Strategic Management: Semester

STRATEGIC MANAGEMENT

semester IV (MBA ) Batch: 2017- 2019

Submitted to : Dr. Rajesh Bhatt Department of Business Administration Maharaja Krishnakumarsinhji Bhavnagar university

Assignment on Internal Analysis Submitted by: Munira Vohra Naman Shah Dharmik Kapadiya Irfan Kalvatar Kajol Chaudhary Date:

Introduction

Strategic analysis of any Business enterprise involves two stages: Internal and External analysis. Internal analysis is the systematic evaluation of the key internal features of an organization. External analysis will be discussed later.

Four broad areas need to be considered for internal analysis The organization’s resources, capabilities The way in which the organization configures and co-ordinates its key valueadding activities The structure of the organization and the characteristics of its culture The performance of the organization as measured by the strength of its products.

Resources Resources are assets employed in the activities and processes of the organization. They can be tangible or intangible. They can be obtained externally (organization-addressable) or internally generated (organization-specific). They can be specific and non-specific: Specific resources can only be used for highly specialized purposes and are very important to the organization in adding value to goods and services. Assets that are less specific are less important in adding value, but are more flexible.

Resources fall within several categories: Human Financial Physical Technological Informational

An audit of resources would be likely to include an evaluation of resources in terms of availability, quantity and quality, extent of employment, sources, control systems and performance.

Organizational Capability • Financial Capability Profile (a) Sources of funds (b) Usage of funds (c) Management of funds • Marketing Capability Profile (a) Product related (b) Price related (c) Promotion related (d) Integrative & Systematic • Operations Capability Factor (a) Production system (b) Operation & Control system (c) R&D system • Personnel Capability Factor (a) Personnel system (b) Organization & employee characteristics (c) Industrial Relations • General Management Capability (a) General Management Systems (b) External Relations (c) Organization climate

General Competences They are assets like industry-specific skills, relationships and organizational knowledge which are largely intangible and invisible assets. Competences and capabilities will often be internally generated, but may be obtained by collaboration with other organizations. Certain competences are likely common to competing businesses within a global industry or strategic group.

Core Competences/Distinctive Capabilities Core competences or distinctive capabilities are combinations of resources and capabilities which are unique to a specific organization and which are responsible for generating its competitive advantage. Kay (1993) identified four potential sources of Core competences: Reputation Architecture (i.e., internal and external relationship) Innovation Strategic assets

Criteria to evaluate Core Competences Complexity: How elaborate is the bundle of resources and capabilities which comprise the core competence? Identifiability: How difficult is it to identify? Imitability: How difficult is it to imitate? Durability: How long does it be replaced by an alternative competences? Superiority: Is it clearly superior to the competences of other organizations? Adaptability: How easily can the competence be leveraged or adapted? Customer orientation: How is the competence perceived by customers and how far is it linked to their needs?

Core Competencies • For a strategic capability to be a Core Competency, it must be • Valuable • Rare • Costly to Imitate • No substitutable

Is the Resource Valuable? • Organizational resources can be a source of competitive advantage only when they are valuable • Enable a firm to formulate and implement strategies that improve its efficiency or effectiveness

Is the Resource Rare? • Organizational resources also possessed by competitors are not sources of competitive advantage • Common strategies based on similar resources give no one firm an advantage • Competitive advantages are gained only from uncommon resources, resources that are rare to other competitors

Can the Resource be Imitated? • Difficulty in imitating resources is key to value creation because it constrains competition • Profits generated from inimitable resources are more likely to be sustainable • Physical uniqueness • Path dependency • Causal ambiguity • Social complexity

Are Substitutes Readily Available? • There must be no strategically equivalent valuable resources that are themselves not rare or inimitable • Substitutability may take at least two forms • Competitor may be able to substitute a similar resource that enables it to develop and implement the same strategy • Very different firm resources can become strategic substitutes (such as e-business as a substitute for physical retail facility)

What is the value chain? • Porter’s definition includes all activities to design, produce, market, deliver, and support the product/service. • The value chain is concentrating on the activities starting with raw materials till the conversion into final goods or services. • Two categories: Primary Activities (operations, distribution, sales) Support Activities (R&D, Human Resources)

What is value chain analysis? • • Used to identify sources of competitive advantage • • Specifically: – Opportunities to secure cost advantages – Opportunities to create product/service differentiation • • Includes the value-creating activities of all industry participants

Value Chain Model (FISH BONE DIAGRAM)

TYPES OF FIRM ACTIVITIES • • Primary activities: Those that are involved in the creation, sale and transfer of products (including aftersales service) Inbound logistics, Operations ,Outbound logistics , Sales and marketing ,Service and support • • Support Activities: Those that merely support the primary activities Human resources (general and admin.) ,Tech. development , Procurement

PRIMARY ACTIVITIES • 1.INBOUND LOGISTICS- CONCERNED WITH RECEIVING, STORING, DISTRIBUTING INPUTS (e.g.HANDLING OF RAW MATERIALS, WAREHOUSING, INVENTORY CONTROL) • 2. OPERATIONS- COMPRISE THE TRANSFORMATION OF THE INPUTS INTO THE FINAL PRODUCT FORM (E.G. PRODUCTION, ASSEMBLY, AND PACKAGING) • 3. OUTBOUND LOGISTICS-INVOLVE THE COLLECTING, STORING, AND DISTRIBUTING THE PRODUCT TO THE BUYERS (e.g. PROCESSING OF ORDERS, WAREHOUSING OF FINISHED GOODS, AND DELIVERY)

• 4. MARKETING AND SALES -Identification of customer needs and generation of sales.(e.g. ADVERTISING, PROMOTION, DISTRIBUTION) • 5. SERVICE -INVOLVES HOW TO MAINTAIN THE VALUE OF THE PRODUCT AFTER IT IS PURCHASED.(e.g. INSTALLATION, REPAIR, MAINTENANCE, AND TRAINING)

SUPPORT ACTIVITIES • 1.FIRM INFRASTRUCTURE The activities such as Organization structure, control system, company culture are categorized under firm infrastructure. • 2.HUMAN RESOURCE MANAGEMENT Involved in recruiting, hiring, training, development and compensation. • 3.TECHNOLOGY DEVELOPMENT These activities are intended to improve the product and the process, can occur in many parts of the firm. • 4.PROCUREMENT Concerned with the tasks of purchasing inputs such as raw materials, equipment, and even labor.

Competitive Advantage • For an organization, it means discovering the needs of the customers and then satisfying and even exceeding their expectations for the purpose of achieving the goals of the organization.

Strategic Advantage

Organizational Culture and Structure A business must have a culture and structure which allow it to carry out its global activities. The structure of the business must allow it to accomplish its objectives as effectively and as efficiently as possible. Culture is an important determinant of how effectively the organization operates and has important implications for employee motivation.