Upload
devonte-abbott
View
226
Download
2
Tags:
Embed Size (px)
Citation preview
Internal Resource Analysis
UNIT IV
WHAT IS AN INTERNAL ANALYSIS?
Internal Analysis
Identifies and evaluatesresources, capabilities, and core competencies
Looks at the organization's
•
•
•
•
Current vision
Mission(s)
Strategic objectives
Strategies
A Quick Review of Organizational Resources
Organizational Resources (assets)
•
•
•
•
•
Financial resources
Physical assets
Human resources
Intangible resources
Structural-cultural resources
Core Competencies -- AValuable Company Resource
• A competence becomes a core competence when the well-performed activity is central to a company’s competitiveness and profitability
• Often, a core competence results from collaboration among different parts of a company
•Typically, core competencies reside in a company’s people, not in assets or the balance sheet
• A core competence gives a company apotentially valuable competitive capabilityand represents a definite competitive asset
Examples: Core Competencies
• Expertise in integrating multiple technologies to create families of new products
• Know-how in creating operating systems for cost efficient supply chain management
• Speeding new/next-generation products to market• Better after-sale service capability• Skills in manufacturing a high quality product• System to fill customer orders accurately and swiftly
Distinctive Competence -- ACompetitively Superior Resource
# 1
• A distinctive competence is a competitively significant activity that a company performs better than its competitors
A distinctive competence Represents a competitively
valuable capability rivals do not have
Presents attractive potential for being a cornerstone of strategy
Can provide a competitive edge in the marketplace—because it represents a competitively superior resource strength
Examples: Competencies
Toyota, Honda, NissanLow-cost, high-quality manufacturingcapability and short design-to-market cycles
IntelDesign of complex chips for personal computers
SonySuperb marketing-distribution skills and R&Dcapabilities
Test to Identify Core Competence
• Prahlad and Hamel gave three test to identify the core competence: -
1. Provide access to wide variety of markets
2. Contribute significantly to end-product benefits
3. Be difficult for competitors to imitate
COMPETITIVE ADVANTAGE
• Competitive advantage is a firm’s ability to outperform its competitors (earn higher profits).
• It could consist of superior quality, service or technical assistance, a strong brand name, a unique or innovative product or service.
• Sustained competitive advantage comes from maintaining higher profits than competitors over long periods of time.
• Core competencies serve as a source of CA.
Distinctive Competencies, Resources, and Capabilities
The roots of competitive advantage:
SYNERGY
• Strategic Advantages in business area do not yield requisite benefits automatically unless all parts work together smoothly.
• Synergy is an economic efect in which the different parts of the firm contribute a unique source of heightened value to the firm when managed as a single unified entity.
• Effect of synergy: -2 + 2 > 5
Value Chain Analysis
• A tool developed by Dr. Michael Porter of Harvard Business School
• Can be used to examine the various activities of the firm and how they interact in order to provide a source of competitive advantage by:
- Performing these activities better or - At a lower cost than the competitors
Value Chain Analysis
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain ( from Table 4-1)
Inbound LogisticsInbound Logistics•••
Materials control systemInventory control systemRaw material handling and warehousing
OperationsOperations••••
Equipment comparison to competitorsPlant layoutProduction control systemLevel of automation in production processes
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain (continued) ( from Table 4-1)
Outbound LogisticsOutbound Logistics••
Timeliness and efficiency of finished products deliveryWarehousing of finished products
Marketing and SalesMarketing and Sales••••••••
Marketing researchSales promotions and advertisingAlternative distribution channelsCompetency and motivation of sales forceOrganization’s image of qualityOrganization’s reputationBrand loyalty of customersDomination of various market segments
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain (continued) ( from Table 4-1)
Customer ServiceCustomer Service•••••
Customer input for product improvementsHandling of customer complaintsWarranty and guarantee policiesEmployee training in customer education & service issuesReplacement parts and services
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain ( from Table 4-2)
ProcurementProcurement•••••
Alternate sources for obtaining needed resourcesTimeliness of resources procurementProcurement of large capital expenditure resourcesLease-versus-purchase decisionsLong-term relationships with reliable suppliers
Technological DevelopmentTechnological Development••••••
R&D activities in product and process innovationsRelationship between R&D and other departmentsMeeting deadlines in technological development activitiesQuality of labs and other research facilitiesQualifications of lab technicians and scientistsCreativity and innovation in organizational culture
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain (continued) ( from Table 4-2)
Human Resource ManagementHuman Resource Management•••••••
Recruiting, selecting, orienting, and training employeesEmployee promotion policiesReward systems to motivate and challenge employeesAbsenteeism and turnoverUnion-organization relationsEmployee participation in professional organizationsEmployee motivation, job commitment, and satisfaction
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain (continued) ( from Table 4-2)
Firm InfrastructureFirm Infrastructure•••••••
Identification of external opportunities and threatsAccomplishing goals with strategic planning systemCoordination and integration of value chain activitiesLow-cost capital expenditures & working capital fundsIS support for strategic and operational decisionsRelationships with stakeholdersPublic image as a responsible corporate citizen
• Value chain Analysis helps in defining a firm’s core competencies and the activities in which it can pursue a competitive advantage as follows: -
- Cost Advantage – by better understanding cost and squeezing them out of the value-adding activities
- Differentiation – by focusing on those activities associated with core competencies and capabilities in order to perform them better than the competitors do.
Example: Key Value Chain Activities
Timber farming
Logging
Pulp mills
Papermaking
Pulp & Paper Industry
Parts and components manufactureAssembly
Wholesale distributionRetail sales
Home Appliance Industry
Example: Key Value Chain Activities
Processing of basic ingredientsSyrup manufacture
Bottling and can fillingWholesale distribution
AdvertisingRetailing
Soft-Drink Industry
Example: Key Value Chain Activities
ProgrammingDisk loadingMarketing
Distribution
Computer Software Industry
Example: Key Value Chain Activities
STRATEGIC ADVANTAGE PROFILE (SAP)
A picture of the more critical areas which can have a relationship of the strategic posture of the firm in the future.
Capability Factor Competitive strengths/Weaknesses
• Finance High cost of capital, reserves & surplus
• Marketing Fierce competition, company position secure
• Operational P&M - excellent - parts & components available
STRATEGIC ADVANTAGE PROFILE (SAP)
Capability Factor Competitive strengths / Weakness
•Personnel Quality of management & personnel par with competition
•General High Quality experienced top management - take proactive
stance