Internal Factor Analysis Summary (IFAS)

Information Technology

November 18, 2013

Presented by

Nitin Khattri Amit KumarAshish JhaAmeya V LakheManish Pandey

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Agenda

VRIO Framework

IT Industry Overview

Dell Inc. IFAS

Apple Inc. IFAS

Introduction to IFAS

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Agenda

VRIO Framework

IT Industry Overview

Dell Inc. IFAS

Introduction to IFAS

Apple Inc. IFAS

Objectives

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How can a firm identify its strengths and weaknesses?

What are firm’s core competencies? Can you create a sustainable competitive

advantage?

Strengths and Weaknesses

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Goal: Objective assessment of strengths and

weaknesses to: identify, protect and deploy resources, understand capabilities and develop core

competencies. Assess strengths and weakness:

Relative to competitors and Important to customers.

Internal Factor Analysis Summary (IFAS)

Internal Factors Weight RatingWeighted Score Comments

1 2 3 4 5

1.00

Strengths

Weaknesses

Total Weighted Score

Notes: 1. List opportunities and threats (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how well the company is responding to the strategic factors in its external environment.Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and Hunger Associates. Reprinted by permission.

The Internal Environment Approaches to Organizational Analysis

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Can use resource-based approach Can use value chain analysis Can use functional resource analysis

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Agenda

IT Industry Overview

VRIO Framework

Apple Inc. IFAS

Introduction to IFAS

Dell Inc. IFAS

The VRIO Framework

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Four Important Questions:

Is the resource Valuable? Is the resource Rare? Is the resource Imitable? Can the Organization make use of it?

Applying the VRIO Framework

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Resource Based View

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Internal Analysis

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Tells us: What the firms should do, given the relative

strength and weakness of resources and capabilities

Manager’s Job: Bundle resource and Capabilities to achieve

competitive advantage

VRIO Framework helps manager recognize sources of competitive advantage

VRIO Analysis- Apple

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Resource/ Capability

Does it have Value?

Is it Rare?

Is it Inimitable?

Is the company Organized to exploit this resource/capability

The Brand Yes Yes Yes Yes  

Supply Chain Management

Yes Yes Yes Yes  

Top Executives Yes Yes Yes Yes  

International Product Distribution

Yes No No Yes  

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Agenda

IT Industry – An overview

Introduction to IFAS

VRIO Framework

Dell Inc. IFAS

Apple Inc. IFAS

Indian IT Industry – An Overview

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Indian IT Industry - Weakness

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Lower productivity levels. Higher attrition rate. Cost of telecom and network infrastructure

is much higher in India than in the west. Still on the lower level of value chain. Political opposition from developed

countries. Weak domestic market. Local infrastructure.

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Agenda

Apple Inc. IFAS

Introduction to IFAS

VRIO Framework

IT Industry- An Overview

Dell Inc. IFAS

DELL INTRODUCTION

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Dell Inc. is an American multinational corporation headquartered in Round Rock, Texas, that develops, sells, repairs and supports computers and related products and services.

Dell is 3rd Largest PC vendor and #1 shipper of PC monitors in world.

More than 110,000 employees worldwide More than 3,000 patents across the world Acquired PerotSystems, Credant

Technologies, Gale technology etc as step to become leader in server technology and data storage sphere.

Internal Factor Analysis Summary (IFAS): Dell Inc.

Internal Factors Weight Ratin

g

Weighted Score

1 2 3 4

1.00

Strengths• Product reliability and performance• Customized products where customers can decide the

specifications they want on their products• Direct sales model which helps the company collect

constant feedback• Competitive pricing

Weaknesses• High dependence on PC products• No business diversification • Minimal investments in Research and Development

Total Weighted Score

3.15

.15

.20

.15

.15

.10

.10

.15

34

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334

.75

.80

.45

.45

.30

.30

.60

Aspect Value

Rarity Imitability

Organisation

Competitive

Advantage

Pricing Yes No Yes Yes Parity

Customization

Yes Yes No Yes Sustained

Marketing Yes No Yes Yes Temporary

Direct Sales Yes No Yes Yes Parity

Dell VRIO analysis

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Agenda

Apple Inc. IFAS

Dell Inc. IFAS

Introduction to IFAS

VRIO Framework

IT Industry- An Overview

APPL INTRODUCTION

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Apple Inc., formerly Apple Computer, Inc. is an American multinational corporation headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software and personal computers

Apple is the world's second-largest information technology company by revenue after Samsung Electronics, and the world's third-largest mobile phone maker after Samsung and Nokia

CONTINUE…

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Its consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites.

During the first five years of operations, revenues doubled every four months, an average growth rate of 700%.

Its best-known hardware products are the Mac line of computers, the iPod music player, the iPhone smartphone, and the iPad tablet computer

CONTINUE…

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As of May 2013, Apple maintains 408 retail stores in fourteen countries as well as the online Apple Store and iTunes Store, the latter of which is the world's largest music retailer.

Apple is the largest publicly traded corporation in the world by market capitalization, with an estimated value of US$415 billion as of March 2013

On September 30, 2013, Apple surpassed Coca-Cola to become the world's most valuable brand in the Omnicom Group's "Best Global Brands" report

IFAS MATRIX

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Item Key internal factor Weight

Rating

score

STRENGTH

1 Apple is the most customer-focused business. They are absolutely obsessed with the customer.

0.10 4 0.40

2 Customer loyalty that makes the customer price insensitive

0.09 4 0.36

3 No debts means Apple can invest in other sectors

0.10 4 0.4

4 Existing products are of high quality while compared to competing products in the market.

0.07 3 0.21

5 It has succeeded in building an image on providing good value . 0.09 4 0.36

IFAS MATRIX

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Item Key internal factor Weight

Rating

score

6 Strong brand that is quite popular among the Apple customers 0.10 4 0.40

7 Apple products are hard to imitate 0.07 3 0.21

8 Advance team consisting of executives in to conduct intelligence on potential competitors.

0.09 4 0.36

IFAS MATRIX

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Item

Key internal factor Weight

Rating

score

WEAKNESS1 Poor relations with other key players

like Microsoft 0.07 2 0.142 Apple is too much dependent on

product launch 0.08 3 0.24

3 Apple emphasized its high-price private label ("Value") and continued to increase price

0.08 3 0.18

4 Strong presence only limited to few countries

0.06 2 0.10

Total 1 3.36

CONCLUSION

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IFAS matrix shows the information related to strategy formulation, Apple achieved an overall of 3.36 total weighted score based on the 1-4 scale. From here we can realize that the company is successful internally.

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Thank you