Strategic Management

Internal Scanning and

Organizational
Analysis

Organizational Analysis
Organizational

analysis

concerned with identifying and

developing an organizations resources

and competencies (Wheelen)
The determination of a firms strategic

competencies and weaknesses (Barnat)

Core and Distinctive

Competencies
Resources
an organizations assets and are thus the basic

building blocks of the organization

tangible, intangible
Capabilities
refer to a corporations ability to exploit its resources
consist of business processes and routines that

manage the interaction among resources to turn

inputs into outputs
company's skills at coordinating resources and putting
them to productive use; reside in organizational
routines (internal processes, structure, culture)

Different Types Of
Resources

Physical Assets
Plant, Equipment, & Real Estate

Financial Assets

Cash & Leverage

Human Assets

Individual Skills & Capabilities

Intangible Assets

Brand Names, Technology, Reputation

Organizational Assets

Organizational Routines & Team-Embodied

Skills

Core and Distinctive

Competencies
Core

competency

Intrinsic set of skills in order to thrive in

a certain market
company strengths that competitors
cannot easily match or imitate
Results to competitive advantage
E.g Coca-colas Branding, Nike,

Core and Distinctive

Competencies
Core

Rigidities / Deficiencies

former core competencies that sow the

seeds of organizational inertia and

prevent the firm from responding
appropriately to changes in the external
environment
E.g Coca-cola during the WWII

Core and Distinctive

Competencies
Distinctive

competency

core competencies that are superior to

those of the competition

VRIO Framework of Analysis

1. Value
2. Rareness
3. Imitability
4. Organization

VRIO Framework of Analysis

Using Resources to Gain

Competitive Advantage
1.
2.
3.
4.

5.

Identify and classify resources in terms of

strengths and weaknesses
Combine the firms strengths into specific
capabilities and core competencies
Appraise profit potentialAre there any
distinctive competencies?
Select the strategy that best exploits the
firms capabilities and competencies relative
to external opportunities
Identify resource gaps and invest in
upgrading weaknesses

Business Models
Business

model

a companys method for making money

in the current business environment

Method of a company in generating
revenue
includes the key structural and
operational characteristics of a firm
how it earns revenue and makes a profit

Business Models
A business model is usually
composed of five elements:
Who it serves
What it provides
How it makes money
How it differentiates and sustains
competitive advantage
How it provides its product/service

Examples of Well-known
Business Models (Alen Gleeson)
Add-On

Model
Advertising Model
Franchise Model
Freemiun Model
Intenet Bubble Model
Low Cost Model
Pay as You Go Model

Value Chain Analysis

Value

chain

the value chain for any firm is the

value-creating activities all the way

from basic raw material sources from
component suppliers through to the
ultimate end-use product delivered into
the final consumers hands (Shank and
Govindarajan)

Value Chain Analysis

a

firms value chain and the way it

performs individual activities are
a reflection of its history, its
strategy,
its
approach
to
implementing its strategy, and the
underlying
economics
of
the
activities
themselves.
(Michael
Porter)

Value Chain Analysis

Two

Major Categories of Business

Activities
a. Primary Activities
directly involved in transforming inputs into outputs
and in delivery and after-sales support.

b. Supporting Activities
support primary activities and other support
activities

Corporate Value Chain

Analysis
Examine each product lines value
chain in terms of the various
activities involved in producing the
product or service
2. Examine the linkages within each
product lines value chain
3. Examine the potential synergies
among the value chains of different
product lines or business units
1.

Scanning Functional
Resources and Capabilities
Basic

Organizational Structures

Simple
Functional
Divisional
Strategic Business Units
Conglomerate

Basic Organizational Structures

Corporate Culture:
The Company Way
Corporate

culture

the collection of beliefs, expectations

and values learned and shared by a

corporations members and transmitted
from one generation of employees to
another.
This

is who we are. This is what we

do. This is what we stand for.

Corporate Culture:
The Company Way
Functions
1.
2.
3.
4.

of a Corporate Culture
Conveys a sense of identity for
employees
Generates employee commitment
Adds to the stability of the
organization as a social system
Serves as a frame of reference for
employees to understand
organizational activities and as a
guide for behavior

Corporate Culture:
The Company Way
Cultural

intensity

the degree of which members of a unit

accept the norms, values and other

cultural content associated with the unit
shows the cultures depth
Cultural

integration

the extent of which units throughout the

organization share a common culture

cultures breadth

Corporate Culture:
The Company Way
The

5 Most Enjoyable Companies To Work For

(Business Insider)

5. Facebook (Social networking website)

4. Riverbed (Computer network equipment)
3. Google (Internet search, mobile and web
apps)
2. Edelman (Public relations firm)
1. (Social media network)

Strategic Marketing
Issues
Market

position

refers to the selection of specific areas

for marketing concentration and can be

expressed in terms of market, product
and geographic locations
Marketing

mix

the particular combination of key

variables under a corporations control

that can be used to affect demand and
to gain competitive advantage

Strategic Marketing
Issues
Marketing

Mix Values

Strategic Marketing
Issues
Product

life

cycle
a graph showing

time plotted
against the sales
of a product as it
moves from
introduction
through growth
and maturity to
decline

Strategic Marketing
Issues
Brand

and Corporate Reputation

Brand
a name given to a companys product which
identifies that item in the mind of the
consumer
Corporate brand
a type of brand in which the companys name
serves as the brand

Strategic Financial
Issues
Financial

leverage

ratio of total debt to total assets

describes how debt is used to increase

earnings available to common

shareholders
Capital

budgeting

the analyzing and ranking of possible

investments in fixed assets in terms of

additional outlays and receipts that will
result from each investment

Strategic Research and

Development Issues
R&D

intensity

spending on R&D as a percentage of

sales revenue
principal means of gaining market share
in global competition
Technology

transfer

the process of taking new technology

from the laboratory to the marketplace

Strategic Research and

Development Issues
R&D

Mix

Basic R&D
focuses on theoretical problems
Product R&D
concentrates on marketing and is concerned with
product or product packaging improvements
Engineering R&D
concerned with engineering, concentrating on
quality control and the development of design
specifications and improved production
equipment

Strategic Research and

Development Issues
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

systems

item is normally processed sequentially,

but the work and sequence of the

process vary
Continuous

systems

work is laid out in lines on which

products can be continuously assembled

or processed
Operating

leverage

impact of a specific change in sales

Strategic Operations
Issues
Experience

curve

unit production costs decline by some

fixed percentage each time the total

accumulated volume of production units
doubles

Strategic Human Resource

Issues
Increasing

Use of Teams

Autonomous (self-managed)
a group of people work together without a supervisor
to plan, coordinate and evaluate their work
Cross-functional work teams
various disciplines are involved in a project from the
beginning
Concurrent engineering
specialists work side-by-side and compare notes
constantly to design cost-effective products with
features customers want

Strategic Human Resource

Issues
Increasing

Use of Teams

Virtual teams
groups
of
geographically
and/or
organizationally dispersed co-workers that are
assembled
using
a
combination
of
telecommunications
and
information
technologies to accomplish an organizational
task

Strategic Human Resource

Issues
Trends

Driving Virtual Teams

1. Flatter organizational structures

2. Turbulent environments
3. Increased employee autonomy
4. Higher knowledge requirements
5. Increased globalization

Strategic Human Resource

Issues
Quality

of Work Life and

Human Diversity includes improvements in:
Introducing participative problem solving
Restructuring work
Introducing innovative reward systems
Improving the work environment

Human

diversity

the mix in the workplace of people from different

races, cultures and backgrounds

provides a competitive advantage

Strategic Information
Systems/Technology Issues
Information systems/technology
contributions to performance:
Automation of back office processes
Automation of individual tasks
Enhancement of key business
functions
Development of a competitive
advantage

Strategic Information
Systems/Technology Issues
Web

2.0

the use of wikis, blogs, RSS (Really

Simple Syndication), social networks

(e.g., LinkedIn and Facebook), podcasts
and mash-ups through company Web
sites to forge tighter links with
customers and suppliers and to engage
employees more successfully

Strategic Information
Systems/Technology Issues
Supply

chain management

the forming of networks for sourcing raw

materials, manufacturing products or

creating services, storing and
distributing the goods and delivering
them to customers and consumers

Internal Factor Analysis

Summary