Scribd Logo
Upload

Welcome to Scribd!

  • 26 views

    Internal Analysis: Strategic Capability

    Uploaded by

    Nidhi Mimani
    This document discusses analyzing an organization's internal strategic capabilities. It describes evaluating key internal resources using the VRIO framework and identifying core competencies. The value chain model is introduced for assessing how value is created through primary and support activities. Benchmarking and SWOT analysis are also discussed as tools for comparing an organization's internal strengths and weaknesses to competitors. The goal of the internal analysis is to understand how to take advantage of opportunities and threats based on an organization's unique resources and capabilities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Internal Analysis: Strategic Capability

    Uploaded by

    Nidhi Mimani
    26 views32 pages
    This document discusses analyzing an organization's internal strategic capabilities. It describes evaluating key internal resources using the VRIO framework and identifying core competencies. The value chain model is introduced for assessing how value is created through primary and support activities. Benchmarking and SWOT analysis are also discussed as tools for comparing an organization's internal strengths and weaknesses to competitors. The goal of the internal analysis is to understand how to take advantage of opportunities and threats based on an organization's unique resources and capabilities.

    Original Title

    Strategy 3

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses analyzing an organization's internal strategic capabilities. It describes evaluating key internal resources using the VRIO framework and identifying core competencies. The value chain model is introduced for assessing how value is created through primary and support activities. Benchmarking and SWOT analysis are also discussed as tools for comparing an organization's internal strengths and weaknesses to competitors. The goal of the internal analysis is to understand how to take advantage of opportunities and threats based on an organization's unique resources and capabilities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    26 views32 pages

    Internal Analysis: Strategic Capability

    Uploaded by

    Nidhi Mimani
    This document discusses analyzing an organization's internal strategic capabilities. It describes evaluating key internal resources using the VRIO framework and identifying core competencies. The value chain model is introduced for assessing how value is created through primary and support activities. Benchmarking and SWOT analysis are also discussed as tools for comparing an organization's internal strengths and weaknesses to competitors. The goal of the internal analysis is to understand how to take advantage of opportunities and threats based on an organization's unique resources and capabilities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 32

    Strategic Capability

    Internal Analysis

    Strategic Capability

    Resource-based view of the firm Value chain identifying where value is created Internal audit Benchmarking SWOT

    Scanning the external environment for opportunities and threats is not enough to provide an organisation a competitive advantage. Strategic managers also need to identify internal strategic factors.

    Internal strategic factors:

    Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats. i.e RESOURCES & COMPETENCIES

    Resource-Based Approach
    Resource:

    An asset, competency, process, skill, or knowledge controlled by the corporation.

    Resources
    Tangible resources physical assets of an organisation

    Intangible resources non-physical assets of an organisation Human Resources


    Physical Resources Financial Resources Intellectual Capital

    Evaluating Key Resources


    VRIO Framework
    Value: Does it provide competitive advantage? Rareness: Do other competitors possess it? Imitability: Is it costly for others to imitate?

    Organization: Is the firm organized to exploit the resource?

    Competences
    The activities and processes through which an organisation deploys its resources effectively I.e the combination of the firms bundle of resources It is when these these competencies are translated into products/services that they are of value to customers. Eg. Gillette Razors, South-West Airlines

    Sustainable Competencies
    Durability:
    Rate at which a firms underlying resources and capabilities (core competencies) depreciate or become obsolete.

    Imitability:
    Rate at which a firms underlying resources and capabilities (core competencies) can be duplicated by others.- reverse engineering

    Managements Strategic Choices Resource Identification Resource development/Protection Resource Deployment

    Key Resources Tang Capabilities Assets Assets Value to Customers Value Barriers to Duplication Appropriability Intang Sustainable Competitive Advantage

    Superior Performance Market Performance Sales Performance Financial Performance

    If firms are to achieve competitive advantage by delivering value to customers, they need to know how this value is created or lost

    Raw Materials

    Value chain
    Primary Manufacturing Product Producer Distributor

    Retailer

    Corporate Value Chain

    Value Chain Analysis


    Assessing the PRIMARY Activities in the Value Chain

    Inbound Logistics
    Materials control system Inventory control system Raw material handling and warehousing

    Operations
    Equipment comparison to competitors Plant layout Production control system Level of automation in production processes

    Value Chain Analysis


    Assessing the PRIMARY Activities in the Value Chain

    Outbound Logistics
    Timeliness and efficiency of finished products delivery Warehousing of finished products

    Marketing and Sales



    Marketing research Sales promotions and advertising Alternative distribution channels Competency and motivation of sales force Organizations image of quality Organizations reputation Brand loyalty of customers Domination of various market segments

    Value Chain Analysis


    Assessing the PRIMARY Activities in the Value Chain (continued) ( from Table 4-1)

    Customer Service
    Customer input for product improvements Handling of customer complaints Warranty and guarantee policies Employee training in customer education & service issues Replacement parts and services

    Value Chain Analysis


    Assessing the SUPPORT Activities in the Value Chain ( from Table 4-2)

    Procurement
    Alternate sources for obtaining needed resources Timeliness of resources procurement Procurement of large capital expenditure resources Lease-versus-purchase decisions Long-term relationships with reliable suppliers

    Technological Development
    R&D activities in product and process innovations Relationship between R&D and other departments Meeting deadlines in technological development activities Quality of labs and other research facilities Qualifications of lab technicians and scientists Creativity and innovation in organizational culture

    Value Chain Analysis


    Assessing the SUPPORT Activities in the Value Chain (continued) ( from Table 4-2)

    Human Resource Management

    Recruiting, selecting, orienting, and training employees Employee promotion policies Reward systems to motivate and challenge employees Absenteeism and turnover Union-organization relations Employee participation in professional organizations Employee motivation, job commitment, and satisfaction

    Value Chain Analysis


    Assessing the SUPPORT Activities in the Value Chain (continued) ( from Table 4-2)

    Firm Infrastructure

    Identification of external opportunities and threats Accomplishing goals with strategic planning system Coordination and integration of value chain activities Low-cost capital expenditures & working capital funds IS support for strategic and operational decisions Relationships with stakeholders Public image as a responsible corporate citizen

    Corporate Value Chain Analysis


    Examine each product lines value chain
    Core competencies & core deficiencies

    Examine the linkages within each product lines value chain


    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

    The Value Network


    The value network
    Set of inter-organisational links/relationships necessary to create a product or service

    Specialisation of roles
    Underpins excellence in creating best-value products

    Need to understand whole process


    Where cost/value is created in supply/distribution chains How to manage links to improve customer value How product quality is a function of linked activities of manufacturer, suppliers and distributors

    The Value Network

    Exhibit 3.7

    Internal audit
    Each organisation has certain functions that it must perform
    These functions can differ from organisation to organisation

    To gain a competitive advantage it must perform these well internal audit is an assessment of a companys internal function areas

    Internal audit- key questions


    Are the necessary resources available to people in the functional areas, so they can perform their activities/ How well do they perform these activities I.e. what are their capabilities and competencies?

    Functional areas
    HRM, marketing, finance, R&D etc. Example hotel industry:
    Front desk Housekeeping Food Service Customer Service

    Why Do an Internal Analysis?

    1. It is the only way to identify an organizations strengths and weaknesses


    2. Its needed for making good strategic decisions

    Assessing Strategic Capability


    An Organisations strategic capability needs to be assessed relative to its competitors, since a sustained competitive advantage, the aim of strategy, entails gaining and sustaining a competitive position over competitors

    Benchmarking Strategic Capability


    Historical performance compared to previous years Industry/sector comparative performance of other organisations Best in class wider search for best practice
    Increased expectations due to improved performance in another sector Breaking the frame about performance standards to be achieved Spot opportunities to outperform incumbents in other markets stretch core competences

    Benchmarking Issues
    If the basis of benchmarking is flawed then it can set off a re-orientation of strategy that is flawed . Eg university sector. Does not identify the real reason (s) for good performance, merely highlights the consequence Benchmarking against who?

    SWOT (1)
    Summarises analysis of
    Business environment
    Opportunities and threats

    Strategic capabilities
    Strengths and weaknesses

    Used for comparison with competitors Focuses on future choices and capability of organisation to support them

    The Role of Strengths and Weaknesses


    Strengths: Resources that an organization possesses and capabilities that an organization has developed. Both can be exploited and developed into a sustainable competitive advantage

    Weaknesses: Resources and capabilities that are lacking or deficient. Prevent an organization from developing a sustainable competitive advantage

    SWOT (2)
    Problems of SWOT analysis
    Can generate long lists: need to focus on key issues Danger of over-generalisation: not a substitute for rigorous strategic analysis

    You might also like