the company is currently.

2. An analysis of current scope should be followed by identification of the pattern of actual past and existing resource deployments. This description will show which functions and activities receive the greatest management emphasis and where the greatest sources of strength currently lie.

3. Given the identification of scope and deployment patterns, an attempt should be made to deduce the actual basis on which the company has been competing. Such competitive advantages or distinctive competencies represent the central core of present performance and future opportunities.

4. Next, on the basis of observation of key management personnel, the actual performance criteria (specifications), emphasis, and priorities that have governed strategic choices in the past should be determined.