A Basic overview of the process of completing a situation analysis with the goal of creating a competitive advantage.

1. An Introduction to Situation
Analysis in Strategic Marketing
In search of Competitive Advantage
Dr. William E. Baker
William Baker Consulting
Marketing Strategy
Communication Strategy
Branding
Advertising
Award Winning Author, Professor and Consultant
619-402-3990, wbaker@uakron.edu
Google Scholar Page: https://scholar.google.com/citations?
hl=en&user=If0w9hoAAAAJ

2. Evaluate
Current
Performance
Scan External
Environment
-PEST
-Five Forces
-Competition
Scan Internal
Environment
-Culture
-Resources
-Capabilities
Select /Prioritize
-Opportunities
-Threats
Select /Prioritize
-Strengths
-Weaknesses
Evaluate
Strategic
Alternatives
Select and
Implement
Best
Alternative
Situation
Analysis
Summary
Generate
Strategic
Alternatives

4. Where is Your Competitive Advantage Within the
Marketing Mix (it is almost always just one of the
below)?
Product: Superior Benefit Delivery
Distribution: Superior Availability
Pricing: Lower Cost of Doing Business

5. Competitive Advantage:
Where is Your Competitive Advantage in Terms of the Marketing Mix?
Promotion: Superior Ability to Reinforce Behavior
Relationships: Superior ability to customize

6. Firm Strengths
Sources of Competitive Advantage
O What do you do better than anyone else?
O What lowest-cost resources do you have access to?
O What intangible factors set you apart?
O What combinations of strengths are difficult for firms to
copy?
O You can be competitive without a single strength but
you cannot have a competitive advantage

10. Strengths and Weaknesses
Identification
 What strengths and weaknesses relative to competitors
emerge from an audit of firm’s resources and capabilities?
 Rank strengths and weaknesses by looking at scarcity,
mobility and scopability as well as overall value/importance
to customer.
 How, if at all, can individual strengths be bundled to create
aggregate strengths?

11. The Power of Bundling
Bundling resources and capabilities is key to maximizing scarcity and
immobility.
Southwest Airlines:
• Single fuel efficient aircraft, the Boeing 737
• No reservation service
• No food service
• Labor contracts stipulate employees can perform multiple tasks
• Lease inexpensive gates at airports or use secondary airports
Strength Outcomes: Lower Cost, Superior Scheduling

12. Firm Weaknesses
Sources of Competitive Disadvantage
ASK yourself:
O What are sources of disadvantage?
O Where do competitors excel?
O What intangible factors hurt you (e.g., image)?
O What competitive strengths are difficult/impossible to overcome?
O You May Not Have a Single Major Weakness But Not Enjoy
Competitive Advantage

13. Environmental Threats and Opportunities
Unexploited or Under Exploited Situations

14. Opportunity-Threat Impact Map
Very
Low
Very
High
Low
Impact
High
Impact
Probability of Occurrence
Impact

15. Common Mistakes in SWOT
Strengths (Weaknesses)
We have a good (bad) product
We have been in business a long (short) time
We have strong (weak) image
We have strong (weak) brand equity
Opportunities that do not have a basis in some real or anticipated change in the external
environment are not opportunities…ask yourself what in the environment is influencing your
firm’s ability to do one of the following
We have the opportunity to increase sales
We have the opportunity to advertise
We have the opportunity to innovate our product line
We have the opportunity to improve customer satisfaction

16. Key Situations to Identify and Address
1. A strength matched with an opportunity provides leverage (exploit the strategic
window while you can)
2. A strength matched with a threat is a vulnerability (monitor situation carefully)
3. A weakness matched with a threat provides a problem (strengthen weak links
competitors may exploit)
4. A weakness matched with an opportunity is a constraint (inhibits your ability to
exploit your opportunity)

17. No Clear Leverage, Problems, Vulnerabilities,
Constraints?
1. Address the market in a manner that fits your strengths
2. Address weaknesses by at least achieving acceptable performance
3. Assess threats for their ability to impact your core customers
4. Assess opportunities by their fit with your core competencies

18. Competitive Intensity:
The Most Misused Presumption in SWOT
• If the concept of “intense competition” is to make any sense, it cannot
apply equally to all competitive scenarios.
• Truly “intense competition” drives profit margins towards zero.
• Firms with competitive advantages are more able to avoid this fate.

19. Competitive Intensity:
The Herfindahl Index

20. Porter’s Five Forces:
Opportunities/Threats to Firm Profitability
Porter’s ‘Five Forces’ are means to assess the probability that an industry’s
profits will be pressured downward through price competition
1. Intensity of Direct Competition
1. Ease of Entry
1. Presence of Substitutes
1. Supplier Power (ability to negotiate higher price to firm)
1. Customer Power (ability to negotiate lower price from firm)

21. Porter’s Five Forces:
Opportunities/Threats to Firm Profitability
Porter’s ‘Five Forces’ are means to assess the probability that an industry’s
profits will be pressured downward through price competition
High Low
Profits Profits
1.Intensity of Direct Competition Less More
1.Ease of Entry Hard Easy
1.Presence of Substitutes Few Many
1.Supplier Power (ability to negotiate higher price to you) Weak Strong
1.Customer Power (ability to negotiate lower price from you) Weak Strong