business strategya

7/28/2019 Business Strategya

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Concept

Components of internal

environment analysis

Process of internal

environment analysisAnalysis of organizational

resources

CONTENTS


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CONCEPT : INTERNAL ENVIRONMENTANALYSIS

What is environment?

Environment refers to the factors that

affects organizations performances

Internal environment

It is the forces that provides strength and

weakness to organization

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CONCEPT :INTERNALENVIRONMENTANALYSIS (CONTD)What is internal environment analysis?

Scanning of internal environmental forces.

It systematically evaluates organizational

capabilities in terms of strength and

weakness

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STRENGTHSA STRENGTH is something a

company is good at doing or acharacteristic that gives it an importantcapability.

Possible Strengths: Name and recognition

Proprietary technology

Cost advantages

Skilled employees

Loyal Customers 5


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WEAKNESSES

A WEAKNESS is something a company

lacks or does poorly (in comparison to

others) or a condition that places it at a

disadvantage

Possible Weaknesses:

Poor organization image in market

Obsolete facilities

Internal operating problems

Poor marketing skills4


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.

Component

of

Internal

Environment

.

Organizational

Organizational

Organizational

Corporate

Internal

strategies

policies resources

Structure

culture

stakeholder

objectives


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ORGANIZATIONALOBJECTIVES,

STRATEGIESANDPOLICIES

Objectives (end results)

Strategies (courses of action

leading to objectives)

Policies (guidelines for decision

making)

Strategic management must beconducted within the framework of

organizational objectives,

strategies and policies

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CORPORATE CULTURE

Shared experiences thatbond organizational

members together.

Organizations founder

(personal values andbeliefs) contributed by

top management.

Symbols, stories,

slogans, and ceremonies

that represent and

personify the spirit of the

organization.9


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ORGANIZATIONALSTRUCTURE

It is officialrelationship among

employees

working in differentlevel of hierarchy

with defined

authorities andresponsibilities

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ORGANIZATIONALRESOURCES

They are either strength orweakness

They either limit or encourages the

ambitious decision of the

organization

Eg: financial resource constraincompany's ambitious decision of

exapnsion an organization11


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INTERNAL STAKEHOLDER Owners with legal property rights to abusiness ie. shareholders

Board of directors elected by the

shareholders to oversee the general

management of the firm to best serve theshareholders interest.

Employees who work for the firm and have a

vested interest in its continued operationand existence.

Physical work environment of the

organization and the work that people do. 12


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PROCESSOFINTERNAL

ENVIRONMENTANALYSIS

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4. Identify strength and weakness and their strengths

5.Prepare SAP based on the appraisal.

1.Internal environment scanning & Monitoring

2. Select review and predict key resource areas

3.Develop standard indicators to measure

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6. Relate the strategic advantage (distinctive

capabilities/competencies)factors to exploiting the environmental

opportunities or dealing with impending threats.


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ANALYSISOFRESOURCESFOR

STRENGTHANDWEAKNESS

1.Production/operation resources

Are plant location & layout strategic

advantages for the firm?

Is quality control high or there isincrease in rework due to poor

control?

What about production facilities? What about cost of production and

waste minimization? 15


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ANALYSISOFRESOURCESFORSTRENGTH

ANDWEAKNESS (CONTD)

2. Marketing resource

How these factors are contributing to the

achievement of organizational objectives?

Strength and weakness may lie in the followingareas.

Product mix

Pricing strategies

Promotion

Distribution

Market segmentation 16


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ANALYSISOFRESOURCEFOR

STRENGTHANDWEAKNESS (CONTD

3.Human resource Manpower planning? Quantity and quality ,accuracy of

demand and supply forecasting Procurement?employment:recruite

ment,selection,placement,orientatai

on strategies Training and development Maintenance

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ANDWEAKNESS (CONTD)

4.Finance and accounting resource Financial capability factors Is the firm stronger financially than

its competitors Indicators Asset mix

Capital structure Financial performance Accounting procedure? 18


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ANDWEAKNESS (CONTD)

5.Research and development R&D can lead to new improved products

for marketing, lead to development ofimproved processing to gain cost efficiency

and helping improved pricing. Research capabilities with in the firm: R& D budget Research expertise available Technical capabilities to design products

that meet customer requirement .

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CONCLUSION

Organizational strategies should be developedalso in line with internal resources and strategiccapabilities of the firm at the same time.

Strategic advantage analysis and diagnosis isthe process by which the firms internalresources are examined to determine where ithas significant competencies so that it can most

effectively exploit the opportunities and meet thethreats the environment is presenting.

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RESOURCES, CAPABILITIESAND

CORE COMPETENCIES

Resources

Are the source of a firms

capabilities

Are broad in scope Alone, do not yield a

competitive advantage

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CORE COMPETENCIES

Resources Are a firms assets,

including people and the

value of its brand name

Represent inputs into afirms production process,

such as:

Capital equipment

Skills of employees

Brand names

Financial resources

Talented managers23


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TANGIBLE RESOURCES

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Financial Resources The firms borrowing capacityThe firms ability to generate internal

funds

Organizational

Resources The firms formal reporting structureand its formal planning, controlling,

and coordinating systems

Physical Resources Sophistication and location of a firmsplant and equipment

Access to raw materials

Technological Resources Stock of technology, such aspatents, trade-marks, copyrights, and trade

secrets

Table 3.1


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INTANGIBLE RESOURCES

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Human Resources Knowledge

Trust Managerial capabilities

Innovation Resources Ideas

Scientific capabilities

Capacity to innovate

Reputational Resources Reputation with customers

Brand name

Perceptions of product quality,

durability, and reliability

Reputation with suppliers


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CORE COMPETENCIES

Capabilities

Are the firms capacity to deployresources that have beenpurposely integrated to achieve

a desired end state Emerge over time through

complex interactions amongtangible and intangible resources

Capabilities are often developed

in specific functional areas or aspart of a functional area

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EXAMPLESOFFIRMSCAPABILITIES

27Table 3.3


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CORE COMPETENCIES

Core Competencies

Activities that a firm performsespecially well compared tocompetitors

Activities through which the firmadds unique value to its goodsor services over a long period oftime

Distinguish a companycompetitively and reflect itspersonality

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THRESHOLDRESOURCE

Minimum resources required to survive in market

It is easy to be imitated by competitors

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UNIQUERESOURCE

Unique resources are those which are:

Valuable

Rare

Costly to imitate

Non-substitutable

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