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Download slides for Ch 5

  1. 1. SOM497 – Business Policy & Strategy CHAPTER 5 : Internal Scanning: Organizational Analysis STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN & J. DAVID HUNGER
  2. 2. Organizational Analysis <ul><li>External scanning </li></ul><ul><ul><li>Scan (outside) environment to identify opportunities and threats </li></ul></ul><ul><li>Internal scanning of strategic factors (aka: Organizational analysis) </li></ul><ul><ul><li>Look inside firm to identify critical strengths and weaknesses </li></ul></ul>
  3. 3. Organizational Analysis: Resource-Based <ul><li>Core & Distinctive Competencies </li></ul><ul><li>Resources </li></ul><ul><li>Capabilities </li></ul><ul><li>Competency </li></ul><ul><li>Core competency </li></ul><ul><li>Distinctive competency </li></ul><ul><li>Evaluation methods </li></ul><ul><li>Firm’s past performance </li></ul><ul><li>Firm’s main competitors </li></ul><ul><li>Understanding environment as whole </li></ul>
  4. 4. Core & Distinctive Competencies <ul><li>VRINO Framework- help evaluate firm’s competencies </li></ul><ul><ul><li>V alue </li></ul></ul><ul><ul><li>R areness </li></ul></ul><ul><ul><li>I mitability </li></ul></ul><ul><ul><li>N on-Substitutable ( not in text ) </li></ul></ul><ul><ul><li>O rganization </li></ul></ul>
  5. 5. VRIN Outcomes Not in your textbook! Is the resource or capability … Competitive Consequence Performance Implications Valuable? Rare? costly to Imitate? Non-substitutable? No No No No Competitive Disadvantage Below average returns Yes No No Yes/No Competitive parity (equality) Average returns Yes Yes No Yes/No Temporary Competitive advantage Above average returns to average returns Yes Yes Yes Yes Sustainable Competitive advantage Above average returns
  6. 6. Organizational Analysis: Resource-Based <ul><li>5-Step Approach Strategy Analysis </li></ul><ul><li>Identify and classify resources </li></ul><ul><li>Combine strengths into capabilities </li></ul><ul><li>Appraise profit potential of capabilities </li></ul><ul><li>Select strategy that best exploits </li></ul><ul><li>Identify resource gaps invest in weaknesses </li></ul><ul><li>Distinctive competencies can come from: </li></ul><ul><li>Patents </li></ul><ul><li>Built over time </li></ul><ul><li>Shared </li></ul><ul><li>Acquired from someone else </li></ul>
  7. 7. Sustainability of Advantage <ul><li>Durability –Rate at which a firm’s underlying resources & capabilities depreciate or become obsolete </li></ul><ul><li>Imitability –Rate at which a firm’s underlying resources and capabilities can be duplicated by others </li></ul><ul><ul><ul><li>Transparency </li></ul></ul></ul><ul><ul><ul><li>Transferability </li></ul></ul></ul><ul><ul><ul><li>Replicability </li></ul></ul></ul><ul><ul><ul><li>Continuum of Sustainability </li></ul></ul></ul>
  8. 8. Business Models <ul><li>Firm’s way to make money in the current business environment </li></ul><ul><li>Elements </li></ul><ul><ul><li>Who does the firm serve </li></ul></ul><ul><ul><li>What does the firm provides </li></ul></ul><ul><ul><li>How does the firm make money </li></ul></ul><ul><ul><li>How does the firm differentiate & maintain its competitive advantage </li></ul></ul><ul><ul><li>How does the firm provide its products/services </li></ul></ul>
  9. 9. Corporate Value-Chain Analysis <ul><li>Allows firms to understand the parts of its operations that create value and those that do not </li></ul><ul><ul><li>Primary Activities </li></ul></ul><ul><ul><li>Support Activities </li></ul></ul>
  10. 10. Basic Firm Structures <ul><li>Simple structure </li></ul><ul><li>Functional structure </li></ul><ul><li>Divisional structure </li></ul><ul><ul><li>Strategic business units (SBU’s) </li></ul></ul><ul><ul><li>Conglomerate structure </li></ul></ul>
  11. 11. Corporate Culture <ul><li>The set of beliefs, expectations, myths, and values that create a feeling of community among firm members </li></ul><ul><li>Corporate culture is the “social glue” </li></ul><ul><li>Strong culture can be beneficial </li></ul>
  12. 12. Strategic Marketing Issues <ul><li>Market Position </li></ul><ul><ul><li>The selection of specific areas for marketing concentration (in terms of market, product, and geographic locations) </li></ul></ul><ul><li>Market Segmentation </li></ul><ul><ul><li>Dividing the market into segments to ID available niches </li></ul></ul><ul><li>Marketing Mix </li></ul><ul><ul><li>Help gain competitive advantage via: </li></ul></ul><ul><ul><ul><li>Product </li></ul></ul></ul><ul><ul><ul><li>Price </li></ul></ul></ul><ul><ul><ul><li>Place </li></ul></ul></ul><ul><ul><ul><li>Promotion </li></ul></ul></ul>
  13. 13. Strategic Marketing Issues (con’t) <ul><li>Product Life Cycle </li></ul><ul><li>Pre-commercialization ( not in text ) -> basic strategy: innovate </li></ul><ul><li>Introduction -> basic strategy: infiltrate </li></ul><ul><li>Growth -> basic strategy: advance </li></ul><ul><li>Maturity -> basic strategy: defend </li></ul><ul><li>Decline -> basic strategy: withdraw </li></ul>
  14. 14. Strategic Marketing Issues (con’t) <ul><li>Brand Reputation </li></ul><ul><ul><li>Name of product that identifies them </li></ul></ul><ul><li>Corporate Brand </li></ul><ul><ul><li>Name of firm serves as brand </li></ul></ul><ul><li>Strong & positive reputation -> source of above average returns </li></ul>
  15. 15. Other Strategic Issues <ul><li>Financial Issues </li></ul><ul><li>Financial manager has to understand the firm’s sources of funds, how they are used </li></ul><ul><li>Funds (short and long-term) should match the corporate objectives, strategies, and policies </li></ul><ul><li>Research & Development Issues </li></ul><ul><li>The firm must also be capable of </li></ul><ul><ul><li>managing and incorporating their innovations into its daily operations ( technology competence ) </li></ul></ul><ul><ul><li>Taking new technology from lab to marketplace ( technology transfer ) </li></ul></ul><ul><li>Firm’s R&D intensity is a way to gain market share in global competition </li></ul>
  16. 16. Next Class <ul><li>Remember there is no class on Tues, Feb 19th (Monday schedule) </li></ul><ul><li>Next class will be on Thurs, Feb 21 </li></ul><ul><li>Read & prepare to discuss: Case 28 (Panera Bread Company: Rising Fortunes) </li></ul>

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