Focus is on identifying & evaluating a firm's strength & weaknesses in the functional areas of business, including management, marketing, finance, production, and management information systems.

1. +
Ch 4: The Internal
Assessment

2. + 2
Strategic Management Model
Perform
External
Audit
Develop Generate, Implement Implement
Establish Measure *
Mission & Evaluate & Strategies Strategies –
Long-Term Evaluate
Vision Select Mgmnt Functional
Objectives Performance
Statement Strategies Issues Issues
Perform
Internal
Audit
March 27, 2012

3. + 3
How to Conduct External Strategic
Management Audit?
Gather
Assimilate Evaluate
Competitive
Information Information
Intelligence
Internal factors considered Benefits of Internal Audit
should be: process:
1. Important to achieving long- • Opportunity for employees to
term and annual objectives understand impact of their roles
2. Measurable • Employees perform better
3. Applicable to all competing when they understand the
firms impact of their roles
4. Hierarchical; pertaining to • Provides forum for improved
overall company and functional communication
March 27, 2012

4. + 4
Internal Assessment: Resource-
Based View (RBV)
Organizational performance will primarily be determined by
internal resources, grouped into 3 broad categories:
Physical | Human | Organization
 Physical Resources: Plant & Equipment | Location | Technology
| Raw Materials | Machines
 Human Resources: Employees | Training | Experience
 Organizational Resources: Firm Structure | Planning Process |
Information Systems | Patents | Copyrights
March 27, 2012

5. +
#1: Does Culture impact
Organizational Strategy?
March 27, 2012 5

6. + 6
Benefits of a Vibrant & Alive Culture
 Focus: Aligns the entire company towards achieving its vision,
mission, and goals.
 Motivation: Builds higher employee motivation and loyalty.
 Connection: Builds team cohesiveness among the company’s
various departments and divisions.
 Cohesion: Builds consistency and encourages coordination
and control within the company.
 Spirit: Shapes employee behavior at work, enabling the
organization to be more efficient and alive.
March 27, 2012

7. + 7
#2: Functions of Management (1/2)
 Planning (preparing for future): Forecasting, establishing
objectives, devising strategies, developing policies, and setting
goals
 Organizing (structure of task & authority relationships):
Organizational design, job specification, job description, span
of control, job analysis
 Motivating (shaping human behavior): Leadership, behavior
modification, delegation of authority, job enrichment, employee
morale, job satisfaction
 Staffing (human resource management): Wage & salary
administration, employee benefits, hiring, training, career
development
March 27, 2012

8. + 8
#2: Functions of Management (2/2)
 Controlling (performance against plan): Quality control,
financial control, sales, inventory, analysis of variance, rewards
& sanctions
Management Audit Checklist of Questions
1. Firm uses strategic-management concepts
2. Company objectives & goals measureable & well
communicated
3. Managers at all levels plan effectively
4. Managers delegate authority
5. Organization’s structure is appropriate
6. Job descriptions & job specifications are clear
7. Employee morale is high
8. Employee absenteeism & turnover is low
9. Organizational rewards & control mechanisms effective
March 27, 2012

9. + 9
#3: Marketing
Selling Product & Service
Customer Analysis
Products/Services Planning
Marketing
Pricing Distribution
Research
Opportunity
Analysis
March 27, 2012

10. + 10
#3: Marketing Audit Checklist of
Questions
1. Markets segmented 7. Product quality & customer
effectively service is good
2. Organization positioned well 8. Firms products & services
among competitors are priced appropriately
3. Firm’s market share has 9. Effective promotion,
been increasing advertising, & publicity
strategy
4. Present channels of
distribution reliable & cost- 10. Marketing Managers have
effective adequate experience &
training
5. Effective sales organization
6. Firm conducts market
research
March 27, 2012

11. + 11
#4: Finance / Accounting
Liquidity Leverage Activity
Ratio Ratio Ratio
Profitability Growth
Ratio Ratio
1. How has each ratio changed over time?
2. How does each ratio compare to industry norms?
3. How does each ratio compare with key competitors?
March 27, 2012

12. + 12
#4: Finance / Accounting Audit
Checklist
1. Financial Strengths & Weaknesses indicated by financial ratio
analysis
2. Firm can raise needed short-term capital
3. Firm can raise long-term capital through debt and/or equity
4. Firm has sufficient working capital
5. Capital budgeting procedures are effective
6. Dividend payout policies reasonable
7. Firm has good relations with investors & stockholders
8. Firm’s financial managers experienced & well-trained
March 27, 2012

13. + 13
#5: Production / Operations
 Process (design of the production system): Choice of
technology, facility layout / location, process flow analysis
 Capacity (optimal output levels): Forecasting, scheduling,
capacity planning
 Inventory (levels of raw materials, WIP, finished goods): What
to order, When to order, how much to order, materials handling
 Workforce (managing skilled, un-skilled labor): Job design,
motivation techniques, work measurement
 Quality (aim is to produce high-quality goods/services): Quality
control, sampling, testing, quality assurance
March 27, 2012

14. + 14
#5: Implication of Different
Production / Operations Strategies
Stress
Low Cost High Quality
Customer
Provider Provider
Service
Introduce
Vertical Centralized
New
Integration Processing
Products
Decentralized Use of Stability of
Processing Automation Employment
March 27, 2012

15. + 15
#5: Production / Operations Audit
Checklist
1. Are supplies of raw materials and parts reliable &
reasonable?
2. Are facilities, equipment, machinery, and offices in good
condition?
3. Are inventory-control policies & procedures effective?
4. Are quality-control policies & procedures effective?
5. Are facilities, resources, and markets strategically located?
6. Does the firm have technological competencies?
March 27, 2012

16. + 16
Value Chain Analysis
Total revenues
minus total costs of
all activities
undertaken to
develop and market
a product or service
yields value.
March 27, 2012

17. + 17
Translating Performance into
Competitive Advantage
Company Competencies & Proficiency Rises
Performs Capabilities to Level of Core
Activities Emerge Competence
Core Competency Gains basis for
Evolves into Sustainable
Distinctive Competitive
Competence Advantage
March 27, 2012

18. + 18
Internal Factor Evaluation Matrix
March 27, 2012

19. Hardy Alexander
Founder & Director | Triune Global
Bangalore – 560077
Contact: +91 96864 48698
Email: halexander@triuneglobal.com
My Blog: dayscore.wordpress.com
+
Thank you
March 27, 2012 19