Strategic marketing

INTERNAL ANALYSIS

Group – 4Junaid A SiddiquiShivani SharmaDattsen Mishra

Manan BediKunal Shukla

Ashish GadbailRohit Singh

Akif GhaffarMohit Lala

Topics to be coveredIntroduction to Internal Analysis

Performance Measurement

Determinant of Strategic Options

From Analysis to Strategy

Business Portfolio Analysis

Case study – Hindustan Motors

External Analysis Vs Internal Analysis

Importance of Internal Analysis

External Analysis Internal Analysis

Study of the various external factors, which are affecting the growth of the company. Eg:• Customer Analysis, competitor analysis, Environment analysis & market and sub market analysis

Study of the key internal features of an organization. Eg:Profitability, product quality, brand association, relative cost, new product, shareholder value

Customer Analysis Segmentation Preference & taste Unmet needs

Profitability Sales Cost

Competitor Analysis Major Competitors Strategies used Target segment

Product Quality Value Addition

Environmental Analysis Technological Legal Cultural

Relative cost

Importance of Internal Analysis

Long – term strategy formulation

Evaluation of SWOT analysis

Supports the decision making process for the company

Introduction to Internal Analysis






Performance Beyond Profit

Financial Performance

Sales & Market Share

Profitability

Shareholder’s Value


Financial

Sales &Market Share

ProfitabilityShareholder’s

Value

Customer BaseCustomer satisfactionLoyal customers

SalesCost

Shareholder’s value enhancement

Internet Analysis Performance measurement Financial performance

• Increase sales means increase customer base, which is directly proportional to market share

Sales & market share

• Necessary for the survival of the firm.• Profitability can be reflected by• Margins

• Cost• ROA

Profitability

• Give priority to shareholder value over other goals

• Reduce the cost of capital by increasing the debt to equity ratio

Shareholder’sValue

Financial Performance (ctd…)








Performance Beyond Profit

Product Service Quality

Brand Loyalty

Brand Association

Relative cost

New product Activity

Employee Capability

Product / Service QualityThe collection of features and characteristics of a product that contribute to its ability to meet given requirements.

Coca Cola Company :- Consistency and reliability are critical to our product

quality and to meeting global regulatory requirements and Company standards.

The Coca-Cola Management System (TCCMS). TCCMS is the integrated quality management program, which holds all of their operations system wide to the same standards for production and distribution of our beverages

Internal Analysis Performance Measurement Performance Beyond Profit

Product quality plays a major role in brand loyalty and brand association

Global Product Quality Index rating was 94.5 which was highest

Brand Loyalty / Customer Satisfaction

It measures parameters such as quick service, ensuring quality products, continuous improvement, wide distribution network, etc.


• Relative possibility of customer shifting to another brand in case there is a change in product’s features, price or quality.

• Brand loyal consumers are the foundation of an organization• Brand loyalty is always developed post purchase.• Example of brand loyalty can be seen in US where true Apple

customers have the brand's logo tattooed onto their bodies.

Brand Association


• It is anything which is deep seated in customer’s mind about the brand.

• Associations are not “reasons-to-buy” but provide acquaintance and differentiation that’s not replicable

• Examples :-Hyatt Hotels :- LuxuryMercedes Benz :- Sophistication, superior engineering.Bill Gates and Microsoft etc.

• Brand should be associated with something positive so that the customers relate your brand to being positive

Relative Cost Vs Relative performance

Our Component

is

More Expensive

Superior

Less Expensive

Inferior

Change•Design•Manufacturing SystemEg. Sony Ericson Camera

Value Analysis•Raise Prices•Promote COST REDUCTIONEg. Apple i-phone, i-pad

Value Analysis•Emphasize/ Promote•Leave it aloneEg. Nokia N 73 Speakers, Camera

Value Analysis•De-emphasize•UpgradeEg. Micromax Mobiles


New Product Activity

Does the R&D operation generate a new product concept?

.

Is there a track record of successful new products?

.

Is new product developed requires any other features or Modification?


Employee Capability and Performance

HR in place to support current and future strategies

New people, added to organization Match its needs OR are there any gaps?

Motivated, Challenged, Fulfilled and Growing in their profession Eg. GoogleFacbook

Evaluation Method: Surveys and GD








Past and Current Strategies

Strategic Problems

Organizational Capabilities

Financial Capabilities /Constraints

Strengths / Weaknesses

Determinants of Strategic Options


Strategic Problems




STRATEGIC CHOICES

PAST AND CURRENT STRATEGIES

To understand the bases of past performance, it is important to be able to make an accurate profit of past and current strategies.


Strategic Problems




STRATEGIC CHOICES


STRATEGIC PROBLEMS• Differs from a weakness or liability.• Absence of an asset ( such as good location) or

competence (eg new product introduction skills).For Example – An Automobile brand that finds it has a fit and finish deficit w.r.t. competitors requires strategic moves involving product design and production


Strategic Problems




STRATEGIC CHOICES


ORGANIZATIONAL CAPABILITIES

• Important source of both strengths and weaknesses are:o Structure – E.g.. The flexible structure of 3M is a

key to its growtho System – E.g.. McDonald’so People o Culture


Strategic Problems




STRATEGIC CHOICES


CONSTRAINTS• Questions to be answered?????

o Whether or not to invest in a business or withdraw cash from it???

o Should a firm increases its net investment or decrease it by holding liquid assets or returning cash to debt holders?

E.G. – Enam Securities Pvt Ltd was acquired by Axis bank because they were not making enough profit from past some time.


Strategic Problems




STRATEGIC CHOICES


ORGANIZATION STRENGTH AND WEAKNESSES

Based on its assets and competencies







Where to compete

The Customer Value Proposition

Assets and Competencies

Functional Strategies and programs

Where to competeAlso the Product – Market Investment Strategy

What segments & products to avoid sometimes the most important decision

Allocation of scarce resources where it is possible to compete successfully

Many big organizations have well defined business scope

Services

Kitchen & Home products

Computer related products

One stop shopping destination

Economies of scale

What products markets will ne entered or exited in the coming years?

Which will be dialed up or down?

Which business sectors will receive investment resources because of their increased importance in future?

Some leading Examples

Some important questions to be asked are:Invest to grow(or enter the product

(market)

Invest only to maintain the

existing position

Milk the business by minimizing investment

Recover as many of the assets as possible by

liquidating or divesting the business

Future Direction of the firm dependent on the following investment

choices

Internal Analysis From Analysis to Strategy

Customer Value Propositions

Definition: “It is the perceived functional, emotional, social, or self expressive benefit that is provided by the organization’s offerings”.

Value propositions need to be relevant and should be reflected in products & offerings.

Propositions should be sustainable over time and differ from competitors.

A good value(Wal Mart)

Excellent on service or product attribute(for Tide, getting clothes clean)

The best overall quality(Lexus)

Product line breadth(Amazon)

Innovative offerings(3M)

A shared passion for an activity or a product(Harley- Davidson)

Global connections & prestige(Citigroup)

Can involve elements such as providing:


Assets & Competencies

Underlying the strategy provide SCA

A Strategic competency is what a business unit does exceptionally well.

A strategic asset is a resource that is strong relative to that of the competitors.

Strategy formulation must consider the cost and feasibility of generating assets and competencies.

The questions to be asked here are:

To what extent are the assets & Competencies strong and in place?

To what extent are they ownable because of a trademark or a long standing investment in a capability?

To what extent are they based on synergy within the organization that others cannot duplicate?


Functional Strategies & Programs

Manufacturing strategyDistribution strategyBrand building strategyCommunication strategyIT strategyGlobal strategySegmentation strategyQuality programCustomer Relationship program

Business strategy driven by a supportive set of Functional Strategies & Programs

The need for functional strategies and programs can be determined by asking a few questions:

What must happen for the firm to be able to deliver on the value proposition?

Are the assets and competencies needed in place?

Do they need to be created, strengthened, or supported? How?


Strategic Decision

Strategic InvestmentValue Proposition

Assets & CompFunctl Strategies &

Programs

Market needs,

attractiveness & key success

factors

Organizational Strength & Weaknesses

Competitor strength & weakness





From analysis to Strategy



Definition and need of Portfolio Analysis

BCG Matrix

GE Matrix

Few strategic implications

To know the current standing of the various businesses

To understand the requirement of the business

Proper allocation of cash/investment

Helps in shaping the strategy of the company

“A company's portfolio is the sum of its business, assets and products. A perfect portfolio analysis is shaped to meet and suit the company's potency and also enable it to exploit the best opportunities available to it.”

Analysis of a portfolio involves deciding on the relative importance of available business and investment opportunities.

The best portfolio analysis takes into account the locations of the different Strategic Business Units (SBU) present in the portfolio.

Need of Business Portfolio Analysis

Definition of Portfolio Analysis

Internal Analysis Business Portfolio Analysis

BCG MatrixStars – high share & high growth

Cash cows – high share & low growth

Dogs – low share & low growth

Question mark – low share & high growth

Two dimension used:

Market share

Market growth rate

Four classification (thus four strategies)

Relative market shareHigh Low

Market

Growth

rates

High

Low


GE/Mc Kinsey Matrix

1 – Invest and grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries.

2 – Selective investment or hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industries.

3 – Harvest and divest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.

The GE matrix however, attempts to improve upon the BCG matrix by generalizing the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.

There are nine Quadrants which are numbered and accordingly Strategic implications are like–

While the GE business screen represents an improvement over the more simple BCG growth-share matrix, it still presents a somewhat limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation.


1 1 2

1 2 3

2 3 3

High Medium Low

High

Medium

Low

Industry Attractiveness

Busi

ness

uni

t St

reng

th

GE/ Mc Kinsey MatrixEvaluating Business Unit Strength• Organization • Growth • Share by segment• Customer loyalty• Margins• Distribution• Technology skills• Planets • Marketing • Flexibility

Evaluate Industry Attractiveness1) Size 2) Growth 3) Customer satisfaction levels4) Competition 5) Price level 6) Profitability7) Technology 8) Government regulation 9) Sensitivity to economic trends


Few strategies Invest to hold

Invest to penetrate

Invest to rebuild

Selective investment

Low investment

Divestiture


ThankYou