internal scanning organizational analysis -...
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Internal Scanning:Organizational Analysis
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Homework
• CASE 11: McAfee 2005: Anti-virus and
Anti-spyware
• questions:• questions:
1. Conduct SWOT analysis.
• Prepare EFA and IFA
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A Comprehensive Strategic Management Model
Perform
external
audit
Feedback
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Develop
Mission
statement
Establish
long term
objectives
Generate,
Evaluate,
and select
strategies
Establish
policies
and
annual
objectives
Allocate
resources
Measure and
evaluate
performance
Perform
internal
audit Formulation Implementation Evaluation
Situational Analysis
SWOT --
–Internal
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–Internal•Strengths/Weaknesses
–External•Opportunities/Threats
TOWS Matrix
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Resource-Based Approach
Internal strategic factors:
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Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats.
Resource-Based Approach
Resource:
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An asset, competency, process, skill, or knowledge controlled by the corporation.
Evaluating Key Resources VRIO Framework
• How to identify the key resources?
Base on four criteria:
1. Value: Does it provide competitive advantage?
2. Rareness: Do other competitors possess it?
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2. Rareness: Do other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit the resource?
• If the answer is use to all it is considered distinctive competence.
Core and distinctive competencies
• Capabilities: organization ability to utilize its
resources. Its business process and routine.
• Competency: cross-functional integration and
coordination of capabilities. E.g., new product
development. development.
• Core-competency: collection of competencies that
crosses divisional boundaries. E.g., new product
development is a core-competency if it goes beyond
one division.
• Distinctive competencies: when core- competencies
are superior to those of the competitions. Prentice Hall, 2004 Chapter 4
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Keys of Strategic Outsourcing
Success1- Understand the bus core competencies.
‘What it gives competitive Differentiation’
Core comp. Is the integration of technologies, constituent skills and collective learning which
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constituent skills and collective learning which makes healthy bus.
2- Mapping out the work of bus.
3- Requires trust between parties
4- Understand the type of work of bus.
Competitive advantage analysis
• Analyzing competences and core competences:
The analysis here determines how resources are deployed
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The analysis here determines how resources are deployed
Competitive advantage is built on the uniqueness of resources or on the core competences.
Strategic Outsourcing for
Competitive Advantage• Used mainly for downsizing and cost
reductions at corporations.
• Usually corps outsourcing non-essential work, why?
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• Usually corps outsourcing non-essential work, why?
To free valuable resources and focus on its areas of competitive advantage.
To do this org. must know its core competences.
Why some nations are more
competitive than others?
• M. Porter in his diamond, suggests that
there are inherited reasons why some
nations are more competitive, and there
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nations are more competitive, and there
organizations are as well, than others.
• Porter believes that national home base of
an organization influence the global
success of organization.
Porter’s Determinants of
National Advantage
There are four forces:
1- The conditions of the nation, availability of
skills, infrastructure.
2- Home country’s demand for products.
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2- Home country’s demand for products.
3- The presence or absence of supporting
industries.
4- The firm’s strategy, structure, rivalry,
establishment process..
Four Nation’s Distinct
Strategies
• S-O, or maxi-maxi
• S-T, or maxi-mini
• W-O, or mini-maxi
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• W-O, or mini-maxi
• W-T, or mini-mini
Resource-Based Approach
5-Step approach to strategy analysis:
• 1- Identify & classify firm’s resources• Strengths & weaknesses
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• Strengths & weaknesses
• 2- Combine firm’s strengths into capabilities• Core competencies
• Distinctive competencies
Resource-Based Approach
5-Step approach to strategy analysis:
• 3- Appraise the Profit potential of resources• Sustainable competitive advantage
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• 4- Select strategy• Exploits firm’s resources relative to external
opportunities
• 5- Identify resource gaps• Invest in upgrading weaknesses
Determining the Sustainability
of an Advantage Durability:
Rate at which a firm’s underlying\basic resources and capabilities (core competencies)
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capabilities (core competencies) depreciate or become obsolete. E.g., new technology can make the company core competency irrelevant.
Sustainability of an Advantage
Imitability:
Rate at which a firm’s underlying
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Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others.
Core Competencies
Imitability of core competencies determined by:
1. Transparency/clearly understood2. Transferability. Ability of competitors
to gather necessary resources and
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to gather necessary resources and capabilities.
3. Replicability/ do it exactly by the competitors :imitate other firms’ success.
Core Competencies
Is it easy to imitate another company’s core competency? Depends if it comes from:
Explicit Knowledge:– Knowledge that can be easily articulated and
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– Knowledge that can be easily articulated and communicated.
Tacit/unexpressed Knowledge:– Knowledge that is not easily communicated
because it is deeply rooted in employee experience or in a corporation’s culture .
Resource Sustainability
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Competitive advantage analysis
• Steps of analyzing competences:
1- Value chain analysis: describes the activities within and around the organization, and relates them to an
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activities within and around the organization, and relates them to an analysis of the competitive strength of the organization.
2- the bases of core competences.
Corporate Value Chain
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Corporate Value Chain Analysis steps:
• Examine each product line’s value chain• Core competencies & core deficiencies
• Examine the “linkages” within each product line’s value chain
• Connections between the way one value activity is
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• Connections between the way one value activity is performed and the cost of performance of another activity
• Examine the synergies among the value chains of different product lines or business units
• Economies of scope
Value Chain
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Competitive advantages
• When competitive advantage is
materialized?
When a firm earns persistently higher rate of
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When a firm earns persistently higher rate of
profit over its rivals.
• Determinants of profit level
1- Value of company products in customers’
eyes.
2- Company production cost.
Competitive advantage
• It can be created in certain industrial field,
through the adoption of low-cost-
differentiation strategy. .M. Porter
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differentiation strategy. .M. Porter
Bases of establishing competitive
advantages
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What is the success strategy
• The strategy which enables organizations
developing new advantages, or maintaining
the existing advantages.
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the existing advantages.
Market segmentation analysis
• It aims to identify similarities and differences between groups of customers or users .
Not all customers are the same.
• Some criteria for market segmentation:
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• Some criteria for market segmentation:
1. Characteristics of customers (e.g., income, gender),
2. Purchase situation (e.g., behavior, its size, importance),
3. Users needs and preferences for product characteristics (e.g., quality, price, brand).
Assessing Effectiveness
Value addedCustomer requirements•Product attributes•Service expectations•Price sensitivity
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Degree ofMatching
Value-added features•Product features
•Service performance•communication
What is efficiency and effectiveness?
• Management (cont.)
• elements of definition
• Efficiency - getting the most output from the least amount of inputs
• “doing things right”
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• concerned with means
• Effectiveness - completing activities so that organizational goals are attained
• “doing the right things”
• concerned with ends
11--٣٤٣٤
Boston Consulting Group Matrix
• It portrays differences among divisions in
terms of relative market share position and
industry growth rate.
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industry growth rate.
• The matrix allows multidivisional corp. to manage its portfolio of business
effectively.
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Benchmarking
The process of comparing the organization
with the best rival in the market.
The objective of any org. should focus on how
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The objective of any org. should focus on how
to be best org. in the world. It should not
focus on being org. better than previous
year.
Goals & Objectives Defined
• Goals: The desired general ends towards
which efforts are directed e.g., expand firm
size.
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size.
• Objectives: are specific quantified, e.g.,
increase sales by 10% each year.
• “We may derive a number of objectives
from a goal”
Long-Term Objectives
• Objectives: Specific results an organization
seeks to achieve in pursuing its basic mission.
• Long-term objective: More than 3 years.
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• Long-term objective: More than 3 years.
Objectives should be: challenging, measurable,
consistent, reasonable and clear. Ex. Our
objective is to achieve 20% return on equity.
Annual Objectives
• Short-term that the organization must achieve
to reach long-term objectives.
Objectives Characteristics:
Measurable, quantitative, challenging, realistic,
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Measurable, quantitative, challenging, realistic,
consistent and prioritized.
Annual objectives are important for strategy
implementation, whereas, long-term
objectives are important for strategy
formulating.
Objectives
• We must avoid generalities e.g.:
maximize profits
reduce costs
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reduce costs
become more efficient
increase sales
Difference between Long term
planning and Strategic
planning• Long term planning: The goals and
objectives are based on the assumption of
org. stability.
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org. stability.
• Strategic planning: The role of the org. is
examined within the context of its
environment.