07 - Internal Analysis
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Transcript of 07 - Internal Analysis
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7/31/2019 07 - Internal Analysis
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Dr. Harris [email protected]
harristk.blogspot.com
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1. Conceptual Thinking
2. Strength and Weakness
3. Value Configuration
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New Entrant
Substitute
Supplier Buyer
Politic/Regulation
Economy
Technology
Globalization
Socio
Culture
Demography
General
Environment
Industry
Environment
CompetitiveEnvironment
Company Environment
(internal analysis)
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Internal analysis is identification factors inside the
company boundary that might influence business
performance (strength and weakness).
This analysis helps us to:o Provide an update overall internal condition to compete in
defined industry.
o Additional information to guide strategy formulation
o Identify the strategic assets that can be exploited for future
growth.
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Insight/Idea
Strategy
Vision
Mission
Objectives
External
Environment
BusinessModel
Internal
Environment
PEST analysis
Industrial analysis
Market analysis
Competitive analysis
(Five Forces, Strategic
group), etc
O and T S and W
Resources
Process
Performance
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Firm as bundle of resources
o Resource and capabilities
o Differentiate among firms
Firm growth is driven by excess resources
o Entrepreneurial spirit
o Zero marginal cost
o Growth limit
Firm growth relates to the environmental context
o Productive opportunities
o
Environmental changes
Edith Penrose (1959):
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Jay Barney (1986):
Firm Performance =Sustainable above average profit
SCA(Sustainable Competitive Advantage)
VRIO Resources(Strategic assets)
Strategic advantages of the firm
that are superior among its
rivals, and make firm gains long
term superior profit
Strategic resources (and
capabilities) that significantly
contribute to build firms SCA
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Company SCA Strategic Resources
Toyota Efficient
production cost
Kaizen
Lean manufacturing
Walmart Low price Global sourcing
Operational excellent
Apple Industry Breaker
(trend setter)
Innovative culture
Visionary leader
Microsoft Market leader Huge market share
Product expansion
Pool of creative engineers
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Valuable? Rare? Costly to
Imitate?
Organized by
superior
capabilities?
Competitive
Implication
Profit
Implication
NO Disadvantage Below normal
YES Parity NormalNO
YES Temporary
Advantage
Above and
short run
YES NO
YES Temporary+
Advantage
Above+ and
short run
YES YES NO
YES Sustained
Advantage
Above and
long run
YES YES YES
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Strategic Assets
Stock
Experience, knowledge
creation, acquisition, R&D,
etc
Strategic assets are deteriorated
over time.
To maintain VRIO, strategic assets
stock need to be added,accumulated, expanded, or
increased its quality continuously.
Example:
o Toyotas lean manufacturing has
adopted by its rivals or different
industries.
o But they can not achieve the quality as
high as Toyota.
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Where should we find them?
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Identify industry critical success factors (CSFs).
Analyze the strength of those CFSs in our company
(compare to rivals, especially within strategic group or
closest strategic group).
The weak CFSs should become the consideration to
build strategic initiatives.
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STRENGTHS
OPPORTUNITIES
WEAKNESSES
THREATS
Improve
AnticipateGraps
Emphasize
From
Internal Analysis
From
External Analysis
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Strategy Formulation
Strategy Formulation is the process of choosing a setof different activities to:o create or preserve unique and valuable position
by:
o exploit opportunities (O) and strengths (S)
and in the same time:
o anticipate threats (T) and improve weakness (W)
Through SWOT analysis, we then creatively choose a
set of different activities.
Those set of different activities can be
depicted on the value configuration
model.
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Firm can be viewed as collection of activities thatare performed to design, produce, market, and
support its products (Porter, 1985).
All these activities can be represented using value
configuration model (value activities system).
There are three models of value configurations:
Value Configuration
o Value Chain: transform input into product
o Value Network: serve exchange between customers
o Value Shop: solve customer problem
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Basic Value Chain
Costs Selling
Price
C
U
S
TO
M
E
R
Value
Porter (1980)
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Basic Value Network
Stabell & Fjedstad (1998)
o Infrastructure
o HR Management
o Technology Development
o Procurement
Primary
Activitie
s
Su
pport
Activities
Network promotion & contract mgt
Service provisioning
Infrastructure operation
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Basic Value Shop
Stabell & Fjedstad (1998)
o Infrastructure
o HR Management
o Technology Development
o Procurement
Problem Finding
and Acquisition
Problem
Solving
Control
(Evaluation)Execution
Choice
Prim
ary
Activ
ities
Support
Ac
tivities
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Example
Valuable
Unique
Competitive
Advantage (CA)
Superior
Performance
Different Set
of Activities
Source
of CA
Competitive Strategy
Customized
product Lower price
Dell Computer: Direct selling
JIT inventory
Integrated
process withglobal suppliers
Efficient working
capital
management, etc
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Inbound
Logistic:
No warehouse
Integrated
process
JIT inventory
36 days
payment
Production
(Operation):
Assembly
components
from supplier
Outbound
Logistic:
Immediate
delivery
No warehouse
Zero finished
product
inventory
Marketing
and Sales:
Direct selling
Direct
payment
7-10 days
delivery
After Sales
Service:
Online
Complain
handling
Support ActivitiesInfrastructure Exclusive agreement with Intel and Microsoft
Exclusive agreement with Samsung, Kodak, Fuji (for printer)
Manage network of suppliers around the world
HR Mgt Recruitment, training, performance management, etc.
Tech Dev. Little spending on R&D
Total quality management to improve
supply chain mgt and assembly line
Online communication (e.g.
internet, phone)
Procurement Global sourcing for generic component
Local sourcing for microprocessor & OS
Value Chain: Dell Computer
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