Performance Through Time
Problems With Existing Strategy Tools
Assessing an organization's strengths, weaknesses, opportunities, and threats (SWOT) is a method widely used by managers to evaluate their strategy. Unfortunately, it offers little help in answering the quantitative questions illustrated in Figure 1.1 "Alibaba.com Growth and Alternative Futures" and Figure 1.2 "Alternative Futures for Blockbuster Inc." Typically, the concepts are ambiguous, qualitative, and fact-free. Discovering that we have the strength of great products and an opportunity for strong market growth offers us no help whatsoever in deciding what to do, when, and how much to bring about what rate of likely growth in profits.
Opportunities and threats are features of the external environment; as such, they are better dealt with by considering industry forces and political, economic, social, and technological (PEST) analysis. Strengths and weaknesses, on the other hand, center on the firm itself, so they are related to the resource-based view (RBV) of strategic management.
RBV writers generally devote attention to more intangible resources and the capabilities of organizations on the assumption that tangible factors are easy for competitors to copy and therefore cannot provide the basis for competitive advantage. Later chapters will show, however, that performance cannot be explained or improved without a strong understanding of how simple resources behave, both alone and in combination, and how they are controlled. Our two examples already illustrate common types of tangible and intangible factors that may need to be taken into account (Table 1.1 "Examples of Resources in Alibaba.com and Blockbuster Inc.").