Some firms are in a better position than other firms in the same industry, on utilizing the opportunities. This situation is based on the firm’s strengths and weaknesses.

Strengths and weaknesses of a firm can be identified by internal analysis. Corporate strengths and weaknesses are a matter of interpretation. Thus, a large cash reserve may appear to be a strength for a firm, but if it is not invested well it may cease to be a strength. Similarly, the absence of an own fleet of cars may be taken as a weakness, but if the cars are freely available at economical rentals it may cease to be a weakness. Though, no definition may ever be complete, we would define strengths and weaknesses as follows:

Corporate Strength: It refers to competitive advantages and other distinct competencies which a company can exert in the market place.

Corporate Weakness: It refers to constraints or obstacles which check movement in a certain desired direction, and may also inhibit the organisation in gaining a distinct competitive advantage.

The Criteria For Determining Strengths And Weaknesses

A major problem which must be resolved prior to any analysis of corporate capabilities is the criteria that would determine whether an element under examination is a strength or a weakness. Earlier I had mentioned that it is a ‘state of mind’ which determines whether a particular element or situation is a strength or a weakness. Judgement, in this sense, is an implicit ingredient in our analysis.