Analysis of competencies

For those that see marketing purely as the production of promotions and leaflets, looking at competences as part of strategic analysis can seem unnecessary. But if you don't deliver on the promises you make in your promotions and through your brand and you don't promote the things that are really going to make you money, your market strategy will not be effective in the long run.

Value-chain analysis

Competencies means looking at your existing offerings and at strengths and weaknesses. What are you good at? What could be improved? What can be transferred to other markets? What can we do without?

Most companies are clear about what they do and what they do well (whether this is clearly communicated to customers is another matter), but in terms of strategic analysis it important to be systematic in assessing these competences.

There are many different frameworks for analysing the competencies of your firm. For instance looking at tangible resources (finance, physical), intangible resources (technology, reputation) and human resources (skills, flexibility). Or McKinsey's 7S's (skills, staff, style, shared values, systems, structure, strategy).

Our preference is to use a variation of Porter's value-chain analysis identifying what is most valued by customers and who is providing this value. This means looking at the product and service the customer receives in terms of what and who provides:

  • development/technical skills,
  • procurement/production skills,
  • sales/communication skills,
  • distribution/logistics skills,
  • service/support skills,

These skills and resources are often closely aligned to the customers view of what they want and need and so you can identify the key value points for your customers.

A key feature of the value chain approach is that you do not have to be (and perhaps shouldn't be) good at all of these areas. Indeed, as there is a cost and return associated with each skill for each of your products/services, this analysis can start to identify which areas produce the greatest returns to your business.

It is also common that different customers value different elements. Consumers may be drawn by a whizzy technical product, but for corporations logistical and service skills may be valued more highly.

Relationships as assets

Implicit within the value-chain idea is that companies should focus on their strengths and the areas where they gain greatest returns, and should maybe be outsourcing areas where they are weaker and where it would be more cost effective to use outside help. Consequently, understanding existing infrastructures, networks and identifying your key relationship assets that have a strong influence over the value your customers perceive they are getting.

These relationships may or may not themselves be with customers. For instance consultants who provide service/support skills, distributors providing logistics, journals or magazines that provide communication with the market. Where these relationships are adding value to your customers, you need to be developing and partnering with these people and they are as valuable to your market strategy as the customers themselves.

Competitive analysis

Choosing target markets

For help and advice on understanding your competences contact