Essay on Organization Competitiveness: Evaluating Strengths & Weaknesses

Introduction

According to Chen & Miller (2015), Evaluation of competitive environment forms part of an organization statement on how it handles competition posed by other firms in the same industry. Therefore, the primary objective of the competitive evaluation is to determine the associated strength and weaknesses of the organization in its operating environment and capitalize on the available opportunities while mitigating the threats. Moreover, an organization must develop sound strategies that give it a competitive advantage above other firms to prevent competition from existing and potential new entrants into the industry (Chen & Miller (2015). On the other hand, the organization must evaluate its weaknesses to avoid any exploitation from rival firms on its product development life cycle. Therefore, through the incorporation of multiple management and theoretical frameworks of environment and industrial analysis, the paper aims the explore new ideas of evaluating the competitive environment as a future of industrial analysis.

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Competitive Environment and Industrial Analysis

It is worth noting that the concept of environmental evaluation is encompassed within the concept of industrial analysis. As Kumar et al. (2015) note, no organization in the corporate business environment can be good enough unless it comes from the customers and supported by long term sustainability of its sale and market growth. Therefore, industrial analysis is a competitive tool that facilitates organizations' evaluation of their competitive environment. Being wary of the environmental forces is a significant component of the strategic planning of every organization that what to continue in existence for the foreseeable future (Kumar et al., 2015). However, through technological advancement, increased competition, and dynamics in the corporate business environment, managers need to rethink new ways of evaluating the competitive environment to gain more competitive advantage.

Chen & Miller (2015) emphasize the importance of competitive dynamics, which comprise five dimensions, including evaluation on the mode of competition, action toolkits, the objective of the competition, roster actors, and time factors. This dimension gives an organization new ideas as far as relational competition is concerned. Moreover, the author notes that competitive dynamic is useful for organization in expanding its rivalrous and competitive corporation modes and, thus, a new approach of environmental evaluation called relational competition. Therefore, an organization should construct an effective boundary of moderators, including industry and culture that determine its appropriateness (Chen & Miller (2015). The organization should evaluate its interaction with the customer in creating value for outdoor competitors.

Notably, many small organizations consider themselves to be on the receiving end of stiff competition in the concerned industry. Management of these organizations fail to recognize the importance of industry analysis as an effective tool of success, hence rethinking on their perception on competition should be on course. Industrial evaluation and understanding of future trends give an organization the much-needed knowledge to control its position in the industry for long term sustainability (Chen & Miller, 2015). Therefore, environmental evaluation is not only a concept for larges corporations but every organization. Thus, small organizations should consider this tool for future organization growth. However, they must be wary of the fact that the environmental analysis is only significant in a relative perspective since both the organization and the competing firms are in one industry.

Notably, managers should know that the key significant factor in locating different abilities between their organizations and competitors is dealing with the factors that affects the whole industry hence, if the organization can identify its key abilities in the industry through sound environmental scanning then, the concerned organization, will enjoying long term sustainability due to the competitive advantage, since the ability will be used as an opportunity to develop competitive strategies. Notably, environmental evaluation consists of three major elements, including the underlying forces in the industry, the attractiveness of the industry, and factors that determine an organization's success within the industry. One new idea that managers can use to compare their organization to an average of all firms in the industry is through the intensive incorporation of ration analysis.

Ratios are computed by dividing one measurable business factor to another-for instance, division of total sales by the number of workers. To achieve effective environmental evaluation, multiple ratios can be calculated on all factors affecting the industry using secondary data available from the industrial past reports and papers from the United States Department of commerce and labor (McGrath, 2013). By initiating multiple ratios compared with that of the industry, an organization will be acquitted with more insights on the operating environment and its effects on the business. The organization will assess its position in comparison to the industry average and hence leading to corrective actions, including a rethinking of how to implement growth strategies. For instance, a small insurance company may compare its payroll per employee ration with the average of other insurance organizations operating In the United States with a primary objective of determining if it is within the competitive range. If the organization is outside the range, then it needs to develop and implement new strategies of falling within the industry average in order not to be faced out in the industry.

If the organization's payroll per employee figures are higher than the industrial average, the management may opt for further investigation, evaluation, and analysis. Moreover, checking employee per establishment ratio would be an ideal area for the organization also to analyze (McGrath, 2013). Michael Porter developed another model of industrial evaluation in his classical 1980 book of competitive strategy and techniques for analyzing. The competitive environment depends on five forces, including the bargaining power of buyers, the threat of new entrants, bargaining power of suppliers, availability of substitute products, and the nature of competition (Porter, 2008). However, Grundy (2006) recommends that rethinking and reinventing Porter's forces would prove effective in giving organizations a competitive advantage. Despite being influential and widely used by the organization to gain competitive advantage, Grundy (2006) believe that the model can be developed further by providing a further suggestion of analyzing the model including breaking the individual forces into further micro levels to increases intensity of evaluation and to transform the framework into a more dynamic model

Industry Forces

The first step of industrial analysis is to asses the effect of Porter's five forces. The collective strength associated with this force determines the ultimate profitability and competitiveness of an organization. Porter (2008) asserts that "The goal of competitive strategy for a business unit in an industry is to find a position in the industry where the company can best defend itself against these competitive forces or can influence them in its favor." Therefore, understanding the underlying forces would evaluate related strengths and weaknesses in the industry. Thus, an organization would make a difference by putting more emphasis on the strength and minimizing its weakest points.

Ease of Entry

Ease of entry entails how complex and easy it may be for a new firm to begin competition in the industry. Notably, the ease of entry is significant since it determines the probability that an organization would face new competitors (Grundy, 2006). In industries that are easy to penetrate, sources of competitive age tend to wane faster as compared to industries that are difficult to penetrate where the sources last longer. Notably, the ease of entry is dependent upon two factors, including the reaction of existing competitors and the barriers to entry imposed in the industry. Existing competitors will react against new entrants, particularly when the competitors have invested a huge amount of resources in the industry. Moreover, the major entry barrier includes economies of scale, switching customer cost, high initial capital outlay required, product differentiation, and limited access to channels of distribution. Therefore, an organization must carry out an intense environmental evaluation to penetrate the industry (Grundy, 2006). Furthermore, Grundy (2006) notes that the organization should devise new methods of environmental evaluation to enable easy market penetration. The author stipulates that, between the bargaining power of supplier and market entry barriers, the organization can enter the market through reverse integration that is acquiring the supply or through forming alliances by the supplier.

Power of Suppliers

Suppliers can gain bargaining power within an industry through several different situations. For example, suppliers gain power when an industry relies on just a few suppliers, when there are no substitutes available for the suppliers' product, when there are switching costs associated with changing suppliers, when each purchaser accounts for just a small portion of the suppliers' business, and when suppliers have the resources to move forward in the chain of distribution and take on the role of their customers. Supplier power can affect the relationship between a small business and its customers by influencing the quality and price of the final product. Therefore, organization should form strong with relationship with suppliers (Porter, 2008).

Power of Buyers

The reverse scenario occurs when bargaining power primarily rests with the buyers. Hence influential buyers can exert pressure on the organization by demanding lower prices and high quality of products and services. Notably, the power of buyers often increases when buyers continue to demand large volumes of organization products when substitutes are available in the market, and when the cost o switching suppliers are low. The organization is charged with the responsibility of creating an effective customer-organization relationship that would not influence buyers to exert unfavorable conditions on the business. An organization must critically evaluate the power of buyers to avoid backward movement in the supply chain distribution.

Availability of Substitutes and Competitors

All firms in the industry manufacture products that are closely and serve the same purpose, and thus intense competition is inevitable. Product substitution is evident, especially when new organization tends to believe that all industry products can serve the same purpose and thus the same price. However, Grungy (2006) notes that the organization that has invested in competitive environment evaluation can leapfrog this fact and have a competitive advantage. This can be achieved if an organization has a deep understanding of the customer, thereby creating demand specifically for their products. Competition can take multiple forms, including price wars, new products, and promotional campaigns. Moreover, competition tends to increase when the industry is characterized by low substitute products well-balanced competitors, hence organizations should constantly assess its environment to outdo other players in the i...