Internal Scanning: Organizational Analysis
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Homework • CASE 11: McAfee 2005: Anti-virus and Anti-spyware • questions: 1. Conduct SWOT analysis. • Prepare EFA and IFA
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A Comprehensive Strategic Management Model
Feedback
Perform external audit
Develop Mission statement
Establish long term objectives
Perform internal audit
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Generate, Evaluate, and select strategies
Establish policies and annual objectives
Formulation
Allocate resources
Implementation
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Measure and evaluate performance
Evaluation
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Situational Analysis
SWOT -–Internal •Strengths/Weaknesses
–External •Opportunities/Threats
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TOWS Matrix
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Resource-Based Approach Internal strategic factors:
Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats. Prentice Hall, 2004
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Resource-Based Approach Resource:
An asset, competency, process, skill, or knowledge controlled by the corporation.
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Evaluating Key Resources VRIO Framework
• How to identify the key resources? Base on four criteria: 1. Value: Does it provide competitive advantage? 2. Rareness: Do other competitors possess it? 3. Imitability: Is it costly for others to imitate? 4. Organization: Is the firm organized to •
exploit the resource? If the answer is use to all it is considered distinctive competence.
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Core and distinctive competencies • Capabilities: organization ability to utilize its resources. Its business process and routine. • Competency: cross-functional integration and coordination of capabilities. E.g., new product development. • Core-competency: collection of competencies that crosses divisional boundaries. E.g., new product development is a core-competency if it goes beyond one division. • Distinctive competencies: when core- competencies are superior to those of the competitions. Prentice Hall, 2004
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Keys of Strategic Outsourcing Success 1- Understand the bus core competencies.
‘What it gives competitive Differentiation’ Core comp. Is the integration of technologies, constituent skills and collective learning which makes healthy bus. 2- Mapping out the work of bus. 3- Requires trust between parties 4- Understand the type of work of bus. Prentice Hall, 2004
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Competitive advantage analysis • Analyzing competences and core competences: The analysis here determines how resources are deployed Competitive advantage is built on the uniqueness of resources or on the core competences.
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Strategic Outsourcing for Competitive Advantage • Used mainly for downsizing and cost reductions at corporations. • Usually corps outsourcing non-essential work, why? To free valuable resources and focus on its areas of competitive advantage. To do this org. must know its core competences. Prentice Hall, 2004
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Why some nations are more competitive than others? • M. Porter in his diamond, suggests that there are inherited reasons why some nations are more competitive, and there organizations are as well, than others. • Porter believes that national home base of an organization influence the global success of organization. Prentice Hall, 2004
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Porter’s Determinants of National Advantage There are four forces: 1- The conditions of the nation, availability of skills, infrastructure. 2- Home country’s demand for products. 3- The presence or absence of supporting industries. 4- The firm’s strategy, structure, rivalry, establishment process.. Prentice Hall, 2004
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Four Nation’s Distinct Strategies • • • •
S-O, or maxi-maxi S-T, or maxi-mini W-O, or mini-maxi W-T, or mini-mini
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Resource-Based Approach 5-Step approach to strategy analysis: •
1- Identify & classify firm’s resources • Strengths & weaknesses
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2- Combine firm’s strengths into capabilities • Core competencies • Distinctive competencies
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Resource-Based Approach 5-Step approach to strategy analysis: •
3- Appraise the Profit potential of resources • Sustainable competitive advantage
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4- Select strategy • Exploits firm’s resources relative to external
opportunities
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5- Identify resource gaps • Invest in upgrading weaknesses Prentice Hall, 2004
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Determining the Sustainability of an Advantage Durability:
Rate at which a firm’s underlying\basic resources and capabilities (core competencies) depreciate or become obsolete. E.g., new technology can make the company core competency irrelevant. Prentice Hall, 2004
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Sustainability of an Advantage Imitability:
Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others. Prentice Hall, 2004
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Core Competencies Imitability of core competencies determined by: 1. Transparency/clearly understood 2. Transferability. Ability of competitors to gather necessary resources and capabilities. 3. Replicability/ do it exactly by the competitors :imitate other firms’ success. Prentice Hall, 2004
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Core Competencies Is it easy to imitate another company’s core competency? Depends if it comes from: Explicit Knowledge: – Knowledge that can be easily articulated and
communicated.
Tacit/unexpressed Knowledge: – Knowledge that is not easily communicated
because it is deeply rooted in employee experience or in a corporation’s culture
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Resource Sustainability
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Competitive advantage analysis • Steps of analyzing competences: 1- Value chain analysis: describes the activities within and around the organization, and relates them to an analysis of the competitive strength of the organization. 2- the bases of core competences.
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Corporate Value Chain
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Corporate Value Chain Analysis steps: •
Examine each product line’s value chain • Core competencies & core deficiencies
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Examine the “linkages” within each product line’s value chain • Connections between the way one value activity is performed and the cost of performance of another activity
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Examine the synergies among the value chains of different product lines or business units • Economies of scope Prentice Hall, 2004
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Value Chain .()*+,-./ة ا2)3/( ا4,. آ6+ 78ر:4 ; ,?>@A • B>آ( و7D/ ا,?=دF8 6./( اGDHI*( اJK ;)JL8 MJN م:P8 • .(آ7DJ/ ()*+,-./ة ا2)3/در ا,Q> @=@L8 B (Hر,P3/ اMJN ;)JL./ة ا7 M/( إGDHI ا78:4 Y*A • ()/وI( اGDHI ا-١ @ةN,*3/( اGDHI ا-٢ Prentice Hall, 2004
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Value Chain :()/وI( اGDHI ا-١ ت,`7a3/ ا-V)-Q./^); واD./ت ا,)J3_/ ا-()JS@ا/ا]>@ادات ا (>@a/ ا-ت,_)T3/ واb=:*./ ا-ت,W.-3/ اB> :@ةN,*3/( اGDHI ا-٢ -(=7DT/ارد ا:3/ إدارة ا-(TK,L> ;c> (آ7DJ/ ()K,KI)( ا-T/ا تRS@3/اء ا7f ()J3N -ث:LT/ وا6`:/:-
