7 analysing the organisation handoutPresentation Transcript
AM A.N.S- firstname.lastname@example.org
Strategic Management Course
ANALYSING THE ORGANISATION
The central challenge of using our managerial
competences to create particular/specific
competitive advantage (s)-In terms of financial
performance, individual departmental
capabilities, appropriateness of our organizational
structure, goal contract, customer value adding
activities, identifying/anticipating performance gaps
You should examine the competence/incompetence
of your functional areas / departments in relation to
Identify those critical strengths and weaknesses in
each of these departments (functional analysis)
1)Financial Performance Analysis
Basing on the financial ratios from the trend
analysis, has our financial standing improved or
deteriorated over time? What is the financial
health of our business?
Are we financially stronger compared to our
rivals in the industry at this point in time? If
so, can we continue maintaining this position?
Key stakeholders need to be sure of this before
deciding to/continuing to deal with.
You have to combine
leverage, liquidity, activity, and profitability ratios
in order reasonably establish your firm’s financial
standing and performance
You can not fully rely on financial ratio analysis
1. The analysis is based on past records which rarely
consider the currently situation on ground
2. Different organizations use/follow different
accounting standards and procedures even when
using ISs (in determining materiality)
3. Bases on quantitive data ignoring qualitative data
4. The source documents may not be accurate hence
giving a wrong picture
2)Functional Area Analysis
Key activities of the company’s function
areas have to be analyzed to identify those
areas where we are performing well
(strengths), and where we need to improve
Barriers between departments should be
avoided for synergy
Both resource &competence- related tangible
and intangible factors should be considered
Responsible for identifying, anticipating,&
satisfying the right customer needs and
Market share (strength & competitiveness in
the market), and size of our loyal
customer/corporate account base?
Our marketing information systems’ efficiency
Level of market research and development (in
relation to customers, markets, & competitors)
Customer service/care and customer
loyalty programs? Doing it well-
strength, Need to improve-weakness
Promotion effectiveness? Giving us
competitive advantages-strengths, a
competitive disadvantage to us-
Appropriateness of our pricing
strategies to our customers?
Appropriateness of our distribution
Responsible for ensuring
the financial soundness
Financial strengths and
stability (financial ratios)?
Finance & A/cing-continues
We avoid some taxes without evading
taxes (strength), dealing mainly in
taxable transactions (weakness)
We can raise additional capital when
needed by appropriately balancing own
vs debt sources (strength), if not
Accuracy, Completeness, and Timeliness
of financial statements/reports?
How good are our relationships with our
Human Resource Dept.
Responsible for attracting and maintaining the
right/competent (and compatible) human resources /
employees and managers in the right positions, at the
right time, for achieving organizational goals
Organization structure, climate, and culture give us a
competitive advantage (strengths)-inappropriate to the
company’s strategic direction (weakness)
We have qualified and experienced/competent staff
who are compatible with our business
staff who need training or to be transferred (weakness
Is the staff morale enough, sense of goal contract, and
Stable workforce/is our labour turn over low?
Our staff are proud of working for our
organization-strength, if not-
Productivity of staff/our record for
achieving objectives compared to our
rivals? Better-OPP, Poor-Weakness
Is there an ‘HR Strategic Fit’ ? ,i.e are
our HR policies and programs
compatible with our human capital?
Core competence-OPP, No fit-
Production and operations
Responsible for turning the product design/ideas/raw
materials into the right finished products (services) to be
sold to our customers. Benchmark with WCM practices or
even trend set.
Are we producing high quality products/operating at lower
overall costs compared to our rivals?
How efficient and effective are our production processes,
systems, and strategies?
Can we produce the required capacity to meet our
customers’ demand (s)?
Strategic location and layout of facilities (the plant, offices,
equipment, raw materials, information, etc)?
Plant and equipment maintenance (including its age)
Inventory control systems/relationship with
Quality control measures-are they customer
Do we have a high (weakness) or low level
(strengths) of rejects?
Flexibility in operations-do we have
alternatives like generators, a pool of casual
staff, compatible staff, and alternative systems
Are our lead times especially during peak
periods? Delays-weakness, quick service-
Analyze the following;
Procurement and supplies dept.
Research and development
IT/Information systems department
Other units in case of product/customer-
Procurement & Supplies Dept
Securing products and services at the right
quality, quantity, price, place, and from the right
How high/low are our procurement costs (e.g.
cost per order or overall procurement costs)?
What is / is our relationship with our core
Are we effectively controlling our supply chain?
Is our procurement documentation accurate
enough for auditing purposes?
How much procurement bypasses the
department/is done out of contract/is there
appropriate contract compliance?
If we are using e-procurement, how are those ICTs
interoperated/compatible with our other procurement
After placing in a requisition, how long does it take to
receive the goods?
Can the system used provide management with real-
time visibility of the procurement activities?
Does the system ensure Corporate governance
(transparency, accountability, disclosure, and trust)?
4)Value Chain Analysis
1. What do our current and potential
customers value most?
2. Are our primary and supportive value chain
activities creating customer value?
3. Primary Value Chain Activities-in bound
logistics, production/operations, out bound
logistics, marketing and sales, after sale
4. Supportive Activities-Company
management, procurement, value-adding
Some questions to answer
How can we best provide that customer value at
reduced cost and make better profits?
Which activities are now core or non core in relation
to creating better customer value?
Which ones are we known to have competence
in/give us a competitive advantage (core
How can we strategically manage such activities
either by ourselves or through well controlled out-
sourcing to competent firms?
AM ABAHO ERNEST
Strategic Gap Analysis
A futuristic strategic gap in performance
Involves some proactive control/management
If it is there, what new strategies do we need
to correct this gap
Adjust the tactics or change the strategy in
AM ABAHO ERNEST
The analysis is in stages
1. Consider the past trend and project into the future
in relation to your goal/objective
2. Why might the future trend be that way?, with
reasons adjust your projection
3. What assumptions are we basing on , and how do
they affect our projection?
4. If corrective action is taken, what do we now
5. Consider other factors besides the initial one
6. If there is a gap, when is it likely to occur ?
AM ABAHO ERNEST
Key Success Factors
Things your company must be good/excel at
in order to succeed in a given industry
Premising/bench marking with those best-in-
class rivals helps you to identify them
They differ from one industry to another
under different conditions
Different from Key Result Areas
AM ABAHO ERNEST
Strategic level managers
Strategic planning and policy formulation as
directed by the board of directors
They also provide effective leadership , are
strategic information bearer, advisers to the
board among other roles
Issues to analyze may among others
1. Their responsiveness and adaptability
2. Attitude to risk
3. Generic skills and experiences ,etc