On the basis of its resources and behavior, an organization develops certain strengths and weaknesses which when combined lead to synergistic effects. Such effects manifest themselves in the form of organizational competencies. It is necessary for a firm to look for and develop factors that adds to its strength, as strength is considered to be an inherent capacity which an organization can use to gain strategic advantage. A weakness, on the other hand, is an inherent limitation or constraint which creates a strategic disadvantage for the organization. Financial strength, for example, is a result of availability of financial sources and efficient rotation of funds. A weakness in the operations management area might be a result of inappropriate plant location, obsolete plant layout and technology.
It has to be noted that an organization cannot enjoy the privilege of having only strengths and devoid of any weaknesses. Then the performance level would become saturated to the point of monotony and there exists no scope for growth or improvement. Only when presented with challenges, any functional area exhibits synergy, as strengths and weaknesses do not exist in isolation but combine within a functional area, and also across different functional areas.
Synergy is needed at all levels for better productivity. Say, within a functional area like marketing, synergistic effort may occur when the product, pricing, distribution and promotional aspect support each other, resulting in higher level of marketing synergy. The same when happens at an even higher level, leads to operating synergy, say, for example, synergistic efforts between marketing and production department to decide on the production forecast and pricing.
Distinctive competence helps a firm to develop strategic advantage that leads to comprehensive growth and development.