Assessing the internal environment of the firm

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Assessing the internal environment of the firm

  1. 1. ASSESSING THE INTERNALENVIRONMENT OF THE FIRM
  2. 2. The benefits and limitations of SWOT analysis in conducting the internal analysis of the firm.The primary and support activities of the firm’s value chainAdvantage of value chain within the firm and between the firm and its customers and suppliers.The different type of tangible and intangible resources, as well as organizational capabilities.The four criteria that a firms resources must posses to maintain a sustainable advantage.The usefulness of financial ratio analysis as well as its inherent limitations.How to make meaningful comparison of performance across a firm.The value of recognizing how the interests of a variety of stakeholders can be interrelated.
  3. 3. • To identify strengths to build on and weaknesses to overcome as they formulate strategies for competitive advantages..
  4. 4. • A method for assessing strengths and weaknesses divides the business into a number of linked of activities that may each produce value for the customer.
  5. 5. General administrationSupport Activities Human Resource Management Margin Technology Development Procurement Marketing & Outbound Margin Operations logistics Inbound logistics Service Sales Primary Activities
  6. 6. Some Factors to consider inAssessing a Firm’s Primary Activities
  7. 7. Location of distribution facilities to minimize shipping times.Excellent material and inventory control systems.Systems to reduce time to send “returns” to supplier.Warehouse layout and designs to increase efficiency of operations for incoming materials.
  8. 8. Efficient plant operations to minimize costs.Appropriate level of automation in manufacturing.Quality production control systems to reduce costs and enhance quality.Efficient plant layout and workflow design.
  9. 9. Effective shipping processes to provide quick delivery and minimize damages.Efficient finished goods warehousing processes.Shipping of goods in large lot sizes to minimize transportation costs.Quality material handling equipment to increase order picking.
  10. 10. Highly motivated and competent sales force.Innovative approaches to promotion and advertising.Selection of most appropriate distribution channels.Proper identification of customer segment s and needs.Effective pricing strategies.
  11. 11. Effective use of procedures to solicit customers feedback and to act on information.Quick response to customer needs and emergencies.Ability to furnish replacement parts and equipment inventory.Quality of service personnel and ongoing training.Appropriate warranty and guarantee policies.
  12. 12. ASSESSING A FIRM’S SUPPORTACTIVITIES
  13. 13. Technology Development The array of technologies employedin most firms is very broad, ranging fromtechnologies used to prepare documentsand transport goods to those embodiedin processes and equipment or theproduct itself.
  14. 14. General Administration Consists of number of activities,including general management, planning ,finance, accounting, legal, governmentaffairs, quality management, andinformation systems.
  15. 15. • Perspective on understanding a firm’s overall success as a based on its internal resources has emerged.
  16. 16. Types of the Firm Resources:1. Tangible Resources2. Intangible Resources3. Organizational Capabilities
  17. 17. Financialo Firms cash account and cash equivalento Firm’s capacity to raise equityo Firms borrowing capacityPhysicalo Modern plant and facilitieso Favorable manufacturing locationso State-of -the-art machinery and equipment
  18. 18. Human Experience and capabilities of employees Trust Managerial skills Firm specific practices and proceduresInnovation and Creativity Reputation Technical and scientific skills Innovation capacities Brand name Reputation with customers for quality and reliability Reputation with suppliers for fairness, non-zero-sum relationships
  19. 19. Firm competencies or skills the firm employs to transfer inputs to outputs.Capacity to combine tangible and intangible resources, using organizational processes to attain desired end.
  20. 20. Four criteria for Assessing Sustainability ofResources and Capabilities:Is the resource or capability…. Implications1.Valuable Neutralize threats and exploit opportunities2.Rare Not many firms possess3.Difficult to imitate Physically unique Path dependency Causal ambiguity Social complexity4.Difficult to substitute No equivalent strategic resources or capabilities
  21. 21. • Represents a series of cause and effect relationship in which success measured from one perspective contributes to success as measured from other perspective.
  22. 22. 1. Customers Perspective2. Internal Business Perspective3. Innovation and LearningPerspective4. Financial Perspective

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