Consequently, an analysis of an organization’s internal environment, that is, a company’s strengths and weaknesses, begins with an assessment of distinctive competencies and core capabilities. A distinctive competence is something that a company can make, do, or perform better than its competitors. While distinctive competencies are tangible—for example, a product or service is faster, cheaper, or better—the core capabilities that produce distinctive competencies are not. Core capabilities are the less visible, internal decision-making routines, problem-solving processes, and organization cultures that determine how efficiently inputs can be turned into outputs. Strategic groups are not “actual” groups, but are selected for study by managers.
Environmental scanning involves searching the environment for important events or issues that might affect the organization. A strategic group is a group of other companies within an industry that top managers choose for comparing, evaluating, and benchmarking their company’s strategic threats and opportunities. The goal of a shadow-strategy task force is to actively seek out its own company’s weaknesses and then, thinking like a competitor, determine how other companies could exploit them for competitive advantage. Furthermore, to make sure that the task force challenges conventional thinking, its members should be independent-minded, come from a variety of company functions and levels, and have the access and authority to question the company’s current strategic actions and intent.