WEEK 4 THE INTERNAL ASSESSMENT

Comprehensive Strategic Management Model (Internal Assessment/Audit) External Audit Vision & Mission Long-Term Objectives Generate, Evaluate, Select Strategies Implement Strategies: Mgmt Issues Implement Strategies: Marketing, Fin/Acct, R&D, CIS Measure & Evaluate Performance Internal Audit

Nature of Internal Audit Key internal forces: Management Marketing Finance/accounting Production/operations Research & Development Management Information Systems

Nature of Internal Audit The process of performing an internal audit Closely parallels the process of performing an external audit Involve representatives of managers and employees throughout a firm to identify strength and weaknesses Require key factors as describe earlier Provide more opportunities for participant to understand their jobs, department, divisions and organization Excellence vehicle for communication process Critical success factors – both strengths and weaknesses Highly interactive process that require coordination from various activities Fialure to understand the relationships among functional areas of business can be detrimental to strategic management

Resource Based View (RBV) Approach to Competitive Advantage Internal resources are more important than external factors in achieving competitive advantage

Resource Based View (RBV) Three Categories important resources Physical resources – plant & equipment Human resources – all employees, experience, expertise, etc. Organizational resources – firm structure, information system, patents, trademarks, etc.

Resource Based View (RBV) Empirical Indicators Rare Hard to imitate Not easily substitutable

Integrating Strategy & Culture Organizational Culture Pattern of behavior developed by an organization as it learns to cope with its problem of external adaptation and internal integration…is considered valid and taught to new members

Integrating Strategy & Culture Values Beliefs Legends Heroes Rites Cultural Products Symbols Rituals Myths

15 examples aspects of an organizational culture Strong work ethics High ethical belief, clear code of business ethics Formal dress – for formal activities Informal dress – for casual activities Socialize together outside work Do not question supervisor’ decision Encourage whistle-blowing Be health conscious – have a wellness program Allow substantial working from home Encourage creativity/innovative Support women and minorities Be high socialize responsible Have numerous meetings Have a participative management Preserve the natural environment

Strategic management – integration of various firm activities Strength and weakness of an organization may be resulted from management activities Management Marketing Finance/account Production/operation Research & Development Management information system

1. Management Basic functions of management Description Planning Consists of all managerial activities related to preparing for future – forecasting, establishing objective, devising strategies, etc Organizing Include all managerial activities that results in a structure of task and authority relationship – organizational design, job specialization, job specification, etc Motivating Involves efforts directed toward shaping human behavior – leadership, communication, delegation of authority, employee morale Staffing Activities centered on personal or HR management – wage, salary administrative, employee benefit, etc Controlling Managerial activities directed toward ensuring that actual results are consistent with planned results – quality control, analysis of variances, rewards, sanctions

Stage When Most Important Management Stage When Most Important Function Planning Strategy Formulation Organizing Strategy Implementation Motivating Strategy Implementation Staffing Strategy Implementation Controlling Strategy Evaluation

Some examples of strength and weakness of management function Competent staff Good leaders High standard of work (ISO standard, TQM) No clear work description attractive compensation program etc Weaknesses Un-skills staff No enough staff Poor leader Low salary No quality standard

2. Marketing Fulfilling customer Needs/Wants for Products/Services. Seven basic functions of marketing Customer analysis Selling product/services Products/services planning Pricing Distribution Marketing research Opportunity analysis

Marketing Customer analysis The examination and evaluation of customer needs, desire and wants Involves administering customer survey, analyzing consumer information, evaluation market positioning strategies Information – essential in developing mission statement

Marketing 2. Selling products/services 3. Product and service planning Includes activities such as advertising, sales promotion, publicity, personal selling, customer relations Critical when a firm pursuing a market penetration strategy 3. Product and service planning Include activities such as test market, product and brand positioning, packaging, features, quality, etc The most important – test market (allow company to test alternative marketing plans and forecast future sales of new product Important for a company that persue product development or diversification strategy.

Marketing 4. Pricing 5. Distribution 5 factors that effect pricing decisions – consumers, government, suppliers, distributors and competitors Eg: government impose on pricing fixing, minimum price, etc. Should be consider for short and long-term perspectives 5. Distribution Include activities such as warehousing, distribution channel, retail site location, transportation carriers Important when a firm is striving to implement market development for forward integration startegy

Marketing 6. Market research 7. Cost-benefit analysis Systematic gathering, recording and analyzing of data about problem related to marketing. 7. Cost-benefit analysis Involve assessing the costs, benefits, risks associated with marketing decision 3 steps – Compare the total costs associated with a decision Estimate the total benefits Compare the total costs and total benefits If benefit exceed – more opportunities

Examples of strength and weakness of marketing functions Global branding Good promotion program Good marketing research Excellence distribution system High quality of product etc Weakness Poor branding Poor marketing program No marketing research Low quality of product Etc.

DISCUSSION Compare two companies - Proton Holdings and Toyota motor. Identify five strength and weakness of both companies, compare and discuss Indentify four major strength and weakness of UTHM. Rank each factors in term of importance