UNIT 8: STRATEGIC ANALYSIS: INTERNAL ANALYSIS

Strategic Capability The resources and competences of an organization needed for it to survive and prosper. Organizational success influenced by: - External environmental factors - Internal factors (capability)

Resource-Based View of Strategy Competitive advantage of an organization is largely influenced by the distinctiveness of its capabilities Internal capability is critical in the search for sustainable competitive advantage

Diagnosing Strategic Capability SWOT Analysis Value Chain Analysis Benchmarking

SWOT Analysis A summary of key issues from the external environment and the strategic capability of an organization External environment: Opportunities and Threats Internal environment: Strengths and Weaknesses

SWOT Analysis Is the organization capable to deliver its business? - The organization should be able to deal with the challenge facing it. - The organization’s capability should be seen in relation to competition.

Value Chain Analysis Value chain The activities that are performed in the creation of a product or service. - Primary activities - Secondary activities The activities add value and cost in the process of creating products and services.

Value Chain Analysis A company’s value chain is influenced by value chains of other companies. Supplier value chains Distributor value chains Retailer value chains

Value Chain Analysis Examination of the various activities in the value chain - In which activities is the company doing well? - Where is the company doing poorly? - Where is the company vulnerable?

Value Chain Analysis What can the company do? - Reduce the cost of value chain activities - Perform certain activities uniquely - Reconfigure the value chain

Benchmarking How the internal capabilities of an organization compare with those of others - Where is the company doing better than others? - Where is the company doing poorer than others?

Approaches to Benchmarking Historical benchmarking - Comparisons in relation to the past Industry benchmarking - Comparisons within the industry Best-in-class benchmarking - Comparisons with the best performance in the industry

Strategic Analysis: Conclusions Identification of strategic issues facing the company - Key issues - Elephant issues It is around the strategic issues that: - Objectives will be set - Strategies will be formulated