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Strategic management
 

Strategic management

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Internal and Resource Analysis

Internal and Resource Analysis
An overview of SWOT analysis ,resource analysis , core competency and competitors analysis .

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    Strategic management Strategic management Presentation Transcript

    • Internal & Resource Analysis
      • SWOT Analysis
      • Resource Analysis- Organizational Capabilities & Competitive Advantage, Value Chain analysis
      • Concept of synergy – Core Competence
      • Competitive Analysis –Five Forces Model,
      • Competitors Analysis
    • SWOT Analysis - Introduction
      • Strengths and weaknesses are essentially internal to the organisation and relate to matters concerning resources, programmes and organisation in key areas such as:
      • Sales / marketing / distribution.
      • Management systems / expertise.
      • Manufacturing efficiency / capacity.
      • Products / quality / pricing.
    • SWOT Analysis - Introduction
      • The external threats and opportunities confronting a company, can exist or develop in the following areas:
      • The company's own industry where structural changes may be occurring
      • The marketplace which may be altering due to economic or social factors Competition which may be creating new threats or opportunities
      • New technologies which may be causing fundamental changes in products, processes, etc.
    • S.W.O.T. Analysis
      • STRATEGIC GROUPS
      • INDUSTRY STAGE of DEVELOPMENT
      • 5 FORCES MODEL (Plus 1)
      • Rivalry
      • Barriers to entry
      • Suppliers
      • Buyers
      • Substitutes
      • Complementors
      EXTERNAL Macroeconomics Political & Legal Technology Demographic Social EXTERNAL OPPORTUNITIES and THREATS THE MACROENVIRONMENT THE INDUSTRY THE COMPANY
      • COMPANY STAGE of DEVELOPMENT
      • VALUE CREATION
      • Efficiency
      • Innovation
      • Customer Responsiveness
      • Quality
      INTERNAL STRENGTHS and WEAKNESSES
    •  
    •  
    • SWOT Analysis - Tata Motors Limited
      • The company began in 1945 and has produced more than 4 million vehicles. Tata Motors Limited is the largest car producer in India. It manufactures commercial and passenger vehicles, and employs in excess of 23,000 people.
    • Strengths
      • The internationalisation strategy has given the benefit that Tata has been able to exchange expertise.
      • The company has a strategy in place for the next stage of its expansion.
      • The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange.
    • Weaknesses
      • The company's passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers.
      • Despite buying the Jaguar and Land Rover brands Tata has not got a foothold in the luxury car segment in its domestic, Indian market.
      • One weakness which is often not recognised is that in English the word 'tat' means rubbish.
    • Opportunities
      • Tata Motor's has successfully purchased the Land Rover and Jaguar brands from Ford Motors It will provide the company the chance to market vehicles in the luxury segments.
      • Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004.
      • Nano is the cheapest car in the World - retailing at little more than a motorbike.
      • The new global track platform is about to be launched from its Korean (previously Daewoo) plant There can be a demand for low-cost passenger and commercial vehicles.
      • The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. that will reduce fuel consumption by up to 10%.
    • Threats
      • Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Tata Motors Limited has to catch up in terms of quality and lean production.
      • Sustainability and environmentalism could mean extra costs for this low-cost producer.
      • Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments..
      • Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts.
    • Resources and capabilities CAPABILITIES More likely to be unobservable & difficult to trade The ability of a firm to accomplish tasks that are linked to higher economic performance by increasing value, decreasing cost or both Should deliver customers a greater value proposition Should help build Barriers to entry either by raising the actual costs of physical plant or increasing brand loyalty among customers Superior Economic Contribution Sustainable Market Position COMPETITIVE ADVANTAGE Resources can be either observable and tradable or unobservable (tacit) and harder to trade: Resources represent an asset that contributes to a firm’s market position by increasing value or lowering cost
    •   Organizational Capability
      • Ability and capacity of an organization expressed in terms of its
      • (1) Human resources : their number, quality , skills , and experience
      • (2) Physical and material resources : machines , land , buildings
      • (3) Financial resources: money and credit
      • (4) Information resources: pool of knowledge , databases and
      • (5) Intellectual resources: copyrights , designs , patents , etc.
    • Competitive Advantage
      • Competitive advantage is, in very basic words, a position a firm occupies against its competitors .
      • According to Michael Porter , the three methods for creating a sustainable competitive advantage are through:
      • Cost leadership
      • Differentiation
      • Focus
    • Building Blocks of Competitive Advantage SUPERIOR EFFICIENCY SUPERIOR CUSTOMER RESPONSIVENESS SUPERIOR QUALITY SUPERIOR INNOVATION COMPETITIVE ADVANTAGE THE INTERNAL VALUE CHAIN THE MANTRA OF COMPETITIVE ADVANTAGE EFFICIENCY QUALITY INNOVATION CUSTOMER RESPONSIVENESS
    • Building Blocks of Competitive Advantage Strengths VALUE CHAIN Weaknesses OUTPUTS INPUTS EFFICIENCY = OUTPUTS  INPUTS FINANCIAL EFFICIENCY = UNITS per Rupee OPERATIONAL EFFICIENCY = UNITS per UNIT EFFICIENCY RELIABILITY , CONSISTENCY, and EXCELLENCE Quality is what the stakeholder says it is. QUALITY
    • Building Blocks of Competitive Advantage CUSTOMER RESPONSIVENESS NEW PRODUCTS and SERVICES NEW PROCESSES NEW TECHNOLOGIES NEW STRATEGIES RESPONSIVENESS (more than timeliness) SATISFYING NEEDS and DESIRES SERVICE Delivering value!!! INNOVATION
    • Value Chain Analysis
    • Value Chain Analysis
      • Value chain is a systematic approach to examining the development of competitive advantage. The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation.
      • The 'margin' depicted in the diagram is the same as added value. The organisation is split into 'primary activities' and 'support activities.'
    • Primary Activities.
      • Inbound Logistics.
      • Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organisation.
      • Operations.
      • This is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new car's engine.
    • Primary Activities.
      • Outbound Logistics.
      • The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer.
      • Marketing and Sales.
      • In true customer orientated fashion, at this stage the organisation prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix.
      • Service.
      • This includes all areas of service such as installation, after-sales service, complaints handling, training and so on.
    • Support Activities.
      • Procurement.
      • This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality.
      • Technology Development.
      • Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments.
    • Support Activities .
      • Human Resource Management (HRM).
      • Employees are an expensive and vital resource. An organisation would manage recruitment and s election, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy.
      • Firm Infrastructure.
      • This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and
    • Concept of Synergy+
      • Synergy, simply stated, is the concept that the combined effect of certain parts is greater than the sum of their individual effects.
      • The study of synergy helps in analyzing new growth opportunities. A new product, for instance, may have such a high synergistic effect on a company’s existing product(s) that it may be an extremely desirable addition.).
    • Concept of Synergy
      • . Conceptually, business synergies take one of six forms :
      •     Shared Know-How ..
      • Coordinated Strategies .
      • Shared Tangible Resources .
      • Vertical Integration ..
      • Pooled Negotiating Power.
      • Combined Business Creation .
    • Core Competency
      • A core competence is the result of a specific unique set of skills or production techniques that deliver value to the customer. Such competences give an organization access to a wide variety of markets.
      • However, the core competences give a business a competitive advantage in a number of markets, markets where customers perceive a benefit from the product.
    • Core Competency
      • Three tests of core competence.
      • Provides potential access to a wide variety of markets.
      • Should make a significant contribution to the perceived customer benefits of the end product.
      • Should be difficult for competitors to imitate.
    • Core Competency
    •  
    •  
    • Five Forces Analysis- Michael Porter
    • WHAT IS THE FIVE FORCES MODEL OF PORTER ?
      • The Five Forces model of Porter is an Outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value) of an industry structure. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces:
      • Entry of competitors . How easy or difficult is it for new entrants to start competing, which barriers do exist.
      • Threat of substitutes . How easy can a product or service be substituted, especially made cheaper.
    • WHAT IS THE FIVE FORCES MODEL OF PORTER ?
      • Bargaining power of suppliers . How strong is the position of sellers. Do many potential suppliers exist or only few potential suppliers, monopoly?
      • Bargaining power of buyers . How strong is the position of buyers. Can they work together in ordering large volumes.
      • Rivalry among the existing players . Does a strong competition between the existing players exist? Is one player very dominant or are all equal in strength and size.
      • Sometimes a sixth competitive force is added:
      • Government .
      •  
    • THREAT OF NEW ENTRANTS DEPENDS ON:
      • Economies of scale.
      • Capital / investment requirements.
      • Customer switching costs.
      • Access to industry distribution channels.
      • Access to technology.
      • Brand loyalty. Are customers loyal?
      • The likelihood of retaliation from existing industry players.
      • Government regulations. Can new entrants get subsidies?
    • THREAT OF SUBSTITUTES DEPENDS ON:
      • Quality. Is a substitute better?
      • Buyers' willingness to substitute.
      • The relative price and performance of substitutes.
      • The costs of switching to substitutes. Is it easy to change to another product?
    • BARGAINING POWER OF SUPPLIERS DEPENDS ON:
      • Concentration of suppliers. Are there many buyers and few dominant suppliers?
      • Profitability of suppliers.
      • Suppliers threaten to integrate forward into the industry.
      • Buyers do not threaten to integrate backwards into supply.
      • Role of quality and service.
      • The industry is not a key customer group to the suppliers.
      • Switching costs. Is it easy for suppliers to find new customers?
    • BARGAINING POWER OF BUYERS DEPENDS ON:
      • Concentration of buyers. Are there a few dominant buyers and many sellers in the industry?
      • Differentiation. Are products standardized?
      • Profitability of buyers.
      • Role of quality and service.
      • Threat of backward and forward integration into the industry.
      • Switching costs. Is it easy for buyers to switch their supplier?
    • INTENSITY OF RIVALRY DEPENDS ON:
      • The structure of competition..
      • The structure of industry costs.
      • Degree of product differentiation.
      • Switching costs.
      • Strategic objectives.
      • Exit barriers.
    • STRENGTHS AND LIMITATIONS OF FIVE FORCES COMPETITIVE MODEL
      • Strengths
      • The model is a strong tool for competitive analysis at industry level.
      • It provides useful input for performing a SWOT Analysis .
      • Limitation
      • We should not underestimate or underemphasize the importance of the (existing) strengths of the organization.
      • It does not cope with synergies and interdependencies within the portfolio of large corporations
    • Creating Competitive Advantages
      • Industrial Organization
      • Model
      • The External Environment
      • An Attractive Industry
      • Strategy Formulation
      • Assets and Skills
      • Strategy Implementation
      • Superior Returns
      • Resource-Based
      • Model
      • Resources
      • Capability
      • Competitive Advantage
      • An Attractive Industry
      • Strategy Implementation
      • Superior Returns
    • Competitor Analysis
      • Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors
      • Competitor analysis has important roles in strategic planning:
      • To help management understand their competitive advantages/disadvantages relative to competitors
      • To generate understanding of competitors’ past, present) future strategies
      • To provide an informed basis to develop strategies to achieve competitive advantage in the future
      • To help forecast the returns that may be made from future investments
    • Questions to ask
      • What questions should be asked when undertaking competitor analysis?
      • The following is a useful list to bear in mind:
      • Who are our competitors?
      • What threats do they pose?
      • What is the profile of our competitors?
      • What are the objectives of our competitors?
    • Questions to ask
      • What strategies are our competitors pursuing and how successful are these strategies?
      • What are the strengths and weaknesses of our competitors?
      • How are our competitors likely to respond to any changes to the way we do business?
    • Sources of information for competitor analysis
      • Davidson (1997) describes how the sources of competitor information can be neatly grouped into three categories:
      • • Recorded data: this is easily available in published form either internally or externally.
      • • Observable data: this has to be actively sought and often assembled from several sources. A good example is competitor pricing;
      • • Opportunistic data: to get hold of this kind of data requires a lot of planning and organisation.
    • What Business already know about Competitors
      • Overall sales and profits
      • Sales and profits by market
      • Sales by main brand
      • Cost structure
      • Market shares (revenues and volumes)
      • Organisation structure
      • Distribution system
      • Identity / profile of senior management
      • Advertising strategy and spending
      • Customer / consumer profile & attitudes
      • Customer retention levels
      •   
    • What Business would like to know about Competitors
      • Sales and profits by product
      • Relative costs
      • Customer satisfaction and service levels
      • Customer retention levels
      • Distribution costs
      • New product strategies
      • Size and quality of customer databases
      • Advertising effectiveness
      • Future investment strategy
      • Contractual terms with key suppliers
      • Terms of strategic partnerships 
    • Thank You… Faculty: Mehak Vaswani