Identifying Company Weaknesses and Resource Deficiencies


A weakness is something a company lacks or does poorly or a condition that puts it at a disadvantage. A company’s internal weaknesses can relate to a) deficiencies in competitively important skills or expertise, b) a lack of competitively important physical, human, organizational, or intangible assets, or c) missing or weak competitive capabilities in key areas. Internal weaknesses are thus shortcomings in a company’s compliment of resources. A weakness may or may not make a company competitively vulnerable, depending on how much the weakness matters in the market place and whether it can be overcome by the resources and strengths in the company’s possession.

Sizing up a company’s resource capabilities and deficiencies is akin to constructing a strategic balance sheet where resource strengths represent competitive assets and resource weaknesses represent competitive liabilities. Obviously, the ideal condition is for the company’s strengths/competitive assets to outweigh its weaknesses/competitive liabilities by an ample margin—50-50 balance is definitely not the desired condition.

Once managers identify a company’s resource strengths and weaknesses, the two compilations need to be carefully evaluated for their competitive and strategy-making implications. Some strengths are more competitively important than others because they matter more in forming a powerful strategy, in contributing to a strong market position, and in determining profitability. Likewise, some weaknesses can prove fatal if not remedied, while others are inconsequential, easily corrected, or offset by company strengths. A company’s resource weaknesses suggest a need to review its resource base: What existing resource deficiencies need to be remedied? Does the company have important resource gaps that need to be filled? What needs to be done to augment the company’s future resource base?

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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The Changing World of Business


The poor performance of star companies in the 1980s and 90s, both MNCs and domestic, has amply demonstrated their susceptibility to under-perform in the face of rapid and marked changes in technology, competition and customer expectations. It is not that all these companies lacked resources, capabilities or competent managers to anticipate and assess the impending changes and initiate proactive action; what they lacked was concern on the part of their managers to enhance the shareholder value of their respective firms on a sustained basis. As a result, this value got diverted to the customers, employees, competitors and suppliers of the company. While it is well known that a firm needs to develop distinctive capabilities and also build a strong network with its key stakeholders to enhance its value creating potential and appropriation of value this created, what really happened in case of most of these unsuccessful firms was that one or more of the stakeholders gained at the expense of the shareholders. The proponsity of managers to take operating, investment and financial decisions without any concern as to how such decisions can affect their shareholders led them to pursue strategies and investments that were ill-conceived and poorly executed, thereby systematically destroying the capabilities and equity developed over the years.

We should argue how the outcome of such a tendency can be detrimental to not only the firms but also to the job and career of the managers, particularly in the light of the various new developments—such as economic liberalization and opening up of most economies to domestic and global competition, greater freedom to access and move capital, emergence of the market for corporate control, and rising shareholder, activism—which have brought the issue of enhancing shareholders’ wealth to the forefront.

It is clear that managers will need to take a fresh guard and revisit their strategies, business processes and organization in order to face this complex set of challenges and retain their firm’s ability to enhance wealth of their shareholders. Thanks to the contribution made by the academia and practising executives, managers now have access to various concepts based on experiences when it comes to facing such challenges. However, it must be stressed that the need of the hour is not another set of concepts and framework; rather what is required is a new “philosophy of business” that draws the attention of every employee of an organization, starting with the CEO, to the importance of creating, enhancing and sustaining shareholder value in everything that the company does—be it strategic, tactical or even routine matters. Needless to say, the employees will also need guidelines on how to operationalize this new philosophy and what actions are needed to sustain the same.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Recovery of Loss-making Companies


A surprising number of large companies have one or more subsidiaries making losses at any time. The number of private companies which fail is further ample proof of loss-making businesses. One response is a desire to sell the loss-making business, which is really an attempt to walk away from a situation which is both a problem and an opportunity. Even if a buyer is found, the purchase price is likely to be lower than net asset value. If loss-making business is sold to the existing management interesting questions are raised. What will they do as owners of the business different from before? Why was this not done at the direction of the group previously? The opportunity is to turn the business into profit before considering selling it, because even if a sale makes sense, it will be easier to achieve and a much higher price should be obtained.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight