Upload
hop-foreman
View
34
Download
0
Tags:
Embed Size (px)
DESCRIPTION
A View from the Top Chapter 5 Analyzing an Organization’s Strategic Resource Base. Team III M Isabel Castaneda Cal Wallace Patrick McGregor. Introduction. Assessing strategic resources and capabilities is important when determining a companies strategy. - PowerPoint PPT Presentation
Citation preview
A View from the TopChapter 5
Analyzing an Organization’s Strategic Resource Base
Team IIIM Isabel Castaneda
Cal WallacePatrick McGregor
Introduction Assessing strategic resources and
capabilities is important when determining a companies strategy.
Analyzing a company’s internal strategic environment has two principal components: Cataloging and valuing current resources and
core competencies for creating competitive advantages.
Identifying internal pressures for change and forces for resistance.
Strategic Resources
A company’s strategic resource base is composed of physical financial, human resource, and organizational assets.
To evaluate the relative worth of a company’s strategic resources four questions must be asked.
Physical Assets
A company’s physical assets can affect its competitiveness.
i.e. Airline companies, the average age of the fleet affects customer perceptions, routine flexibility, and operating and maintenance costs.
Analyzing a Company’s Financial Resource Base
For the corporate level, evaluations of the financial position involves thorough analysis of the company’s financial statements.
Financial ratio analysis can provide an overview of an organization’s current and past profitability, liquidity, leverage, and activity.
Profitability Ratios
Measure how well a company is allocating its resources.
Ratios Gross Profit Margin Net Profit Margin Return on Assets Return on Equity
Liquidity Ratios
Measure cash flow generation and ability of an organization to meet its current obligations.
Ratios Current Ratio Quick Ratio Inventory to Net Working Capital
Leverage
Can indicate potential improvements in the financing of operations.
Ratios Debt-to-assets ratio Debt-to-equity ratio Long-term debt-to-equity ratio
Activity Ratios
Measure productivity and efficiency
Ratios Inventory Turnover Fixed Asset Turnover Average Collection
DuPont Formula
Used to analyze an organization’s return on assets directly links operating variables to financial performance.
Accounting-based measures have generally been found inadequate indicators of a business unit’s economic value.
Shareholder Value Analysis Focuses on cash flow generation to
determine economic value. It is helpful to answer the following
questions: Does the current strategic plan create
shareholder value. How does the business unit’s performance
compare with others in the corporation. Would an alternative strategy increase
shareholder value more than the current.
Economic Value Added Economic value added and market
value added have supplemented accounting based performance measures.
Advantages: Help align employee and owner interest
through employee compensation. Can be the basis for a single competitive
performance measure called MVA. Indicates if returns lag the cost of capital
Analyzing a Company’s Financial Resource Base
Cost analysis deals with identification of strategic cost driver.
Cost benchmarking is useful in assessing a firm’s cost relative to those competing firms, or for comparing a company’s performance against best-in-class competitors.
Human Capital: A Company’s Most Valuable Strategic Resource
Firms are run by and for people. More focus on attracting,
developing, and retaining. Continuous employee development
is critical Ex- Fed Ex has an 11 week training
and “Leadership Institute”
Organizational Strategic Resources
Knowledge Intellectual Capital Base Reputation with customers,
partners, and suppliers and financial community
Specific competencies, processes, and skill sets
Corporate Culture
Organizational Strategic Resources Continuation
Intellectual Capital- hard to measure
Patents- protect and preserve competitive advantage
Knowledge- better knowledge » better performance and enhanced learning
The Importance of Brands
Brands provide guarantee of reliability and quality
Customers must trust the brands Ex- Ranking 100 Best Global
Brands by dollar value.
The Importance of Brands Continuation
Ranking 100 Best Global Brands by dollar value
Identifiable Qualities: Do not fear public flops Face your weaknesses Protect your culture
Core Competencies
Great capabilities that enable a company to build a competitive advantage.
Focus on creating a value, and change as customer’s requirements change
Hamel and Prahalad three tests for identifying core competencies
Internal Change Forces and the Capacity for Change Internal Change Forces
Four basic forms of resistance 1. Structural, Organizational rigidities 2. Closed mind-sets reflecting support for
obsolete business beliefs and strategies 3. Entrenched cultures reflecting values,
behaviors, and skills that are not conductive to change.
4. Counterproductive change momentum that isn’t in tune with current strategic requirements
The Company Life Cycle Founding
Establishment of: Vision and Purpose Direction Allocation of
Capital and Resources
Growth Requires
Organizational Learning
Delegation of Authority
Leadership challenges
Responding to external and internal change.
Working together as a cohesive unit
Mckinsey 7-S Model Frameworks
Strategy Structure Systems Skills Staff Style All link to Shared Values
Particulars of the Model
Not hierarchical Change in one force
will occur a change in another
Fixing problems in one area without attention to others is counterproductive.
Align each factor accordingly for a desired direction of a particular goal.
Stakeholder Analysis
What roles do they play? Internal or External Rights and Interest Returns Competition Laws and Regulations Demands of the Stakeholders
SWOT SWOT- the sizing up of a company’s
strengths, weaknesses, external opportunities, and threats.
Strengths and Weaknesses are internal Opportunities and Threats are external
FIGURE 5-5 on page 69
Work Cited Kluyer, C (2006). Strategy: A View from the Top.
Upper Saddle River, New Jersey: Pearson Education.
Building Brands. Retrieved June 7, 2009, from Building Brands: Mckinseys 7-S Model Web site: http://www.buildingbrands.com/didyouknow/14_7s_mckinsey_model
Oxford Analytical, (2009, May, 27). Emerging Economies Must Maintain Social Programs. Forbes, Retrieved June 7, 2009, from http://www.forbes.com/2009/05/26/health-education-politics-business-oxford_print.html