Table of Content: 

1. INTRODUCTION 
2. UNDERSTANDING KEY STAKEHOLDERS 
3. Mendelow’s Matrix
4. ROLE OF RESOURCES AND CAPABILITIES: BUILDING CORE COMPETENCY 
5. COMBINING EXTERNAL AND INTERNAL ANALYSIS (SWOT ANALYSIS) 
6. COMPETITIVE ADVANTAGE: USING MICHAEL PORTER’S GENERIC STRATEGIES 
7. Michael Porter’s Generic Strategies
8. Best-Cost Provider Strategy

INTRODUCTION 

Strategic Analysis is equally important when it comes to internal environment assessment.

Internal environment refers to the sum total of people – individuals and groups, stakeholders, processes- input-throughput-output, physical infrastructure- space, 
equipment and physical conditions of work, administrative apparatus- lines of authority & power, responsibility, accountability and organizational culture￾intangible aspects of working- relationships, philosophy, values, ethics- that shape an organization’s identity. 

In other words, the internal environment is specific to each organisation. It is based on its structure and business model and includes all stakeholders like top management, investors, employees, board of directors, investors, etc.

UNDERSTANDING KEY STAKEHOLDERS 

A firm may be viewed as a coalition of stakeholders- all those individuals and entities that have a stake in its success and can impact it as well. They may be the 
employees, shareholders, investors, suppliers, customers, regulators and so on. This view of the firm is in contrast to the earlier view of the firm that was considered to be an extension of the owners and shareholders alone. 

Mendelow’s Matrix

The Mendelow Stakeholder matrix (also known as the Stakeholder Analysis matrix and the Power-Interest matrix) is a simple framework to help manage key stakeholders. 

Managing a project is extremely complicated as it involves managing the competing interests of various stakeholders. Who needs to know what and when, 
who needs to give their feedback and who has the final approval can be confusing. However, managing stakeholders is critical to the success of a project. This is where a stakeholder analysis matrix i.e. Mendelow’s Matrix can help.

In the above figure, we see categorisation of stakeholders into four groups by Mendelow’s;

 KEEP SATISFIED Stakeholders: High power, less interested people - Organisation should put in enough work with these people to keep them satisfied with their intended information on a regular basis. For example, banks, government, customers, etc.

 KEY PLAYERS Stakeholders: High power, highly interested people - Organisation’s aim should be to fully engage this group of stakeholders, making the greatest efforts to satisfy them, take their advice, build actions and keep them informed with all information on a regular basis. For example, Shareholders, CEO, Board of Directors, etc.

 LOW PRIORITY Stakeholders: Low power, less interested people - Organisation should only monitor them with no actions to satisfy their expectations. Strategically, minimal efforts should be spent on this group of stakeholders while keeping an eye to check if their levels of interest or power change. For example, business magazines, media houses, etc.

 KEEP INFORMED Stakeholders: Low power, highly interested people - Organisation should adequately inform this group of people and communicate with them to ensure that no major issues arise. This audiences can also help with real time feedbacks and areas of improvement for an organisation.

ROLE OF RESOURCES AND CAPABILITIES: BUILDING CORE COMPETENCY 

An organization may be viewed as an entity endowed with resources and capabilities. These resources and capabilities may be so synergized as to impart distinct competencies that the organization may leverage to its advantage. C.K. Prahalad and Gary Hamel have advocated a concept of core competency, which is a widely used concept in management theories. They defined core competency as the collective learning in the organization, especially coordinating diverse production skills and integrating multiple streams of technologies. An organization’s combination of technological and managerial know-how, wisdom and experience are a complex set of capabilities and resources that can lead to a competitive advantage compared to a competitor.

Competency is defined as a combination of skills and techniques rather than individual skill or separate technique. For core competencies, it is characteristic to have a combination of skills and techniques, which makes the whole organization utilize these several separate individual capabilities. Therefore, core competencies cannot be built on one capability or single technological know-how, instead, it has to be the integration of many resources. The optimal way to define core competence is to consider it as sum of 5- 15 areas of developed expertise.

According to C.K. Prahalad and Gary Hamel, major core competencies are identified in three areas -

 competitor differentiation,

 customer value, and

 application to other markets

Competitor differentiation is one of the main three conditions. The company can consider having a core competence if the competence is unique and it is difficult for competitors to imitate. This can provide a company an edge compared to competitors. It allows the company to provide better products or services to market with no fear that competitors can copy it. The company has to keep on improving these skills in order to sustain its competitive position. Competence does not necessarily have to exist within one company in order to define as core competence. Although all companies operating in the same market would have the equal skills and resources, if one company can perform this significantly better; the company has obtained a core competence.

COMBINING EXTERNAL AND INTERNAL ANALYSIS (SWOT ANALYSIS) 

SWOT analysis is the analysis of a business’s strengths, weaknesses, opportunities and threats. The primary objective of a SWOT analysis is to help organizations develop a full awareness of all the factors (external as well as internal), involved in making a business decision.

SWOT analysis shall be implemented before all company actions, whether it is exploring new initiatives, revamping internal policies, considering opportunities to grow or alter a plan midway. One shall also us SWOT analysis to discover recommendations and strategies, with a focus on leveraging strengths and opportunities to overcome weaknesses and threats.

Since its creation, SWOT has been the most widely used tools for business owners to grow their companies. Sometimes it’s wise to perform SWOT analysis just to check on the current landscape of your business to improve business operations as needed. The analysis can show areas where an organization is performing well, as well as areas that need improvement

Therefore, an organsition while using this tool, SWOT analysis, should consider relative competitors, and external factors affecting the organisation. Although a simple tool, it is a useful starting point for analysis.

COMPETITIVE ADVANTAGE: USING MICHAEL PORTER’S GENERIC STRATEGIES 

For most, if not all, companies, achieving superior performance relative to rivals is the ultimate challenge. If a company’s strategies result in superior performance, it is said to have a competitive advantage.

Strategic management involves development of competencies that managers can use to achieve better performance and a competitive advantage for their organization. Competitive advantage allows a firm to gain an edge over rivals when competing. ‘It is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.’

Michael Porter’s Generic Strategies

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus. Porter called these base generic strategies. These strategies have been termed generic, because they can be pursued by any type or size of business firm and even by not-for-profit organisations.

 Cost leadership emphasizes on producing standardized products at a very low per-unit cost for consumers who are price-sensitive.

 Differentiation is a strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively price-insensitive. 

 Focus means producing products and services that fulfil the needs of small groups of consumers with very specific taste.

Porter’s strategies imply different organizational arrangements, control procedures, and incentive systems. Larger firms with greater access to resources typically 
compete on a cost leadership and/or differentiation basis, whereas smaller firms often compete on a focus basis.

Porter stresses the need for strategists to perform cost-benefit analysis to evaluate “sharing opportunities” among the firm’s existing and potential business units. Sharing activities and resources enhances competitive advantage by lowering costs or raising differentiation. In addition to prompting sharing, Porter stresses the need for firms to “transfer” skills and expertise among autonomous business units effectively in order to gain competitive advantage. Depending upon factors such as type of industry, size of firm and nature of competition, various strategies could yield advantages in cost leadership differentiation, and focus.

Best-Cost Provider Strategy

The new model of best cost provider strategy is a further development of above three generic strategies. It is directed towards giving customers more value for the 
money by emphasizing on both, low cost and upscale differences. The objective is to keep costs and prices lower than those of other sellers of “comparable products".

Best-cost provider strategy involves providing customers more value for the money by emphasizing on lower cost and better-quality differences. It can be done 
through: 
(a) offering products at lower price than what is being offered by rivals for products with comparable quality and features 
                                               Or
(b) charging similar price as by the rivals for products with much higher quality and better features.
For example, android flagship phones from OnePlus, Xiaomi, Oppo, Vivo, etc, are all rooting for giving better quality at lowest prices to the customers. They are following the best-cost provider strategy to penetrate market.