1. Assessing Strengths and Weakness: an Internal Analysis
Austin Bastian
Philip Winfield
Dana Cook
Tyler Buschman
Jordan Jones
Ian Walraven
Stephanie Light
Bryson Bell

2. What is an Internal Analysis?
Internal Analysis- the process of evaluating and organization’s resources and capabilities.
Provides important information about an organization’s assets, skills, and work activities.
Most important part is looking at the organization’s resources, capabilities, and core competencies.

3. Review of Organizational Resources
Financial Resources
Physical Resources
Human Resources
Intangible Resources
Structural-Cultural Resources

4. Hallmark Case Dedicated to being the “best” Beliefs
Products and services enrich people’s lives
Creativity and quality are essential to success
The people of Hallmark are most valuable resource

5. Hallmark Case Values Excellence in all we do
High standards of ethics and integrity
Caring and responsible corporate citizenship for Kansas City and for each community in which we operate

6. From Resources to Organizational Capabilities
Resources are the inputs needed to perform its work
Combining organizational resources in a way to get the most value out of them
Ex: chef, Southwest Airlines
Using organizational capabilities, routines and processes, and dynamic capabilities

7. Core Competencies and Distinctive Capabilities
Core competencies- any major value-creating capabilities
Ex. Nordstrom's customer service is their core competency that comes from their capabilities in sales training and employee recruitment
Capabilities are the building blocks for core competencies

8. Distinctive Organizational Capabilities
These are the special and unique capabilities that distinguish an organization from its competitors.
Ex. Southwest Airlines
These distinct capabilities lead to a sustainable competitive advantage

9. Characteristics of Distinctive Organizational Capabilities
1. A distinctive capability contributes to superior customer value and offers real benefits
Why be good at something that your customers don’t want?
2. A distinctive capability should be difficult for competitors to imitate.
3. A distinctive organizational capability should be able to be used in a variety of ways.

10. Strengths and Weaknesses
Strengths- resources that the organization possesses and capabilities that it has developed
Can be exploited and developed into a sustainable competitive advantage
Weaknesses- resources that are lacking or deficient and prevent the organization from developing a sustainable competitive advantage
Should be corrected if they are preventing a sustainable competitive advantage
How can I strategically manage these areas of strengths and weaknesses to high levels of performance?

11. How to do an Internal Analysis
3 Different approaches for doing an
internal analysis
Value Chain Analysis
Using an Internal Audit
Developing a capabilities assessment profile

12. Value Chain Analysis
A systematic way of examining all the organization’s functional activities and how well they create customer value.
Porter’s nine activity groups (5 primary and 4 support)

13. Porter’s nine activity groups
Primary:
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Customer Service
Support:
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Examples:
-Hallmark
-Harley Davidson

14. Using an Internal Audit
An internal audit is a thorough assessment of an organization’s internal areas
Similar to an external financial audit, focuses on internal data in order to better the organization from the inside out.
Identifies what functions of the organization are operating well or operating poorly.
Strategic decision makers use the internal audit to assess the organizations resources and capabilities from the perspective of its different functions and organizational elements

15. Using an Internal Audit
An internal audit looks to six organizational functional areas and asks questions to test management’s assertions.
Production/operations
Does the organization have reliable and reasonably priced supplies?
Are facilities, offices, machinery, and equipment in good working condition?
How does the company do on quality assessments?
Marketing
What’s the organizations market position or rank?
Is the advertising strategy effective?
Are marketing planning and budgeting effective?
Research and development
Does the organization have adequate R&D facilities?
Are the organizations products technologically competitive?

16. Using an Internal Audit
The six organizational functional areas contin…
Financial/accounting
Is the organization able to raise short-term capital?
Is the organization able to raise long-term capital?
Has the organization established reasonable financial goals?
Management(includes Human Resources and other general management activities)
Do the organization’s employees manage strategically?
Is the organizations structure appropriate?
How does the organization treat its employees?
Information systems
Is the information system updated regularly?
Is the information system secure?
Is the information system user friendly?

17. Using an Internal Audit
All of these assessments concentrate on the availability or lack of critical resources and the level of capabilities in each functional area.
An internal audit should also look at three other important organizational elements:
Strategic Managers
Organizational structure
The organizational culture

18. Capabilities Assessment Profile
An in-depth evaluation of an organization’s capabilities
It provides some guidelines for identifying the organization’s distinctive capabilities
Consists of 2 phases:
Identifying distinctive capabilities
Developing and leveraging these distinctive capabilities

19. The 5 Steps for Assessing Organizational Capabilities
1.) Prepare a current product-market profile
Emphasizes organization-customer interactions
2.) Identify sources of competitive advantage and disadvantage in the main product-market segments
Figure out why customers choose our products instead of our competitors
Involves identifying specific cost, product, and service attributes

20. The 5 Steps for Assessing Organizational Capabilities (cont’d)
3.) Describe all the organizational capabilities and competencies
To identify the capabilities, you need to examine the resources, skills, and abilities of the organization’s divisions
An analysis of the organizational resources and the routines and processes behind the capabilities
4.) Sort the core capabilities and competencies according to strategic importance

21. The 5 Steps for Assessing Organizational Capabilities (cont’d)
Identify the capabilities that are strategically important by using three criteria:
1.) Does the capability provide tangible customer benefits?
2.) Is the capability difficult for competitors to imitate?
3.) Can the capability provide wide access to a number of different markets?
5.) Identify and agree on the key capabilities and competencies
Agreement is important in order to sustain competitive advantage

22. Determining Strengths and Weaknesses
More than just identify these factors, need to determine the organization’s strengths and weaknesses
What are the strong points?
What are the weak points?
What resources and capabilities can be enhanced and exploited for a sustainable competitive advantage?
What resources and capabilities are lacking or not used effectively?

23. Determining Strengths and Weaknesses
Criteria to Judge Organizational Strengths and Weakness

24. Determining Strengths and Weaknesses
Past Performance Trends
Could include any performance measure
Such quantitative measures can be used as indicators of organizational strengths and weaknesses.
Specific Goals or Targets: Organizational Goals
Organizational goals are statements of desired outcomes.
State what it hopes to accomplish and by when. Goals provide direction for an organization

25. Determining Strengths and Weaknesses
Comparison Against Competitors
Comparing resources and capabilities against competitors, an organization can see how it stacks up.
A key consideration for gathering this information is whether competitive-intelligence methods are legal and ethical.
Personal Opinions of Strategic Decision Makers or Consultants
Sometimes the best assessment is the personal opinion of those who are directly involved in the activity.

26. Why is an Internal Analysis Important?
It is the only way to identify an organization’s strengths and weaknesses
It is needed for making good strategic decisions
Provides the basis for deciding what strategic actions are necessary for sustainable competitive advantage

27. Why is an Internal Analysis Important?
With the information from the internal analysis, decision makers can make judgments about:
Competitive advantages the organization might have
What might be potentially developed into competitive advantages
What might be preventing competitive advantages from being developed

28. Summary of Important Points
An internal analysis is the process of evaluating an organization’s resources and capabilities
Three techniques of an internal analysis:
Value Chain
Internal Audit
Capabilities Assessment Profile
The internal analysis is important for two reasons:
It is the only way to identify strengths and weaknesses
It is needed for making good decisions

29. Under Armour Strengths Brand Name, Innovation, Collegiate Endorsements
Weaknesses
Pricing, Advertising, Narrow Focus Compared to Competition