strategic audit tool

R & R ASSOCIATES CONSULTING

STRATEGIC AUDIT TOOL

Researched & Developed by R & R Associates Consulting

Strategic Audit Report Researched and Developed by R & R Associates Consulting

R & R ASSOCIATES CONSULTING # 3 Melder Place, Nugegoda 10250 Sri Lanka

www.consultinglanka.com Tel +94 77 774 5600/ +94 11282 5355 [email protected]

© 2002 - 2013

Industry Analysis

-SubstitutesSubstitutes refers to alternatives of the company’s products or services mapped against the current status quo

1. What are all the alternatives for your product service?

2. During the last year, Were there any companies / individuals promoting what you have identified above?

3. Who and what has the current biggest share?

4. What are the new areas of substitutes our competition is moving into (Why?) and what is our current share of it?

5. What is the main driving factor for the shift (Give based on 4 P’s)

6. What are the entry barriers if any for the substitutes?

7. Do we have any of them with us Vis-à-vis our competitors?

8. What are we doing to do to get them in our organization and can we?




© 2002 - 2013

-EntryEntry refers to new markets and alternatives of the company’s products or services which have appeared in the marketplace via-avis current status quo

1. Who and What are new markets that have opened during the last year?

2. During the last year, Were there any convergence taking place in the industry?

3. If so Who and what have the current biggest share?

4. What are the new driving forces that have an impact on above (Based on GLPEST)

5. What is the current impact and what is the potential impact to our business?

6. What is the one thing we can do now about it?

7. Do we have any of it with us Vis-à-vis our competitors?

8. What are we doing to do to get them in our organization and can we?




© 2002 - 2013

-RivalryRivalry refers to the level of healthy competition and perhaps mutual respect that companies have for each others products, services and capabilities in the current market

1. What is our relationship with our rivals? (High level contact, mid level contact, low level contact, no contact)

2. What is the driving force of that contact?

3. If we have anything other that high level contact what can we do anything to establish high level contact?

4. Can we use the current level of contact to establish industry benchmarks? (Based on the 4 P’s)

5. What is the current impact and what is the potential impact of bench marking on our business?

6. Do we need to benchmark?

7. If we benchmark vis-à-vis our competitors what will be the impact / differentiation USP/UBP

8. What is our current edge (Differentiator / cost leader) will benchmarking change / impact it and what will that be?




© 2002 - 2013

-Buyer PowerBuyer Power refers to the level of and the ability of our current customers to have an impact on our products and services based on current market and socio economic trends (Exercise of choice)

1. What is our relationship with our customers? (High level contact, mid level contact, low level contact, no contact)

2. What is the driving force of that contact? (Customer hotline >>>>>>>>>>> CRM system)

3. What was the last High and Low points of our customer contacts?

4. What is our experience culture with our customers (Repetitive >>>>Learn from our mistakes>>>> )

5. What was the last strong message given to us by our customers / Market / Regulator?

6. What did we do about it?

7. What is the situation vis-à-vis our competition?

8. What is happening in terms of cross industry / cross border influences?




© 2002 - 2013

-Supplier PowerSupplier Power refers to the level of and the ability our current suppliers to have an impact on our products and services based on current market and socio economic trends

1. What is our relationship with our suppliers? (High level contact, mid level contact, low level contact, no contact)

2. What is the driving force of that contact?

3. Are our suppliers forward, back word or vertically integrating?

4. Is there any supplier consolidation / fragmentation if so what is driving it? (Cost, Technology etc.)

5. Are there any convergence forces impacting our suppliers?

6. What is the 80 / 20 of our suppliers?

7. What is our current status vis-à-vis the current critical supplies?

8. What are our potential / new critical supplies and what can we do to ensure the long term viability of that supply?




© 2002 - 2013

Competitor AnalysisCompetitor Analysis refers to a company’s ability to map the movements in competitors in our universe and track the impact of it to the business and customers.

1. What is the total market value, our share and value vis-à-vis our competition?

2. During the last year, who were the biggest buyers, the value of the orders and our share vis-à-vis our competition?

3. Do we know who will be the biggest buyers this year, the value of the orders and what will be our share vis-à-vis our competition?

4. What are the new areas of business our competition is moving into (Why?) and what is our current share of it?

5. What are the areas of business our competition is moving out of (Why?) and what is our current share and future potential?

6. What are the entry barriers if any and how do we raise the bar?

7. What are we doing to be “top of mind” to our customers vis-à-vis our competition?

8. What are the USP’s / UBP’s of our top 5 competitors vis-à-vis us?




© 2002 - 2013

-Market IntelligenceMarket Intelligence refers to a company’s ability to perceive and adapt to changes in the market.

1. Are you crystal-clear on who your customers are and why they use your products and services?

2. Is there a person or group of people in the company responsible and accountable for marketing, market research, and keeping up with industry trends through trade shows and industry journals?

3. Do you know the strengths, weaknesses, strategies and financial status of your top five competitors?

4. Have you conducted a formal customer feedback in the past 12 months?

5. Do you have the mechanisms in place to gather customer feedback on an ongoing basis ?

6. Do you regularly talk to customers about their future business strategies?

7. Are your corporate strategies and structure consistently organized around external market information rather than internal operations or technical expertise?

8. Have you made changes and innovations that consistently respond to your customers’ needs?




© 2002 - 2013

Company Analysis

-RiskRisk refers to a company’s risk in strategy, market, financial and pure (operational) risks

1. What are the possible hazards/risks that can affect the business? E.g. Investment, Product, sales, HR, Natural disasters

2. What are the possible causes of the hazards & Risks?

3. What are the possible consequences of the Hazards and risks

4. What are the contingencies in place if any?

5. When, What was the last hazard or risk impacted our business and what was the net result?

6. Is any part of the business based on a ignorance gap, sole provider of products & Services or a first mover advantage?

7. What are our current risk reduction strategies and its net impact/worth?

8. Who is responsible for risk management in the organization?




© 2002 - 2013

-ResourcesResources refers to a company’s resources either owned leased or outsourced

1. What are the resources owned by the company such as products & brands, trademarks and patents, plan & machinery, land & Buildings, etc?

2. What are the resources available to the company by way of Strategic Alliances, JV’s and partnerships with suppliers?

3. What is the 80/20 of your resources in terms of net profit?

4. What were the last 3 planed resources made available to the company and their profit contribution?

5. Are there any unplanned resources being used by the company if so what are the circumstances leading to it?

6. What are the ROI’s and Asset utilizations of the tangible resources available to the company?

7. Do we have a list of intangible assets and are they documented?

8. Plot the firms resource bundle on the table given below




© 2002 - 2013

THE FIRM’S RESOURCE BUNDLETangible Assets Intangible Assets Capabilities

Fixed Assets Blueprints Cultures

Intangible Assets Intangible Capabilities

IP Assets Competencies

Core Competencies Core Competencies

Invisible Assets

Intermediate Goods

Distinctive Competencies

Core Skills

-Value Chain AnalysisValue Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business.(1) Primary Activities - those that are directly concerned with creating and delivering a product or service.(2) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others.




© 2002 - 2013

-Primary ActivitiesPrimary Activities refers to a company’s activities carried out in creating value

1. What are our value generators and value components?

2. What is the total value chain and plot the value provided by the business

3. What is the potential of moving forward or back word in the value chain to capture greater share of the value?

4. What are our competencies & capabilities vis-à-vis new value segment

5. Is our internal supply chain & systems based on value flow?

6. Does our structure mirror the value flow

7. Are there any parallel value

8. What are the most efficient, productive and cost effective permutations and combinations of in-source, out-source, centralize & decentralize?




© 2002 - 2013

-Support ActivitiesSupport Activities is the company’s ability to support the business strategies through its internal operations, systems and organizational structure.

1. Are the roles and responsibilities for each employee and manager clearly defined?

2. Are there clear accountabilities and performance evaluations in place for each middle manager and supervisor?

3. Is the appropriate management talent and depth in place to achieve the corporate strategies and growth that have been outlined?

4. Are the financial systems in place to get accurate and timely data on both current and forecasted financial performance?

5. Is employee compensation aligned with corporate objectives?

6. Are sales and marketing systems in place to consistently develop new customers?

7. Is technology being utilized effectively to improve overall performance?

8. Are current policies and procedures customer friendly making it easy for customers to do business with you?




© 2002 - 2013

- Core Competencies & Capabilities Core competencies are those capabilities that are critical to a business achieving competitive advantage.

1. Do we have a capability map of our employees based on the value chain?

2. What are the core competencies across the value chain? (Critical Path, Key Success Factors)

3. What are the core competency development programs currently available and at what frequency do we have them?

4. What are the standards, Benchmarks and certification mechanisms currently available and in use?

5. What is the documentation and training update mechanism in place to ensure key learning proliferation through out the company?

6. What are the supply, demand and retention dynamics of core competencies

7. What are the time line contingencies for each core competency?

8. What is the cross industry portability of our core competency?




© 2002 - 2013

-Sources of Competitive Advantage -Innovation

1. Do your training/educational programs have provisions to incubate and spin-out new products and businesses?

2. Does the rate of production of new products and service exceed the norms of your industry and create new markets in which you can excel?

3. Does your marketing image portray an organization with the capacity to create and move ideas into the marketplace to make your customers successful?

4. Have resources been allocated to articulate a compelling vision internally and share company expertise externally through publications and participation in major forums?

5. Has one person been chartered with the overall responsibility to manage the corporate-wide innovation process?

6. Has a strategic alliance manager been designated to create and manage the network of partnerships and joint ventures to leverage your firm?

7. Are there performance measures - both tangible and intangible - to assess the quality of your innovation practices?

8. Map your company on the matrix given below




© 2002 - 2013

1st 2nd 3rd 4th 5th

Technology as the Asset

Project as the Asset

Enterprise as the Asset

Customer as the Asset

Knowledge as the Asset

Core Strategy R&D in Isolation Link to Business

Technology/Business Integration

Integration With Customer R&D

Collaborative Innovation System

Change Factors

Unpredictable Serendipity

Inter-dependence

Systematic R&D Management

Accelerated Discontinuous Global Change

Kaleidoscopic Dynamics

Performance R&D as Overhead

Cost-Sharing Balancing Risk/Reward

‘Productivity Paradox’

Intellectual Capacity/Impact

Structure Hierarchical; Functionally Driven

Matrix Distributed Coordination

‘Multi Dimensional’ Communities of Practice

Symbiotic Networks

People We/They Competition

Proactive Cooperation

Structured Collaboration

Focus on Values and Capacity

Self Managing Knowledge Workers

Process Minimal Communication

Project to Project Basis

Purposeful R&D/Portfolio

Feedback Loops and ‘information persistence’

Cross-Boundary Learning and Knowledge Flow

Technology Embryonic Data-Based Information-Based IT as a Competitive Weapon

Intelligent Knowledge Processors




© 2002 - 2013

-Employee SurveyEmployee Survey

(Choose the appropriate answers below)

YES NO MAYBE

1. Does everyone in your company know what the company wants to accomplish in the next 2 years?

YES NO MAYBE

2. Is everyone able to articulate the company’s dream or vision?

YES NO MAYBE

3. Do you and your team formally evaluate your company’s strengths, weaknesses, opportunities, and obstacles every year?

YES NO MAYBE

4. Does the company have a written plan/outline for fulfilling the vision?

YES NO MAYBE

5. Can everyone name the 3 top priorities that everyone in the company should be working on?

YES NO MAYBE

6. Have you created ‘key indicators’ (other than sales & profits) to measure progress on strategies and goals?

YES NO MAYBE

7. Do you have a marketing calendar/action plan that works?

YES NO MAYBE

8. Do you have a sales calendar/action plan that works?

YES NO MAYBE

9. Do you do formal, periodic customer surveys that work well?

YES NO MAYBE

10. Is there an organized, systematic approach to developing new products/services and to abandoning others?




© 2002 - 2013

-LeadershipStrategic Leadership is a CEO’s ability to provide a clear source of direction, decision making and long term planning.

1. Do you have a clear understanding of the company’s future direction, goals and strategies?

2. Does the CEO embrace his role as leader of the organization as opposed to being an operations or sales or financial expert?

3. Is the senior management team united and focused on achieving the same strategies and objectives for the business?

4. Does the senior management spend a consistent, dedicated amount of time on strategic thinking and long term planning rather than being trapped in the day to day?

5. Does the senior management monitor itself and hold accountable the execution of corporate strategies?

6. Is the CEO open to challenging the status quo?

7. Is the senior management open to challenging the status quo?

8. Does the senior management effectively communicate the corporate direction, strategies, goals to the middle management and supervisory levels?




© 2002 - 2013

-Performance AnalysisPerformance Analysis refers to a company’s ability to track and give feed back regarding its activities to be able to change to the change in the market.

1. How have the resources deployed in the business changed over time?

2. How do the resources and capabilities of the business compare with others in the industry?

3. How do the resources and capabilities of the business compare with “best-in-class” - wherever that is to be found?

4. How has the financial performance of the business changed over time and how does it compare with key competitors and the industry as a whole?

5. Has your company experienced several or more consecutive quarters of losses?

6. Have you taken on any additional debt in order to finance losses?

7. Is your industry in the midst of either a downturn or an explosion in growth?

8. Do any of the following exist at your company: labor disputes with the union; excessive turnover; lack of a succession plan?




© 2002 - 2013

9. Are you experiencing any problems with capacity issues or high overhead?

10. Have you recently experienced or do you anticipate loss of access to a key product line or loss of a key supplier?

11. Do you have excess inventory on hand?

12. Has your company recently branched out into new or unrelated business lines?

13. Do you manage for income (relying on quarterly projections) as opposed to cash flow?

14. Is your company experiencing rapid growth?

15. Does the market have trouble distinguishing your product or service from your competitors’?

16. Does one product or customer account for more than 60 percent of your current business?

17. Do your directors or advisors generally agree with your decision, without much debate or discussion?




© 2002 - 2013

-Portfolio AnalysisPortfolio Analysis refers to a company’s portfolio of SBU’s, subsidiaries, or profit centers and the overall balance of the strategic business units of a business.

1. What is the 80/20 of the SBU’s based on profitability

2. Can each one of them stand as independent businesses (State Business Model) in the market they operate in? (Why not?) and Place them according to Leading / Strong / Favorable / Tenable / Weak / Nonviable

3. What is the additional profit attributed to the company by being a SBU?

4. What was the last addition and divestiture of SBU’s and when & why?

5. Do we have clear guideline to form, merge or divest SBU’s

6. Do we have the best strategic fit based on value flow in all our SBU’s

7. If we were to start from a clean slate what will be the best SBU fit and composition?

8. Develop a strategic business unit map according to the model given bellow




© 2002 - 2013

-Clarity of purpose and Strategic DirectionClarity of Purpose and strategic Direction is a shared understanding of the company’s identity and a detailed picture of the company in the future.

1. Have you articulated in writing why your company is uniquely different from any other company in the world?

2. Since there is an existing Mission Statement, does it stress the purpose of the business as it relates to Serving the Customer?

3. Is the company operating from a platform of its unique strengths, skills and talents?

4. Does the senior management have a clear and detailed vision of the company three years from now?

5. Is that vision shared by the management as a team?

6. Is the purpose and direction of the company communicated to all employees?

7. Can the middle management consistently articulate the company’s core purpose and future direction?

8. Does the middle management commit and contribute to the basic purpose and future direction of the company on a day-to-day basis?




© 2002 - 2013

-Strategic PlanningStrategic Planning is the process by which the company determines specific action steps to achieve future objectives.

1. Does the company have a regular planning process which reviews and updates its strategies and execution?

2. Has the company set clearly defined and achievable objectives?

3. Is strategy development based on qualitative variables in the marketplace rather than on historical budgeting?

4. Is there a clear understanding of priorities for action and allocation of resources as opposed to random decision-making & “fire-fighting?”

5. Do corporate strategies leverage the company’s core competencies and unique strengths?

6. Does senior management work together in developing corporate strategy as opposed to setting independent objectives and agendas for their individual departments?

7. Do the strategies translate into specific, dated and measurable tactics?

8. Are results of objectives and strategies tracked, measured and reported?




© 2002 - 2013

R & R ASSOCIATES CONSULTING

# 3 Melder Place, Nugegoda 10250 Sri Lanka www.consultinglanka.com

Tel +94 77 774 5600/ +94 11282 5355 [email protected]

© 2002 - 2013

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