QUESTION 2
Strength and weakness only affect the target company. In that case, strategic internal audit in a company helps it to understand its strengths and weaknesses better. The internal strategic plan looks at the certain functions that a company should perform. That way, it will be easier to understand force and weakness at service level other than in general. That way, the strategic internal audit will be improving efficiency. For instance, depending on products, market and products each company has functional units that are different from the other company. Therefore, the strategic audit will differ too. However, there are primary functions that help a company to improve its strength and weaknesses (Hyland 2003)
Production –Operations is one of the main functional areas that the audit targets. The manner in which the examination is carried out is efficient enough to improve the strength and the weaknesses of a Company. The review includes surveying strength and weakness of a company. Categorizing them is a major way that makes the company know them better than if they were just in groups. Westbrook (2007) argues that audit confirms that these strength and weakness have the potentials in them that the company can exploit. In the process of operating them, the company will keep realizing the hidden potential in them. Investigating on the two internal elements means that the firm must have an interest in evaluating the ability. Evaluation will show the ones that are more competitive than the others are. That way, the company continues to increase the understanding of the strength and the weaknesses in their environment.
A strategic internal audit focuses on the particular power that is boosting the company and the gap that is pulling the business from better performances. In that case, there are various possible outcomes in every company. For instance, the strategic audit may reveal that the strength is either the location of the business, improved quality of the products, specialist expertise, and innovative products, amongst others. Upon the audit, the company always tries to exploit the outcome to come up with better results (Hyland 2003). The reaction shows that the company understands its strength better and better.
On the other hand, weakness maybe undifferentiated products about competitors, faded reputation, and lack of expertise in the marketing field. Therefore, these exploitations of these potentials show that the company s understanding the strength and the weaknesses better than without the strategic audit. Ideally, a strategic internal review will help the potential business strengths against the foreseen market opportunities. Finally, as a way to show that it understands them better, the company will maximize on strengths and minimize the weaknesses.
QUESTION 3
According to Hall (2002), competitive advantage is a major subdivision of the business strategy. Brand name, product quality, inventory turnover, cost leadership, and effective in-store operations are parts of competitive advantage. Competitive advantage puts a company in a favorable business position. Therefore, it is crucial for a company to look for ways to create competitive advantage and implement them too. However, creating and implementing are not enough if the company is not ready to sustain its competitive advantage. According to Porter, there are few ways of how a company can sustain its competitive advantage. These include amiability and durability, constant upgrading and number of distinct resources. Therefore, it is imperative that businesses masters on their capabilities and key competencies.
Resource base strategy of a company combines industry structure and core competencies. Core competencies are the internal perspective on the policy while the sector structures are the external aspects. Different companies have different collections of intangible and physical assets and capabilities. These assets and capacity are the ones that resource based strategy calls resources. Physical resources are capital, property rights amongst others. Intangible resources include technological know-how and brand names. Processes like lean manufacturing are organizational resources. According to Cool (2009) all these resources are helpful when it comes to sustaining competitive advantages.
It is of value to note that different companies have different resources since companies have different skills and assets, experiences as well as organizational cultures. In that case, Wernerfelt (2011) proposes that, for resources to be the basis of an effective strategy that will help the company gain a competitive advantage, it must pass some external market tests. These include durability of the resource, appropriateness, substitutability, superiority regarding competitiveness and inimitability. These conditions answer several questions in case a company wants to implement a resource. For instance, it answers the question on how quickly a resource can depreciate, whether the resource is better comparing it with that of its competitors and whether the resource can have any other use apart from the intended purpose only.
Similarly, it means that for a company to sustain these resources in its external environment, they have to undergo four theoretical conditions in the industry. These include ex-ante limits to competition. The state means that the costs do not offset the rent, suggesting that there must be a price to compensate for a benefit if the company must survive the competition. Another condition is imperfect mobility. It suggests that the rent is sustained in the business. Since resources are imperfectly immobile, then it means that the competitive advantage exists within the firm. These forces limit the competition for rents (Wernerfelt 2011). These are the ex-post limits to competition. When a company gains a superior position after the game, then there are chances of surviving such a resource in future. Lastly, we have heterogeneity of resources, which suggests that rent exists in a company. In this scenario, the condition assumes that capabilities and bundles are different in different societies. In that regard, companies with superior resources are ahead of the others since they can produce efficiently than competitors.
References
Cool, K., 2009. Sustainability of competitive advantage.
Management science, 35(12), pp.1504-1511.
Hall, R.,2002. The strategic analysis of intangible resources.
Strategic management journal, 13(2), pp.135-144.
Hyland, .A, 2003. Developing a Strategic Internal Audits: A Model and Survey.
Managerial Auditing Journal, 18(6/7), pp.465-477.
Wernerfelt, B., 2011. A resource‐based strategy of the firm. Strategic Management
Westbrook, R., 2007. SWOT analysis: it's time for a product recall.
Strategic planning, 30(1), pp.46-52.
