CHAPTER 5

INTERNAL SCANNING:
ORGANIZATIONAL ANALYSIS
CBMEC 2 | BENAWE | ESPALABRA| RAMEH | YUMANG
A Resource-Based Approach to
Organizational Analysis

ORGANIZATIONAL ANALYSIS
is concerned with identifying and
developing an organization’s resources
and competencies.
 RESOURCES
are an organization’s assets and are thus the
basic building blocks of the organization.

Includes tangible assets, human assets and

CORE AND intangible assets
DISTINCTIVE
COMPETENCIES CAPABILITIES
refer to a corporation’s ability to exploit its
resources.

They consist of business processes and routines

that manage the interaction among resources to
turn inputs into outputs.

Dynamic Capabilities
 COMPETENCY
Is a cross-functional integration and
coordination of capabilities.

CORE AND CORE COMPETENCY

DISTINCTIVE is a collection of competencies that crosses
COMPETENCIES divisional boundaries, is widespread within the
corporation, and is something that the
corporation can do exceedingly well.

DISTINCTIVE COMPETENCY
When core competencies are superior to those
of the competition
 VRIO Framework of
Analysis
If the answer to each of these questions is yes for a particular competency, it
is considered to be a strength and thus a distinctive competence.

1 2 3 4
VALUE RARENESS IMITABILITY ORGANIZATION

Does it provide Is the firm organized to

Do no other Is it costly for others to
customer value and exploit the resource?
competitors possess it? imitate?
competitive

advantage?

 Using resources to gain

competitive advantage
Identify and classify the firm’s resources in terms of strengths and weaknesses.

Combine the firm’s strengths into specific capabilities and core competencies.

Appraise the profit potential of these capabilities and competencies in terms of their
potential for sustainable competitive advantage and the ability to harvest the profits
resulting from their use. Are there any distinctive competencies?

Select the strategy that best exploits the firm’s capabilities and competencies relative to
external opportunities.

Identify resource gaps and invest in upgrading weaknesses.

 ACCESS TO A DISTINCTIVE
COMPETENCY

Acquired from someone

Asset endowment else

Shared with another Carefully built and

business unit ot alliance accumulated over time
partner within the company
 ACCESS TO A DISTINCTIVE
COMPETENCY

geographic concentrations of interconnected

companies and industries

CLUSTERS It provides access to: employees, suppliers,

specialized information and complementary
products
 ACCESS TO A DISTINCTIVE
COMPETENCY
Research reveals that companies with core
competencies have little to gain from locating
in a cluster with other firms and therefore do
CLUSTERS not do so.
In contrast firms with the weakest
technologies, human resources, training
programs, suppliers, and distributors are
strongly motivated to cluster
 DETERMINING THE
SUSTAINABILITY OF AN
ADVANTAGE

DURABILITY
is the rate at which a firm’s
underlying resources, capabilities,
or core competencies depreciate
or become obsolete.
 DETERMINING THE
SUSTAINABILITY OF AN
ADVANTAGE

IMITABILITY is the rate at which a firm’s underlying

resources, capabilities, or core
competencies can be duplicated by others

A core competency can be easily imitated to

the extent that it is transparent, transferable,
and replicable.
 06
DETERMINING THE SUSTAINABILITY OF
AN ADVANTAGE
IMITABILITY

TRANSPARENCY TRANSFERABILITY REPLICABILITY

is the speed with which is the ability of competitors is the ability of competitors
other firms can understand to gather the resources and to use duplicated resources
the relationship of capabilities necessary to and capabilities to imitate
resources and capabilities support a competitive the other firm’s success.
supporting a successful challenge

firm’s strategy

 DETERMINING THE SUSTAINABILITY OF

AN ADVANTAGE

EXPLICIT KNOWLEDGE TACIT KNOWLEDGE

knowledge that can be easily

articulated and communicated is knowledge that is not easily
communicated because it is deeply
This is the type of knowledge that rooted in employee experience or
competitive intelligence activities can in a corporation’s culture
quickly identify and communicate.

Continuum of Resource
Sustainability

BUSINESS MODEL
A company’s method for making money in
the current business environment

it includes the key structural and

operational characteristics of a firm
FIVE ELEMENTS OF Who it serves

BUSINESS MODEL
What it provides

How it makes money

How it differentiates and

sustains competitive advantage

How it provides its

product/service
CUSTOMER SOLUTIONS
MODEL
this is also known as consulting model

this model is to create money through

improving its clients' operations, not by
selling products.
PROFIT PYRAMID
MODEL
This model attempts to capture
multiple markets with multiple
brands
MULTI-COMPONENT
SYSTEM/ INSTALLED
BASE MODEL
companies offer a base product
at cost or at a loss, then sell
complementary, necessary
products at high margins.
 ADVERTISING
MODEL
this model offers its basic
product for free to make money
on advertising
 SWITCHBOARD
MODEL
In this model a company acts as
an intermediary to connect
multiple sellers to multiple
buyers
 TIME
MODEL
Being the first to market with a
new innovation allows a
company to earn high margins.
 EFFICIENCY
MODEL
In this model a company waits
until a product becomes
standardized and then enters
the market with a low-priced,
low-margin product that appeals
to the mass market
 BLOCKBUSTER
MODEL
refers to a method of investing
significant sums of money in
one's own research and/or
development with the hope that
some will turn out to be
successful blockbusters with
high returns
PROFIT MULTIPLIER
MODEL
This model creates licensable
products that can create value
for a range of business
customers.
ENTREPRENEURIAL
MODEL
A company provides specialized
products/services to specific
markets that are too small for
large competitors to be
profitable but have the potential
to grow quickly
DE FACTO INDUSTRY
STANDARD MODEL
In this model, a company offers
products free or at a very low
price in order to saturate the
market and become the industry
standard.
value chain analysis
Value chain represents the internal activities a firm
engages in when transforming inputs into outputs.
industry value-chain
analysis
1 2

UPSTREAM DOWNSTREAM
SEGMENTS SEGMENTS
vertical integration
one management team at one location supervises the upstream
and downstream aspects of production.

CENTER OF GRAVITY
the part of the chain that is most important to the company and
the point where its greatest expertise and capabilities lie.
CORPORATE value-chain analysis
PRIMARY SUPPORT
ACTIVITIES ACTIVITIES
Procurement
inbound logistics
Technology
operations
development
outbound logistics
Human resource
marketing and sales
management
service
Firm infrastructure
CORPORATE value-chain analysis
CORPORATE value-chain analysis
Corporate value chain analysis involves the
following three steps:

1. Examine each product line’s value chain in

terms of the various activities involved in
producing that product or service.
2. Examine the “linkages” within each product
Differences among line’s value chain
competitor value chains 3. Examine the potential synergies among the
are a key source of value chains of different product lines or
competitive advantage.” business units.
- Michael Porter
 BASIC ORGANIZATIONAL
STRUCTURES

1 2 3
SIMPLE FUNCTIONAL DIVISIONAL
STRUCTURE STRUCTURE STRUCTURE
 BASIC
ORGANIZATIONAL
STRUCTURES
CORPORATE CULTURE
is the collection of beliefs, expectations, and values
learned and shared by a corporation’s members and
transmitted from one generation of employees to
another.

Two distinct attributes of a corporate culture:

1. Cultural intensity
2. Cultural integration
 Functions fulfilled
by corporate culture in an organization:
1 Conveys a sense of identity 2
Helps generate employee
for employees. commitment to something

greater than themselves.

Serves as a frame of
3 Adds to the stability of the 4 reference for employees to
organization as a social use to make sense of
system. organizational activities and
to use as a guide for
appropriate behavior.
 strategic marketing
issues

1 2 3 4
MARKET MARKETING PRODUCT LIFE BRAND &
POSITION & MIX CYCLE CORPORATION
SEGMENTATION REPUTATION
Brand is a name given to a
Market position refers to the Marketing mix refers to the It is a graph showing time company’s product which
selection of specific areas for combination of key variables plotted against the monetary identifies that item in the mind
marketing concentration and under a corporation’s control sales of a product as it moves of the consumer.
can be expressed in terms of that can be used to affect from introduction through

market, product, and geographic demand and to gain growth and maturity to decline. A corporate reputation is a
locations. competitive advantage.
widely held perception of a
company by the general public.

 strategic FINANCIAL issues

FINANCIAL LEVERAGE CAPITAL BUDGETING

the ratio of total debt to total assets the analyzing and ranking of
It is helpful in describing how debt possible investments in fixed assets
is used to increase the earnings such as land, buildings, and
available to common shareholders. equipment in terms of the additional
outlays and additional receipts that
will result from each investment.
Strategic Research and
Development Issues

R&D
activities companies undertake to innovate
and introduce new products and services or
to improve their existing offerings
 Strategic Research and
Development Issues
R & D INTENSITY TECHNOLOGY TRANSFER
spending on R&D as percentage of the process of taking new
sales revenue technology from the laboratory to
the marketplace
Principal means of gaining market
share in global competition
RESEARCH AND DEVELOPMENT MIX

BASIC R & D PRODUCT R & D ENGINEERING or

PROCESS R & D
Focuses on Concentrates on Concerned with
theoretical problems marketing and is engineering,
concentrating on quality
concerned with
control and the
product or product
development of design
packaging specifications and
improvements improved production
equipment.
 Impact of Technological
Discontinuity on Strategy

TECHNOLOGY DISCONTINUITY
When a new technology cannot be used to
enhance current technology, but substitutes
for the technology to yield better
performance
 STRATEGIC OPERATIONS ISSUES

INTERMITTENT CONTINUOUS OPERATING

SYSTEMS SYSTEMS LEVERAGE

Item is normally Work is laid out in impact of a specific

processed lines on which change in sales
sequentially, but the products can be volume on net
work and sequence continuously operation income
of the process vary assembled or

processed

 AUTONOMOUS
A group of people work together without a
supervisor to plan, coordinate and evaluate
their work

CROSS-FUNCTIONAL WORK TEAMS

STRATEGIC Various disciplines are involved in a project
from the beginning
HUMAN
RESOURCE CONCURRENT ENGINEERING
(HRM) ISSUES Specialists work side-by-side and compare

notes constantly to design cost-effective
products with features customers want

VIRTUAL TEAMS
a group of people who participate in common
projects by making collaborative efforts to
achieve shared goals and objectives.
TRENDS DRIVING QUALITY OF WORK LIFE HUMAN DIVERSITY
VIRTUAL TEAMS AND HUMAN DIVERSITY
Flatter org structures
Introducing The mix in the
Turbulent
participative problem workplace of people
environments
solving from different races,
Increased employee
Restructuring work cultures and
autonomy
Introducing innovative backgrounds
Higher knowledge
reward systems Provides a competitive
requirements
Improving the work advantage
Increase globalization
environment

 Strategic Information
systems/technology Issues
INFORMATION WEB 2.0 SUPPLY CHAIN
SYSTEM/TECHNOLOGY MANAGEMENT
refers to the use of the forming of
Automation of back
wikis, blogs, RSS, social networks for sourcing
office processes
networks, podcasts raw materials,
Automation of
and mash-ups through manufacturing
individual tasks
company Web sites to products or creating
Enhancement of key
forge tighter links with services, storing and
business functions
customers and distributing the goods,
Development of a
suppliers and to and delivering them to
competitive advantage
engage employees customers and

more successfully. consumers

Internal Factor Analysis Summary (IFAS)
one way to organize the internal factors into the
generally accepted categories of strengths and
weaknesses
to analyze how well a particular company’s management
is responding to these specific factors in light of the
perceived importance of these factors to the company.
Internal Factor Analysis Summary
(IFAS)
steps in making the ifas table
STEP 1: INTERNAL STEP 2: WEIGHT STEP 3: RATING STEP 4: WEIGHTED SCORE
FACTORS Weight each factor from 1.0 Rate each factor from 5.0 Multiply each factor’s
List strengths and (Most Important) to 0.0 (Not (Outstanding) to 1.0 (Poor) weight times its rating to
weaknesses (8–10) in Important) in Column 2 in Column 3 based on the obtain each factor’s
Column 1. based on that factor’s company’s response to that weighted score in Column 4.
probable impact on the factor.
company’s strategic
position. The total weights
must sum to 1.00

STEP 5: COMMENTS STEP 6:

Use Column 5 (comments) Add the individual weighted scores
for rationale used for each to obtain the total weighted score
factor. for the company in Column 4. This
tells how well the company is
responding to the factors in its
internal environment.
CHAPTER 5
INTERNAL SCANNING:
ORGANIZATIONAL ANALYSIS
CBMEC 2 | BENAWE | ESPALABRA| RAMEH | YUMANG