internal scanning organizational analysis -...

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.