1. Ch 4 -1
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2. Strategic Management: Concepts and Cases
Arab World Edition
Fred R. David
Abbas J. Ali
Abdulrahman Y. Al-Aali
Chapter 4:
The Internal Assessment
Ch 4 -2
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3. Chapter Outline The Nature of an Internal Assessment
The Resource-Based View (RBV)
Integrating Strategy and Culture
Evaluating Capabilities and Competitive Position
Identifying Strengths, Weaknesses, Opportunities, and Threats
Value Chain Analysis (VCA)
The Internal Factor Evaluation (JFE) Matrix
Ch 4 -3
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4. Nature of an Internal Assessment
Functional Areas of Business:
Strengths
Weaknesses
Ch 4 -4
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5. Source: Adapted from Fred R
Source: Adapted from Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22,
no. 3 (June 1988) 40.
Ch 4 -5
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Ch 4-5

6. Nature of an Internal Assessment Basis for Objectives & Strategies
Internal strengths/weaknesses
External opportunities/threats
Clear statement of mission
Ch 4 -6
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7. Functional Business Areas
Key Internal Forces
Functional Business Areas
Vary by organization
In large organizations, divisions may have differing strengths & weaknesses
Ch 4 -7
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8. Distinctive Competencies
Key Internal Forces
Distinctive Competencies
Distinctive competencies
A firm’s strengths that cannot be easily matched or imitated by competitors.
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Ch 4 -8
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9. Distinctive Competencies
Key Internal Forces
Distinctive Competencies
Building competitive advantage involves taking advantage of distinctive competencies.
Strategies designed to improve on a firm’s weaknesses and turn to strengths.
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Publishing as Prentice Hall
Ch 4 -9
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10. Performing an Internal Assessment
Parallels the process of external audit
Information from functional areas:
Management
Marketing
Finance/accounting
Production/operations
Research & development
Management information systems
Ch 4 -10
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11. Performing an Internal Assessment
Performing an internal strategic-management assessment provides a vehicle for understanding the nature and effect of decisions in other functional business areas of the firm.
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Ch 4 -11
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12. Performing an Internal Assessment
The key to organizational success is coordination & understanding among managers from all functional areas
Ch 4 -12
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13. Performing an Internal Assessment
Functional Relationships
Number and complexity increases relative to organization size
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Ch 4 -13
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14. Performing an Internal Assessment
Financial Ratio Analysis
Exemplifies complexity of relationships among functional areas of the business
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Publishing as Prentice Hall
Ch 4 -14
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15. Resource Based View (RBV)
Approach to Competitive Advantage
Internal resources are more important than external factors
Ch 4 -15
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16. Resource Based View (RBV)
Three All-Encompassing Categories
Physical resources
Human resources
Organizational resources
Ch 4 -16
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17. Resource Based View (RBV) Empirical Indicators
For a resource to be valuable, it must be:
Rare
Hard to imitate
Not easily substitutable
Ch 4 -17
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18. 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.
Ch 4 -18
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19. Integrating Strategy & Culture
Organizational Culture:
Resistant to change
May represent:
- Strength
- Weakness
Ch 4 -19
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20. Integrating Strategy & Culture
Values
Beliefs
Legends
Heroes
Rites
Cultural
Products
Symbols
Rituals
Myths
Ch 4 -20
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21. Integrating Strategy & Culture
Organizational Culture Can Inhibit Strategic Management
Miss external changes due to strongly held beliefs
Natural tendency to “hold the course” even during times of strategic change
Ch 4 -21
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22. Arab Versus Other Cultures
To successfully compete in world markets, Arab executives must have a better knowledge of historical, cultural, and religious forces that motivate and drive people in other countries.
Ch 4 -22
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23. Ch 4 -23
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24. Evaluating Capabilities and Competitive Position
Assessment of resource capabilities, and strengths and weaknesses
A realistic map of the company’s future
Three common methods of assessment
Strength-Weaknesses-Opportunities-Threats (SWOT) analysis
Value Chain Analysis (VCA)
Internal Factor Evaluation (IFE)
Ch 4 -24
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25. Identifying Strengths, Weaknesses, Opportunities and Threats
Part of SWOT analysis
Provides useful insights on the company’s strategic position
Ch 4 -25
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26. SWOT Analysis Resources Capabilities Strengths 26 Ch 4 -26
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27. Disadvantages of a company relative to its competitors
SWOT Analysis
Disadvantages of a company relative to its competitors
Weaknesses
Ch 4 -27
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28. SWOT Analysis
Induced by various factors and changing conditions in the external environment
Opportunities
Ch 4 -28
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29. Any factor in the external environment which negatively impacts a firm
SWOT Analysis
Any factor in the external environment which negatively impacts a firm
Threats
Ch 4 -29
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30. The Value of SWOT Analysis
After the SWOT Analysis, executives must engage in two more processes:
Developing and understanding the company’s position
Devising strategies compatible with the company’s internal and external situations
Ch 4 -30
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31. The Value of SWOT Analysis
These three processes (SWOT identification, examining the firm’s position, and developing strategies) are interrelated and require careful attention.
These help ensure the company is embarking on a course of action that is practical and will lead to optimal outcomes.
Ch 4 -31
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32. Value Chain Analysis (VCA)
Total revenues minus total costs of all activities undertaken to develop and market a product or a service yields value.
Ch 4 -32
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33. Value Chain Analysis (VCA)
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34. Value Chain Analysis (VCA)
A process whereby a firm determines the costs associated with organizational activities
Ch 4 -34
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35. Value Chain Analysis (VCA)
Benchmarking
An analytical tool used to determine whether a firm’s value chain activities are competitive compared to its rivals and thus conducive to winning in the marketplace.
Ch 4 -35
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36. The Internal Factor Evaluation (IFE) Matrix
An internal strategic-management analysis
Evaluation of strengths and weaknesses
Basis for identifying and evaluating relationships
Intuitive judgments are required
Ch 4 -36
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37. Ch 4 -37
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38. Ch 4 -38
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39. For Review (Chapter 4) Key Terms & Concepts Cultural Products
Internal Analysis
Distinctive
Competencies
Internal Factor Evaluation
(IFE) Matrix
Distribution
Competencies
Organizational Culture
Financial Ratio Analysis
Resource-Based
View (RBV)
Ch 4 -39
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40. For Review (Chapter 4) Key Terms & Concepts SWOT analysis
Opportunities
Strengths
Threats
Weaknesses
Value Chain Analysis
(VCA)
Ch 4 -40
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Ch 4 -41
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