Post on 03-Apr-2018
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12012 July 12
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Concept
Components of internal
environment analysis
Process of internal
environment analysisAnalysis of organizational
resources
CONTENTS
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CONCEPT : INTERNAL ENVIRONMENTANALYSIS
What is environment?
Environment refers to the factors that
affects organizations performances
Internal environment
It is the forces that provides strength and
weakness to organization
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CONCEPT :INTERNALENVIRONMENTANALYSIS (CONTD)What is internal environment analysis?
Scanning of internal environmental forces.
It systematically evaluates organizational
capabilities in terms of strength and
weakness
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STRENGTHSA STRENGTH is something a
company is good at doing or acharacteristic that gives it an importantcapability.
Possible Strengths: Name and recognition
Proprietary technology
Cost advantages
Skilled employees
Loyal Customers 5
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WEAKNESSES
A WEAKNESS is something a company
lacks or does poorly (in comparison to
others) or a condition that places it at a
disadvantage
Possible Weaknesses:
Poor organization image in market
Obsolete facilities
Internal operating problems
Poor marketing skills4
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.
Component
of
Internal
Environment
.
Organizational
Organizational
Organizational
Corporate
Internal
strategies
policies resources
Structure
culture
stakeholder
objectives
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ORGANIZATIONALOBJECTIVES,
STRATEGIESANDPOLICIES
Objectives (end results)
Strategies (courses of action
leading to objectives)
Policies (guidelines for decision
making)
Strategic management must beconducted within the framework of
organizational objectives,
strategies and policies
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CORPORATE CULTURE
Shared experiences thatbond organizational
members together.
Organizations founder
(personal values andbeliefs) contributed by
top management.
Symbols, stories,
slogans, and ceremonies
that represent and
personify the spirit of the
organization.9
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ORGANIZATIONALSTRUCTURE
It is officialrelationship among
employees
working in differentlevel of hierarchy
with defined
authorities andresponsibilities
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ORGANIZATIONALRESOURCES
They are either strength orweakness
They either limit or encourages the
ambitious decision of the
organization
Eg: financial resource constraincompany's ambitious decision of
exapnsion an organization11
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INTERNAL STAKEHOLDER Owners with legal property rights to abusiness ie. shareholders
Board of directors elected by the
shareholders to oversee the general
management of the firm to best serve theshareholders interest.
Employees who work for the firm and have a
vested interest in its continued operationand existence.
Physical work environment of the
organization and the work that people do. 12
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PROCESSOFINTERNAL
ENVIRONMENTANALYSIS
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4. Identify strength and weakness and their strengths
5.Prepare SAP based on the appraisal.
1.Internal environment scanning & Monitoring
2. Select review and predict key resource areas
3.Develop standard indicators to measure
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6. Relate the strategic advantage (distinctive
capabilities/competencies)factors to exploiting the environmental
opportunities or dealing with impending threats.
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ANALYSISOFRESOURCESFOR
STRENGTHANDWEAKNESS
1.Production/operation resources
Are plant location & layout strategic
advantages for the firm?
Is quality control high or there isincrease in rework due to poor
control?
What about production facilities? What about cost of production and
waste minimization? 15
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ANALYSISOFRESOURCESFORSTRENGTH
ANDWEAKNESS (CONTD)
2. Marketing resource
How these factors are contributing to the
achievement of organizational objectives?
Strength and weakness may lie in the followingareas.
Product mix
Pricing strategies
Promotion
Distribution
Market segmentation 16
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ANALYSISOFRESOURCEFOR
STRENGTHANDWEAKNESS (CONTD
3.Human resource Manpower planning? Quantity and quality ,accuracy of
demand and supply forecasting Procurement?employment:recruite
ment,selection,placement,orientatai
on strategies Training and development Maintenance
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ANALYSISOFRESOURCESFORSTRENGTH
ANDWEAKNESS (CONTD)
4.Finance and accounting resource Financial capability factors Is the firm stronger financially than
its competitors Indicators Asset mix
Capital structure Financial performance Accounting procedure? 18
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ANALYSISOFRESOURCESFORSTRENGTH
ANDWEAKNESS (CONTD)
5.Research and development R&D can lead to new improved products
for marketing, lead to development ofimproved processing to gain cost efficiency
and helping improved pricing. Research capabilities with in the firm: R& D budget Research expertise available Technical capabilities to design products
that meet customer requirement .
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CONCLUSION
Organizational strategies should be developedalso in line with internal resources and strategiccapabilities of the firm at the same time.
Strategic advantage analysis and diagnosis isthe process by which the firms internalresources are examined to determine where ithas significant competencies so that it can most
effectively exploit the opportunities and meet thethreats the environment is presenting.
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RESOURCES, CAPABILITIESAND
CORE COMPETENCIES
Resources
Are the source of a firms
capabilities
Are broad in scope Alone, do not yield a
competitive advantage
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RESOURCES, CAPABILITIESAND
CORE COMPETENCIES
Resources Are a firms assets,
including people and the
value of its brand name
Represent inputs into afirms production process,
such as:
Capital equipment
Skills of employees
Brand names
Financial resources
Talented managers23
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TANGIBLE RESOURCES
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Financial Resources The firms borrowing capacityThe firms ability to generate internal
funds
Organizational
Resources The firms formal reporting structureand its formal planning, controlling,
and coordinating systems
Physical Resources Sophistication and location of a firmsplant and equipment
Access to raw materials
Technological Resources Stock of technology, such aspatents, trade-marks, copyrights, and trade
secrets
Table 3.1
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INTANGIBLE RESOURCES
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Human Resources Knowledge
Trust Managerial capabilities
Innovation Resources Ideas
Scientific capabilities
Capacity to innovate
Reputational Resources Reputation with customers
Brand name
Perceptions of product quality,
durability, and reliability
Reputation with suppliers
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RESOURCES, CAPABILITIESAND
CORE COMPETENCIES
Capabilities
Are the firms capacity to deployresources that have beenpurposely integrated to achieve
a desired end state Emerge over time through
complex interactions amongtangible and intangible resources
Capabilities are often developed
in specific functional areas or aspart of a functional area
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EXAMPLESOFFIRMSCAPABILITIES
27Table 3.3
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RESOURCES, CAPABILITIESAND
CORE COMPETENCIES
Core Competencies
Activities that a firm performsespecially well compared tocompetitors
Activities through which the firmadds unique value to its goodsor services over a long period oftime
Distinguish a companycompetitively and reflect itspersonality
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THRESHOLDRESOURCE
Minimum resources required to survive in market
It is easy to be imitated by competitors
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UNIQUERESOURCE
Unique resources are those which are:
Valuable
Rare
Costly to imitate
Non-substitutable
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