Strategic Capabilities and External Forces: A Comprehensive Review

This article provides a comprehensive review of strategic capabilities and their impact on business performance. It discusses the concept of strategic capabilities and their role in achieving competitive advantage. The article also explores the external forces that can affect strategic capabilities, such as economic, political, legal, demographic, social, and technological factors. The research methodology includes a mixed approach, combining primary and secondary data collection methods. The study includes a case study of Smart Communications to illustrate the application of strategic capabilities in a real-world context.

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Name of the Student
Name of the University
Author Note

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Review of Literature
Strategic Capabilities
Strategies are deployed by the different organizations in order to be successfully being
able to compete in the business environment for various returns which comprise of aspects like
the market share, the revenue, the customers and various related tactics (Bryce 2017). Hence, it
is the duty of the leader to ensure that he is successfully being able to shape various strategies for
the organization and be able to assure that the firm is being able to come up with various
advantages which would benefit the organization in the long run. Hence, according to Hitt,
Ireland and Hoskisson (2016), strategic capabilities can be rightfully referred to as the strengths
of the company, the people, the skills as well as capacities which provide a competitive edge to
the firm and are able to see to it that the firm is being able to perform very well. Moreover,
Engert, Rauter and Baumgartner (2016) states that the Strategic capability can be defined as the
overall ability of the business to harness the different resources in order to ensure that the firm is
being able to achieve its goals and be able to focus on the assets of the firm which will help it in
engaging in long term success. Moreover, there is no single method for measuring the strategic
capability of the organizations.
In the given section, the different Strategic capabilities which an organization may
comprise of have been discussed in the following section.
Thriving in the International Market
As discussed earlier, the strategic capability of an organization may assist it in growing
financially and help the firm in prospering well irrespective of the various strategic limitations

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which exist in the market regarding aspects like competition and the various legislations and
regulations.
Identification of Critical Competencies
There are a large number of critical competencies which can contribute towards ensuring
that the strategic competency and capability of a business can be enhanced (Steiss 2019). The
aspects like cash, patents and related property also contributes towards ensuring that a firm is
able to deploy the right kind of strategies and is being able to perform well in the long run.
Strategic Value Analysis
Just having the strategic capability is not enough and any organization which aims to
ensure success in the long run would be required to have an assessment of the strategic
capabilities which is indeed a complex procedure. The procedure of evaluating the overall
business strategic capability can be defined as the strategic value analysis. As the requirements
of the business have been changing to a great extent, the analysis must ensure that they are
successfully being able to conduct a strategic analysis and enhance the overall strategic
capability of the business (Zhao et al. 2017).
Aspects of the Strategic Capability
The strategic capability may comprise of a number of factors involved in the business and
may comprise of factors like the Manufacturing of the product or the service delivery which
assists in ensuring that a firm is being able to manufacture in the right manner and engage in
adequate service delivery as well. The strategic capability of the business also lies in its supply
chain management whereby the firm would be required to ensure that it is being able to have a
good control over its supplies (Ansoff et al. 2018). The other strategic capabilities of a business
are often focused on the Research and Development along with the skills of the employees and

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managers. With respect to this, it can be rightfully mentioned that, all the employees of a firm
are required to be skilled adequately which will help in seeing to it that the firm is being able to
have a good standing in the market (Zhao et al. 2017).
External forces
The businesses do not operate in a vacuum but they rather govern in a dynamic
environment which tends to have a great impact on the manner in which the firm tends to operate
and also acts as a deciding factor of whether the firm will be able to achieve long term success or
not. The different factors which generally govern the external environment can be contributed to
have various factors like the Political, Social, Economic, Legal, Technological and demographic
factors. Each of these factors has been known to have a very strong impact on the overall
operations of the firm (Hitt and Duane Ireland 2017). The business and the related managers
have a large control over the internal environment of the firm which then tends to impact the
operations of the organization. The managers make use of the various skills which they possess
in order to maintain the overall internal environment of the firm however, the primary
management of the firm deals with the external factors as the business is generally not able to
manage these overall factors. The next section will examine the different external environment
factors which will have an impact on the overall performance of the business.

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Figure 1: The external environment of the business
(Source: Lasserre 2017)
Economic Influences
These influences are one of the most integral influences whereby a business is generally
able to be affected by the business cycles and the various individuals. The interest rates and the
inflation rates are other areas which tend to affect the economic activity of the business. The
government attempts to ensure that it is successfully able to control the overall economic

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activities of the business so that it is able to set various aspects like taxes and other interest rates
which will ensure that, the flow of supply and demand can be managed well.
Political and Legal Influences
The political environment of a country where the firm functions also has an impact on the
daily business operations (Quinlan et al. 2019). The laws of the country, the various aspects like
the laws of the firm and other such associations also have an impact on the manner in which the
firm tends to perform in the long run. In line with this, it is integral to understand that a
politically stable environment calls for a comprehensive political climate and better business
operations.
Demographic Factors
According to Trigeorgis and Reuer (2017), the demographic factors which affect the
operations of the business can be understood to be the factors like the location of the individual,
the market, the vital statistics regarding their age and related aspects like location as well. The
Demographic factors also change and form the basis of the decision making of various
organizations. The businesses must be able to deal with the unique shopping preferences of the
different generations which would require considerable planning on their side.
Social Factors
Another set of factors which have an impact on the operations of the firm can be
understood to be the social factors whereby the attitudes, values and the ethics as well as the
lifestyle tend to have a strong impact on the manner in which the firm can be understood to have

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a broad range of interests which comprise of various aspects like the changing roles of the
business, the development of the family incomes, the renewed emphasis, the ethical behavior of
the different participants which will assist in ensuring that the renewed emphasis can be
maintained on the ethical behavior within all levels of the organization (Morschett, Schramm-
Klein and Zentes 2015). Thereby social behaviors of the customers can determine the impact on
the operations of the firm whose roles tend to change to a great extent and this thereby leads to
the renewed emphasis on the ethical behavior within the firm (Morden 2016).
Technology
The technological factors can be considered to be another set of factors which generally
have a very strong impact on the business operations. This technology has the capability to
impact the application of science as well as the engineering problems which tend to have a very
strong impact on the productivity. The productivity can be considered to have a very strong
impact on the organizational performance and has the overall ability to maintain the performance
of the company at large (Frynas and Mellahi 2015). Various organizations around the globe tend
to impact the manner in which the advances can take place and additionally, the technology is
largely used by the businesses to communicate with the customers, suppliers and other such
domains which will ensure advancement of the business operations.
Impact of external forces of Strategic capabilities
Hence, from the given analysis, it can be rightfully understood that the external forces
which govern the business environment of the firm tend to act as a barrier in front of the
organization and limit the firms overall capability to perform well (Kumar 2019). In line if this, it
can be rightfully understood that, the internal capabilities of the business are within the limitation

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of the organization but these are impacted by the unlimited forces and therefore, considerations
have to be made in order to ensure that the firm is able to perform considerably well.
Research Methodology
Research Outline
The research needs to be carried out in a comprehensive manner which will help in
ensuring that, the firm is successfully able to determine the impact of the external forces on its
strategic capability and in line of this, SMART Communications is able to come up with various
avenues which will go a long way in ensuring that the firm is successfully able to device various
policies which can assist it in the long run. Therefore, the section will determine the various
research techniques which have been applied for the research (Mackey and Gass 2015).
Research Philosophy
The research philosophy can be defined as the overall assumptions and beliefs based on
which the research is carried out (Kumar 2019). It determines the overall role of the researcher
and ensures that the study is successfully able to attain the overall objectives which it has set out
for itself. In line with this, it can be mentioned that the research philosophy which has been
adopted for the study is the Positivist philosophy whereby the data will be analyzed and collected
using a mixed approach.
Research Design
The research design can be understood as the overall layout which is generally used for
the study and it is based on this layout, the research findings are generally presented. The
research design which has been adopted for the study can be stated to be the descriptive design

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whereby the study will aim to present the findings of the research in a descriptive manner and the
manner in which the external forces have an impact on the operations of the Smart
communications.
Research Approach
The research approach can be stated to be the manner in which the research is undertaken
(Flick 2015). The deductive research design has been followed for the paper as it will assist in
deducing the information out of the data which will be collected for the research and will be
aligned with the objectives which have been laid out for the paper (Silverman 2016).
Research Strategy
The research strategy can be stated to be the procedure which has been adopted for the
Data collection and the Data analysis. In line of this, it can be understood that the Mixed
approach strategy has been adopted whereby the data will be collected using both the primary
and the secondary sources of information and along with this, the case study approach related to
the Smart communications will be met with.
Data collection
The data collection method which is being adopted for the research is the mixed method.
In this method, the data for the dissertation will be collected using both the primary and
secondary method of the data collection (Alvesson and Sköldberg 2017). The primary method
will be using interviews of industry experts for the analysis and the secondary method will make
use of the Literature review which will be used to examine the strategic framework available.
Data analysis

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The data analysis method which will be adopted for the analysis is the Case study
approach. Here all the findings will be analyzed in regard to the case of the Smart
communications.
Ethical considerations
The ethical considerations can be referred to the various aspects which a researcher needs
to consider while carrying out the entire research. In line of this, it can be rightfully mentioned
that, the interviews for the research must be undertaken with consent and no unethical acts
should be undertaken.

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