(Strategic Management) Chapter 4 – Internal Analysis

Organizational Resources
Assets of an organization. Land, labor, copyrights, patents etc. Capabilities which can become a competitive advantage. Resources alone do not = success, capabilities must be combined to make something substantial.
Core Competencies
Any major value creating capabilities organizations have that are essential to their business.
Distinctive Organizational Capabilities
Special and unique capabilities that distinguish an organization from its competitors.
Contributes to superior customer value, can be used in a variety of ways, and is difficult to imitate.
Resources an organization possesses and capabilities an organization has developed, both which can be developed into a substantial competitive advantage.
Resources and capabilities that are lacking and prevent organization from developing a sustainable competitive advantage.
Three Internal Analysis Techniques
1) Value Chain
2) Internal Audit
3) Capabilities Assessment Profile
Value Chain
A systemic way of examining all the organizations functional activities and how well they create customer value.
– *Five Primary Activities*
1) *Inbound Logistics* – Bring resources to company and inventory control.
2) *Operations (Productions)* – How productive is our equipment?
3)*Outbound Logistics* – Are products going out on time?
4) *Marketing and Sales* – Is marketing research and advertising working?
5) *Customer Service* – How well are you handling customers?
– *Four Secondary Activities*
1) *Procurement* – Do we have alternative backups to obtain needed resources?
2) *Technological Development* – How well is our research and development?
3) *Human Resource Management* – How effective is our recruitment?
4) *Firm Infrastructure* – Do we have a good public image?
Internal Audit
Access internal functioning areas.
1) *Production and Operations* – How is our machinery?
2) *Marketing* – Does the organization segment markets effectively?
3) *Research and Development* – Are employees who do R&D qualified? Are their facilities up to date/have the appropriate tools?
4) *Finance and Accounting* – Is our organization financially strong/weak?
5) *Management* – Are we managing strategically?
6) *Information Systems/Technologies* – Is our info updated regularly and secure? Are we subject to hacking?
Capabilities Assessment Profile
For identifying and developing capabilities.
1) Prepare a current product market profile (ie. what are you selling?)
2) Identify competitive (dis)advantages
3) Describe organizational capabilities and competencies
4) Sort these capabilities and competencies according to strategic importance
5) Identify and agree on capabilities
Assessing Strengths and Weaknesses
1) Look at past performances
2) Ask: Are we reaching our goals and targets?
3) Compare yourself to your competition
4) Personal opinions from consultant and/or strategic decision makers
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