Internal Environment Analysis Mahesh Amarasiri MBA,FCMA,ACIM,B.Sc (Eng)

Tools Used to Identify Strengths and Weeknesses Value Chain Analysis BCG Matrix Product Life Cycle Analysis Resource Analysis

The Value Chain Exhibit 3.6 Source: M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of The Free Press, a division of Simon & Schuster, Inc. © 1985, 1988 by Michael E. Porter. All rights reserved. Exhibit 3.6

Value Chain and Value Network To diagnose strategic capability To understand how value is created or lost in terms of the activities undertaken The value chain describes the activities within and around an organisation which together create a product or service

Value Chain Analysis Identifies clusters of activities providing particular benefit to customers Highlights activities which are less efficient and which might be de-emphasised or outsourced Requires managers to think about the role of such activities Can be used to identify the cost and value of activities

The Value Network Exhibit 3.7 Source: M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of The Free Press, a division of Simon & Schuster Inc. © 1985, 1988 by Michael E. Porter. All rights reserved. Exhibit 3.7

The Value Network The value network Specialisation of roles 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 – Key Questions (1) Where are cost and value created? Which activities are vital to an organisation? Retain direct control of core capabilities Outsource less important activities Where are the profit pools? Potential profits at different parts of the value network Availability of competences to compete in these areas

The Value Network – Key Questions (2) Make or buy? Outsourcing Develop competence in influencing performance of other organisations Who are the best partners? What kind of relationships are required?

Value Chain Analysis-Google

BCG Matrix Mahesh Amarasiri MBA, FCMA, ACIM,B.Sc ( Eng) 4/10/2015

Sales & profits ($) Time Product Life Cycle Introduction Growth Maturity Decline

Resources- an organization’s assets Resource Analysis Resources- an organization’s assets Tangible Intangible Capabilities- a corporation’s ability to exploit its resources Identify and classify resources in terms of strengths and weaknesses Combine the firm’s strengths into specific capabilities and core competencies Appraise profit potential- Are there any distinctive competencies? Identify resource gaps and invest in upgrading weaknesses