11

Internal & Resource Internal & Resource AnalysisAnalysis

SWOT AnalysisSWOT AnalysisResource Analysis- Organizational Resource Analysis- Organizational Capabilities & Competitive Capabilities & Competitive Advantage, Advantage, Value Chain analysisValue Chain analysisConcept of synergy – Core CompetenceConcept of synergy – Core CompetenceCompetitive Analysis –Five Forces Competitive Analysis –Five Forces Model, Model,

Competitors Analysis Competitors Analysis

22

SWOT Analysis - IntroductionSWOT Analysis - Introduction

Strengths and weaknesses are essentially internal to Strengths and weaknesses are essentially internal to the organisation and relate to matters concerning the organisation and relate to matters concerning resources, programmes and organisation in key resources, programmes and organisation in key areas such as:areas such as:

Sales / marketing / distribution.Sales / marketing / distribution. Management systems / expertise.Management systems / expertise. Manufacturing efficiency / capacity.Manufacturing efficiency / capacity. Products / quality / pricing.Products / quality / pricing.

33

SWOT Analysis - IntroductionSWOT Analysis - Introduction

The external threats and opportunities confronting a The external threats and opportunities confronting a company, can exist or develop in the following company, can exist or develop in the following areas: areas:

The company's own industry where structural changes The company's own industry where structural changes may be occurringmay be occurring

The marketplace which may be altering due to The marketplace which may be altering due to economic or social factors Competition which may economic or social factors Competition which may be creating new threats or opportunities be creating new threats or opportunities

New technologies which may be causing New technologies which may be causing fundamental changes in products, processes, etc.fundamental changes in products, processes, etc.

44

THEMACROENVIRONMENT

THEINDUSTRY

S.W.O.T. AnalysisS.W.O.T. Analysis

THECOMPANY

STRATEGIC GROUPS

INDUSTRY STAGE of DEVELOPMENT

5 FORCES MODEL (Plus 1)RivalryBarriers to entrySuppliersBuyersSubstitutesComplementors

EXTERNAL

MacroeconomicsPolitical & LegalTechnologyDemographicSocial

EXTERNAL

COMPANY STAGE of DEVELOPMENT

VALUE CREATIONEfficiencyInnovationCustomer ResponsivenessQuality

INTERNALSTRENGTHS and WEAKNESSES

OPPORTUNITIES

and THREATS

55

66

77

SWOT Analysis - Tata Motors SWOT Analysis - Tata Motors LimitedLimited

The company began in 1945 and has The company began in 1945 and has produced more than 4 million vehicles. Tata produced more than 4 million vehicles. Tata Motors Limited is the largest car producer Motors Limited is the largest car producer in India. It manufactures commercial and in India. It manufactures commercial and passenger vehicles, and employs in excess of passenger vehicles, and employs in excess of 23,000 people.23,000 people.

88

StrengthsStrengths The The internationalisation strategy has given the internationalisation strategy has given the

benefit that Tata has been able to exchange benefit that Tata has been able to exchange expertise. expertise.

The company has a strategy in place for the The company has a strategy in place for the next stage of its next stage of its expansion.expansion.

The company has had a successful alliance The company has had a successful alliance with Italian mass with Italian mass producerproducer Fiat since 2006. Fiat since 2006. This has enhanced the product portfolio for This has enhanced the product portfolio for Tata and Fiat in terms of production and Tata and Fiat in terms of production and knowledge exchange. knowledge exchange.

99

WeaknessesWeaknesses The company's passenger car products are The company's passenger car products are

based upon 3rd and 4th generation platforms, based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a which put Tata Motors Limited at a disadvantage with competing car disadvantage with competing car manufacturers. manufacturers.

Despite buying the Jaguar and Land Rover Despite buying the Jaguar and Land Rover brands Tata has not got a foothold in the brands Tata has not got a foothold in the luxury car segment in its domestic, Indian luxury car segment in its domestic, Indian market. market.

One weakness which is often not recognised One weakness which is often not recognised is that in English the word 'tat' means is that in English the word 'tat' means rubbish. rubbish.

1010

OpportunitiesOpportunities

Tata Motor's has successfully purchased the Tata Motor's has successfully purchased the Land Rover and Jaguar brands from Ford Land Rover and Jaguar brands from Ford Motors It will provide the company the chance to Motors It will provide the company the chance to market vehicles in the luxury segments. market vehicles in the luxury segments.

Tata Motors Limited acquired Daewoo Motor's Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004. Commercial vehicle business in 2004.

Nano is the cheapest car in the World - retailing Nano is the cheapest car in the World - retailing at little more than a motorbike. at little more than a motorbike.

The new global track platform is about to be The new global track platform is about to be launched from its Korean (previously Daewoo) launched from its Korean (previously Daewoo) plant There can be a demand for low-cost plant There can be a demand for low-cost passenger and commercial vehicles. passenger and commercial vehicles.

The range of Super Milo fuel efficient buses are The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. powered by super-efficient, eco-friendly engines. that will reduce fuel consumption by up to 10%. that will reduce fuel consumption by up to 10%.

1111

ThreatsThreats Other competing car manufacturers have been in Other competing car manufacturers have been in

the passenger car business for 40, 50 or more the passenger car business for 40, 50 or more years. Tata Motors Limited has to catch up in years. Tata Motors Limited has to catch up in terms of quality and lean production. terms of quality and lean production.

Sustainability and environmentalism could mean Sustainability and environmentalism could mean extra costs for this low-cost producer. extra costs for this low-cost producer.

Since the company has focused upon the Since the company has focused upon the commercial and small vehicle segments, it has commercial and small vehicle segments, it has left itself open to competition from overseas left itself open to competition from overseas companies for the emerging Indian luxury companies for the emerging Indian luxury segments.. segments..

Rising prices in the global economy could pose a Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of threat to Tata Motors Limited on a couple of fronts. fronts.

1212

Resources and capabilitiesResources and capabilities

CAPABILITIESMore likely to be unobservable & difficult to trade

The ability of a firm to accomplish tasks that are linked to higher economic performance by increasing value, decreasing cost or both

CAPABILITIESMore likely to be unobservable & difficult to trade

The ability of a firm to accomplish tasks that are linked to higher economic performance by increasing value, decreasing cost or both

Should deliver Should deliver customers a greater customers a greater value propositionvalue proposition

Should help build Should help build Barriers to entry either Barriers to entry either by raising the actual by raising the actual costs of physical plant costs of physical plant or increasing brand or increasing brand loyalty among loyalty among customerscustomers

SuperiorEconomicContribution

Sustainable Market Position

Resources can beeither observable and tradable or unobservable (tacit) and harder to trade: Resources represent an asset that contributes to a firm’s market position by increasing value or lowering cost

1313

  OrganizationalOrganizational Capability Capability

AbilityAbility and and capacitycapacity of an of an organizationorganization expressed in expressed in termsterms of its of its

(1) (1) Human resourcesHuman resources: their number, : their number, qualityquality, , skillsskills, and , and experienceexperience

(2) Physical and (2) Physical and materialmaterial resourcesresources: : machinesmachines, , landland, , buildingsbuildings

(3) (3) FinancialFinancial resources: resources: moneymoney and and creditcredit (4) (4) InformationInformation resources: resources: poolpool of of knowledgeknowledge, ,

databasesdatabases and and (5) Intellectual resources: (5) Intellectual resources: copyrightscopyrights, , designsdesigns, ,

patents, etc.patents, etc.

1414

Competitive AdvantageCompetitive Advantage Competitive advantageCompetitive advantage is, in very basic words, is, in very basic words,

a position a firm occupies against its a position a firm occupies against its competitors.competitors.

According to According to Michael PorterMichael Porter, the three , the three methods for creating a sustainable competitive methods for creating a sustainable competitive advantage are through:advantage are through:

Cost leadershipCost leadership Differentiation Differentiation Focus Focus

1515

SUPERIOR EFFICIENCY

SUPERIOR CUSTOMER

RESPONSIVENESS

SUPERIOR QUALITY

SUPERIOR INNOVATION

Building Blocks of Competitive AdvantageBuilding Blocks of Competitive Advantage

COMPETITIVE ADVANTAGE

THE INTERNAL

VALUE CHAIN

THE MANTRA OF COMPETITIVE ADVANTAGE

EFFICIENCY

QUALITY

INNOVATION

CUSTOMER RESPONSIVENESS

1616

Building Blocks of Competitive AdvantageBuilding Blocks of Competitive Advantage

Strengths

VALUE CHAINWeaknesses

OUTPUTSINPUTS

EFFICIENCY = OUTPUTS INPUTS

FINANCIAL EFFICIENCY = UNITS per Rupee

OPERATIONAL EFFICIENCY = UNITS per UNIT

EFFICIENCY

RELIABILITY, CONSISTENCY, and EXCELLENCE

Quality is what the stakeholder says it is.

QUALITY

1717

Building Blocks of Competitive Building Blocks of Competitive AdvantageAdvantage

CUSTOMER RESPONSIVENESS

NEW PRODUCTS and SERVICES

NEW PROCESSES

NEW TECHNOLOGIES

NEW STRATEGIES

RESPONSIVENESS (more than timeliness)

SATISFYING NEEDS and DESIRES

SERVICE

Delivering value!!!

INNOVATION

1818

Value Chain Analysis Value Chain Analysis

1919

Value Chain AnalysisValue Chain Analysis Value chain is a systematic approach to Value chain is a systematic approach to

examining the development of competitive examining the development of competitive advantage. The chain consists of a series advantage. The chain consists of a series of activities that create and build value. of activities that create and build value. They culminate in the total value delivered They culminate in the total value delivered by an organisation. by an organisation.

The 'margin' depicted in the diagram is the The 'margin' depicted in the diagram is the same as added value. The organisation is same as added value. The organisation is split into 'primary activities' and 'support split into 'primary activities' and 'support activities.'activities.'

2020

PrimaryPrimary Activities.Activities. Inbound Logistics.Inbound Logistics. Here goods are received from a Here goods are received from a

company's suppliers. They are stored company's suppliers. They are stored until they are needed on the until they are needed on the production/assembly line. Goods are production/assembly line. Goods are moved around the organisation.moved around the organisation.

Operations.Operations. This is where goods are manufactured or This is where goods are manufactured or

assembled. Individual operations could assembled. Individual operations could include room service in an hotel, packing include room service in an hotel, packing of books/videos/games by an online of books/videos/games by an online retailer, or the final tune for a new car's retailer, or the final tune for a new car's engine.engine.

2121

Primary Activities.Primary Activities. Outbound Logistics.Outbound Logistics. The goods are now finished, and they need to The goods are now finished, and they need to

be sent along the supply chain to wholesalers, be sent along the supply chain to wholesalers, retailers or the final consumer.retailers or the final consumer.

Marketing and Sales. Marketing and Sales. In true In true customercustomer orientated fashion, at this orientated fashion, at this

stage the organisation prepares the offering stage the organisation prepares the offering to meet the needs of targeted customers. to meet the needs of targeted customers. This area focuses strongly upon marketing This area focuses strongly upon marketing communications and the promotions mix.communications and the promotions mix.

Service.Service. This includes all areas of service such as This includes all areas of service such as

installation, after-sales service, complaints installation, after-sales service, complaints handling, training and so on.handling, training and so on.

2222

Support Activities.Support Activities. Procurement.Procurement. This function is responsible for all This function is responsible for all

purchasing of goods, services and materials. The purchasing of goods, services and materials. The aim is to secure the lowest possible price for aim is to secure the lowest possible price for purchases of the highest possible quality. purchases of the highest possible quality.

Technology Development.Technology Development. Technology is an important source of Technology is an important source of

competitive advantage. Companies need to competitive advantage. Companies need to innovate to reduce costs and to protect and sustain innovate to reduce costs and to protect and sustain competitive advantage. This could include competitive advantage. This could include production technology, Internet marketing production technology, Internet marketing activities, lean manufacturing, Customer activities, lean manufacturing, Customer Relationship Management (CRM), and many Relationship Management (CRM), and many other technological developments.other technological developments.

2323

Support ActivitiesSupport Activities.. Human Resource Management (HRM).Human Resource Management (HRM). Employees are an expensive and vital resource. Employees are an expensive and vital resource.

An organisation would manage recruitment and s An organisation would manage recruitment and s election, training and development, and rewards and election, training and development, and rewards and remuneration. The mission and objectives of the remuneration. The mission and objectives of the organisation would be driving force behind the organisation would be driving force behind the HRM strategy.HRM strategy.

Firm Infrastructure.Firm Infrastructure. This activity includes and is driven by corporate This activity includes and is driven by corporate

or strategic planning. It includes the Management or strategic planning. It includes the Management Information System (MIS), and other mechanisms Information System (MIS), and other mechanisms for planning and for planning and

2424

Concept of Synergy+Concept of Synergy+

Synergy, simply stated, is the Synergy, simply stated, is the concept that the combined effect of concept that the combined effect of certain parts is greater than the certain parts is greater than the sum of their individual effects. sum of their individual effects.

The study of synergy helps in The study of synergy helps in analyzing new growth analyzing new growth opportunities. A new product, for opportunities. A new product, for instance, may have such a high instance, may have such a high synergistic effect on a company’s synergistic effect on a company’s existing product(s) that it may be existing product(s) that it may be an extremely desirable addition.).an extremely desirable addition.).

2525

Concept of SynergyConcept of Synergy

. . Conceptually, business synergies take one of Conceptually, business synergies take one of six formssix forms::

      Shared Know-HowShared Know-How....

Coordinated StrategiesCoordinated Strategies. . Shared Tangible ResourcesShared Tangible Resources. . Vertical IntegrationVertical Integration.... Pooled Negotiating Power.Pooled Negotiating Power. Combined Business CreationCombined Business Creation. .

2626

Core CompetencyCore Competency A core competence is the result of a A core competence is the result of a

specific unique set of skills or production specific unique set of skills or production techniques that deliver value to the techniques that deliver value to the customer. Such competences give an customer. Such competences give an organization access to a wide variety of organization access to a wide variety of markets. markets.

However, the core competences give a However, the core competences give a business a competitive advantage in a business a competitive advantage in a number of markets, markets where number of markets, markets where customers perceive a benefit from the customers perceive a benefit from the product. product.

2727

CoreCore Competency Competency

Three tests of core competence.Three tests of core competence. Provides potential access to a wide Provides potential access to a wide

variety of markets. variety of markets. Should make a significant contribution to Should make a significant contribution to

the perceived customer benefits of the the perceived customer benefits of the end product. end product.

Should be difficult for competitors to Should be difficult for competitors to imitate. imitate.

2828

Core CompetencyCore Competency

2929

3030

3131

Five Forces Analysis- Michael PorterFive Forces Analysis- Michael Porter

3232

WHAT IS THE FIVE FORCES MODEL OF WHAT IS THE FIVE FORCES MODEL OF

PORTERPORTER??The Five Forces model of Porter is an The Five Forces model of Porter is an

Outside-in business unit strategy tool that is Outside-in business unit strategy tool that is used to make an analysis of the used to make an analysis of the attractiveness (value) of an industry attractiveness (value) of an industry structure. The Competitive Forces analysis structure. The Competitive Forces analysis is made by the identification of 5 is made by the identification of 5 fundamental competitive forces:fundamental competitive forces:

Entry of competitorsEntry of competitors. How easy or difficult . How easy or difficult is it for new entrants to start competing, which is it for new entrants to start competing, which barriers do exist. barriers do exist.

Threat of substitutesThreat of substitutes. How easy can a . How easy can a product or service be substituted, especially product or service be substituted, especially made cheaper. made cheaper.

3333

WHAT IS THE FIVE FORCES MODEL OF PORTERWHAT IS THE FIVE FORCES MODEL OF PORTER?? Bargaining power of suppliersBargaining power of suppliers. How strong is . How strong is

the position of sellers. Do many potential the position of sellers. Do many potential suppliers exist or only few potential suppliers, suppliers exist or only few potential suppliers, monopoly? monopoly?

Bargaining power of buyersBargaining power of buyers. How strong is the . How strong is the position of buyers. Can they work together in position of buyers. Can they work together in ordering large volumes. ordering large volumes.

Rivalry among the existing playersRivalry among the existing players. Does a . Does a strong competition between the existing players strong competition between the existing players exist? Is one player very dominant or are all exist? Is one player very dominant or are all equal in strength and size. equal in strength and size.

Sometimes a sixth competitive force is added:Sometimes a sixth competitive force is added: GovernmentGovernment. .   

3434

THREAT OF NEW ENTRANTS DEPENDS ON:THREAT OF NEW ENTRANTS DEPENDS ON:

Economies of scale. Economies of scale. Capital / investment requirements. Capital / investment requirements. Customer switching costs. Customer switching costs. Access to industry distribution channels. Access to industry distribution channels. Access to technology. Access to technology. Brand loyalty. Are customers loyal? Brand loyalty. Are customers loyal? The likelihood of retaliation from existing industry The likelihood of retaliation from existing industry

players. players. Government regulations. Can new entrants get Government regulations. Can new entrants get

subsidies? subsidies?

3535

THREAT OF SUBSTITUTES THREAT OF SUBSTITUTES DEPENDS ON:DEPENDS ON:

Quality. Is a substitute better? Quality. Is a substitute better? Buyers' willingness to substitute. Buyers' willingness to substitute. The relative price and performance of The relative price and performance of

substitutes. substitutes. The costs of switching to substitutes. The costs of switching to substitutes.

Is it easy to change to another Is it easy to change to another product? product?

3636

BARGAINING POWER OF SUPPLIERS BARGAINING POWER OF SUPPLIERS DEPENDS ON:DEPENDS ON:

Concentration of suppliers. Are there many Concentration of suppliers. Are there many buyers and few dominant suppliers? buyers and few dominant suppliers?

Profitability of suppliers. Profitability of suppliers. Suppliers threaten to integrate forward into the Suppliers threaten to integrate forward into the

industry. industry. Buyers do not threaten to integrate backwards Buyers do not threaten to integrate backwards

into supply. into supply. Role of quality and service. Role of quality and service. The industry is not a key customer group to the The industry is not a key customer group to the

suppliers. suppliers. Switching costs. Is it easy for suppliers to find Switching costs. Is it easy for suppliers to find

new customers? new customers?

3737

BARGAINING POWER OF BUYERS DEPENDS ON:BARGAINING POWER OF BUYERS DEPENDS ON:

Concentration of buyers. Are there a few Concentration of buyers. Are there a few dominant buyers and many sellers in the dominant buyers and many sellers in the industry? industry?

Differentiation. Are products standardized? Differentiation. Are products standardized? Profitability of buyers. Profitability of buyers. Role of quality and service. Role of quality and service. Threat of backward and forward integration Threat of backward and forward integration

into the industry. into the industry. Switching costs. Is it easy for buyers to switch Switching costs. Is it easy for buyers to switch

their supplier? their supplier?

3838

INTENSITY OF RIVALRY DEPENDS ON:INTENSITY OF RIVALRY DEPENDS ON:

The structure of competition.. The structure of competition.. The structure of industry costs. The structure of industry costs. Degree of product differentiation. Degree of product differentiation. Switching costs. Switching costs. Strategic objectives. Strategic objectives. Exit barriers. Exit barriers.

3939

STRENGTHS AND LIMITATIONS OF FIVE STRENGTHS AND LIMITATIONS OF FIVE FORCES COMPETITIVE MODELFORCES COMPETITIVE MODEL

Strengths Strengths The model is a strong tool for competitive analysis The model is a strong tool for competitive analysis

at industry level. at industry level. It provides useful input for performing a SWOT It provides useful input for performing a SWOT

Analysis. Analysis. Limitation Limitation We should not underestimate or We should not underestimate or

underemphasize the importance of the (existing) underemphasize the importance of the (existing) strengths of the organization.strengths of the organization.

It does not cope with synergies and It does not cope with synergies and interdependencies within the portfolio of large interdependencies within the portfolio of large corporations corporations

4040

Creating Competitive Advantages Industrial OrganizationModel The External

Environment An Attractive Industry Strategy Formulation Assets and Skills Strategy

Implementation Superior Returns

Resource-BasedModel Resources Capability Competitive Advantage An Attractive Industry Strategy

Implementation Superior Returns

4141

CompetitorCompetitor Analysis Analysis Competitor analysisCompetitor analysis in marketing and strategic in marketing and strategic

management is an assessment of the strengths and management is an assessment of the strengths and weaknesses of current and potential competitorsweaknesses of current and potential competitors

Competitor analysis has important roles in strategic Competitor analysis has important roles in strategic planning:planning:

To help management understand their competitive To help management understand their competitive advantages/disadvantages relative to competitorsadvantages/disadvantages relative to competitors

To generate understanding of competitors’ past, To generate understanding of competitors’ past, present) future strategiespresent) future strategies

To provide an informed basis to develop To provide an informed basis to develop strategies to achieve competitive advantage in the strategies to achieve competitive advantage in the futurefuture

To help forecast the returns that may be made To help forecast the returns that may be made from future investmentsfrom future investments

4242

Questions to askQuestions to ask

What questions should be asked when What questions should be asked when undertaking competitor analysis? undertaking competitor analysis?

The following is a useful list to bear in The following is a useful list to bear in mind:mind:

Who are our competitors? Who are our competitors? What threats do they pose?What threats do they pose? What is the profile of our competitors?What is the profile of our competitors? What are the objectives of our What are the objectives of our

competitors?competitors?

4343

Questions to askQuestions to ask

What strategies are our competitors What strategies are our competitors pursuing and how successful are these pursuing and how successful are these strategies?strategies?

What are the strengths and weaknesses of What are the strengths and weaknesses of our competitors?our competitors?

How are our competitors likely to respond How are our competitors likely to respond to any changes to the way we do business? to any changes to the way we do business?

4444

Sources of information for competitor Sources of information for competitor analysis analysis

Davidson (1997) describes how the sources of Davidson (1997) describes how the sources of competitor information can be neatly grouped competitor information can be neatly grouped into three categories: into three categories:

• • Recorded data:Recorded data: this is easily available in this is easily available in published form either internally or externally. published form either internally or externally.

••Observable data:Observable data: this has to be actively sought this has to be actively sought and often assembled from several sources. A and often assembled from several sources. A good example is competitor pricing; good example is competitor pricing;

• • Opportunistic data:Opportunistic data: to get hold of this kind of to get hold of this kind of data requires a lot of planning and data requires a lot of planning and organisation. organisation.

4545

What Business already know about What Business already know about Competitors Competitors

Overall sales and profitsOverall sales and profits Sales and profits by marketSales and profits by market Sales by main brandSales by main brand Cost structureCost structure Market shares (revenues and volumes)Market shares (revenues and volumes) Organisation structureOrganisation structure Distribution systemDistribution system Identity / profile of senior managementIdentity / profile of senior management Advertising strategy and spendingAdvertising strategy and spending Customer / consumer profile & attitudesCustomer / consumer profile & attitudes Customer retention levelsCustomer retention levels

     

4646

What Business would like to know about What Business would like to know about

CompetitorsCompetitors Sales and profits by productSales and profits by product Relative costsRelative costs Customer satisfaction and service levelsCustomer satisfaction and service levels Customer retention levelsCustomer retention levels Distribution costsDistribution costs New product strategiesNew product strategies Size and quality of customer databasesSize and quality of customer databases Advertising effectivenessAdvertising effectiveness Future investment strategyFuture investment strategy Contractual terms with key suppliersContractual terms with key suppliers Terms of strategic partnerships Terms of strategic partnerships 

4747

Thank You…Thank You…

Faculty: Mehak VaswaniFaculty: Mehak Vaswani