1. Internal Scanning: Organizational Analysis
Chapter 4
Internal Scanning: Organizational Analysis
Dr.Vijaya Kumar
Skyline College
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2. Resource-Based Approach
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.
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3. Resource-Based Approach
An asset, competency, process, skill, or knowledge controlled by the corporation.
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4. 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?
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5. Resource-Based Approach
5-Step approach to strategy analysis:
Identify & classify firm’s resources
Strengths & weaknesses
Combine firm’s strengths into capabilities
Core competencies
Distinctive competencies
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6. Resource-Based Approach
5-Step approach to strategy analysis:
Profit potential of resources
Sustainable competitive advantage
Select strategy
Exploits firm’s resources relative to external opportunities
Identify resource gaps
Invest in upgrading weaknesses
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7. Sustainability of an Advantage
Durability:
Rate at which a firm’s underlying resources and capabilities (core competencies) depreciate or become obsolete.
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8. Sustainability of an Advantage
Imitability:
Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others.
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9. Core Competencies Imitability of core competencies determined by:
Transparency
Transferability
Replicability
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10. Core Competencies Explicit Knowledge: Tacit Knowledge:
Knowledge that can be easily articulated and communicated.
Tacit Knowledge:
Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation’s culture .
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11. Resource Sustainability
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12. Corporate Value Chain
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13. Corporate Value Chain Analysis
Examine each product line’s value chain
Core competencies & core deficiencies
Examine the “linkages” within each product line’s 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
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14. Basic Organizational Structures: Simple and Functional
I. Simple Structure
II. Functional Structure
Owner-Manager
Workers
Top Management
Manufacturing
Sales
Finance
Personnel
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15. Basic Structures of Corporations: Divisional
III. Divisional Structure*
Manufacturing
Finance
Top Management
Product Division A
Product Division B
*Conglomerate structure is a variant of the division structure.
Sales
Personnel
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16. Corporate Culture Defined:
Collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another.
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17. Corporate Culture Distinct Attributes 1. Cultural intensity
Degree to which members of a unit accept the norms, values, or other culture content associated with the unit.
2. Cultural integration
Extent to which units throughout an organization share a common culture.
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18. Corporate Culture Important Functions Sense of identity for employees
Generate employee commitment
Stability of organization
Guide for appropriate behavior
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19. Strategic Marketing Issues
Market Position:
“Who are our customers?”
Market Segmentation:
Niches, new product development
Marketing Mix:
Combination of key variables under the corporation’s control used to affect demand and gain competitive advantage.
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20. Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 89. Copyright © Reprinted by permission of Prentice-Hall, Inc.
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21. The Product Life Cycle Introduction Growth* Maturity Decline Time
Sales
*The right end of the Growth stage is often called Competitive Turbulence because of price and distribution competition that shakes out the weaker competitors. For further information, see C. R. Wasson, Dynamic Competitive Strategy and Product Life Cycles, 3rd ed. (Austin, Tex.: Austin Press, 1978).
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22. Strategic Financial Issues
Financial Leverage:
Ratio of total debt to total assets.
Capital Budgeting:
Analyzing and ranking possible investments in fixed assets.
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23. Strategic R&D Issues R&D Intensity: Technological Competence:
Spending on R&D as a percentage of sales revenue.
Technological Competence:
Development and use of innovative technology.
Technology Transfer:
Process of taking new technology from the lab to the marketplace.
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24. Technological Discontinuity
What the S-Curves Reveal
Research Effort/Expenditure
In the corporate planning process, it is generally assumed
that incremental progress in technology will occur. But past
developments in a given technology cannot be extrapolated
into the future, because every technology has its limits. The
key to competitiveness is to determine when to shift re-
sources to a technology with more potential.
Mature
Technology
New
Product Performance
Source: P. Pascarella, “Are You Investing in the Wrong Technology?” Industry Week (July 25, 1983), p. 38. Copyright © 1983 Penton/IPC. All rights reserved. Reprinted by permission.
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25. Strategic Operations Issues
Intermittent systems:
Manufacturing systems where items are normally processed sequentially but the work and sequence of the process vary.
Continuous systems:
Laid out as lines where products are continuously assembled or processed.
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26. Strategic HRM Issues Teams Unionization Temporary Workers
Autonomous (self-managing)
Cross-functional
Concurrent engineering
Unionization
13.9% of labor force overall
12% of private labor force
Temporary Workers
Increase flexibility; avoid layoffs
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27. Strategic HRM Issues Quality of Worklife Human Diversity
Participative problem solving
Restructuring work
Innovative reward systems
Improvements in work environment
Human Diversity
Different races, cultures and backgrounds in the workplace.
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28. Strategic Information Systems Issues
Automate back-office processes
Automate individual tasks
Enhance key business functions
Develop competitive advantages
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29. Strategic Information Systems Issues
Intranet:
Information network within an organization that also has access to the external worldwide Internet.
Extranet:
Information network within an organization available to key suppliers and customers.
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30. Internal Factor Analysis Summary (IFAS)
Internal Factors
Rating
Weighted Score
Weight
Comments 1 2 3 4 5
Strengths
Weaknesses
Total Weighted Score
1.00
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31. Internal Factor Analysis Summary (IFAS): Maytag as Example
Internal Factors
Rating
Weighted Score
Weight
Comments
Strengths
• Quality Maytag culture
• Experienced top management
• Vertical integration
• Employee relations
• Hoover’s international orientation
Weaknesses
• Process-oriented R&D
• Distribution channels
• Financial position
• Global positioning
• Manufacturing facilities
Total Weighted Score 1 2 3 4 5
.15
.05
.10
.20 5 4 3 2
.75
.20
.40
.15
.45
.10
.30
Quality key to success
Know appliances
Dedicated factories
Good, but deteriorating
Hoover name in cleaners
Slow on new products
Superstores replacing small dealers
High debt load
Hoover weak outside the United Kingdom and Australia
Investing now
1.00
3.05
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32. Impact of the Internet Virtual Teams:
Groups of geographically and/or organizationally dispersed coworkers that are assembled using a combination of telecommunications and information technologies to accomplish an organizational task.
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33. Impact of the Internet Virtual Teams Flatter organizational structures
Turbulent environments
Employee autonomy
Higher knowledge requirements
Globalization of trade
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