COMP5331: Web Pub and Web Ad 7. Internal Analysis Dickson K.W. Chiu PhD, SMIEEE

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What is an Internal Analysis?

  Looks at the organization’s  Vision   Mission Strategic objectives Identifies and evaluates resources, capabilities, and core competencies Dickson Chiu 2006 COMP5331-7-2

Company Vision

      Massively inspiring Overarching Long-term Driven by and evokes passion Fundamental statement of the organization ’ s  Values, Aspiration, Goals E.g., Disneyland: earth ” “ To be the Happiest place on

Company vision

Hierarchy of Goals Dickson Chiu 2006 COMP5331-7-3

Mission Statements

     Purpose of the company Basis of competition and competitive advantages More specific than vision Focused on the means by which the firm will compete E.g., FedEx: “ To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation, logistics, and e-commerce.

”

Company vision Mission statements

Hierarchy of Goals Dickson Chiu 2006 COMP5331-7-4

Strategic Objectives

    Operationalize the mission statement Provide guidance on how the organization can fulfill or move toward the “ higher goals ” More specific, a more well-defined time frame, measurable (yardstick for rewards and incentives), consistent with vision and mission, realistic (challenging but doable), timely E.g., P&G: years ” “ Increase sales growth 6% to 8% in each of the next five

Company vision Mission statements Strategic objectives

Hierarchy of Goals Dickson Chiu 2006 COMP5331-7-5

A Quick Review of Organizational Resources

 Organizational Resources (assets)   Financial resources: debt capacity, credit lines, etc.

Physical assets: buildings, equipment and fixtures    Human resources: experience, knowledge, etc. of employees Intangible resources: brand names, patents Structural-cultural resources: culture, work systems Dickson Chiu 2006 COMP5331-7-6

The Strategic Role of Organizational Resources and Organizational Capabilities

Performance Results Competitive Advantage Organizational Resources

Financial assets Physical assets Human resources Intangible assets Structural-cultural assets

DistinctiveOrganizational Capabilities Organizational Capabilities

Organizational processes and routines Accumulated knowledge Actual work activities

Core Competencies

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From Resources to Organizational Capabilities

     Organizational capabilities  Competencies or skills that a firm employs to transform inputs to outputs, and capacity to combine tangible and intangible resources to attain desired end     Outstanding customer service Excellent product development capabilities Innovativeness of products and services Ability to hire, motivate, and retain human capital Organizational routines and processes Capabilities – patterns of coordination Sustainable competitive advantage Dynamic capabilities Dickson Chiu 2006 COMP5331-7-8

Characteristics of Distinctive Organizational Capabilities • Contributes to Superior Customer Value • Can Be Used in a Variety of Ways Distinctive Organizational Capabilities Dickson Chiu 2006 • Is Difficult for Competitors to Imitate COMP5331-7-9

The Role of Strengths and Weaknesses

Strengths

: Resources that an organization possesses and capabilities that an organization has developed.

Both can be exploited and developed into a sustainable competitive advantage

Weaknesses

: Resources and capabilities that are lacking or deficient.

Prevent an organization from developing a sustainable competitive advantage

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How to do an internal analysis: value chain   Using a value-chain analysis  The premise behind value chain analysis is that customers demand value from goods and services they obtain    Customer value Product is unique and different Product is low priced Quick response to specific or distinctive customer needs A value chain is a systematic way of examining organization’s functional activities Dickson Chiu 2006 COMP5331-7-11

Primary and Support Activities in the Value Chain {

Firm Infrastructure Human Resource Management Technological Development Procurement

Primary Activities Dickson Chiu 2006 COMP5331-7-12

How to do an internal analysis – internal audit  Using an internal audit   Thoroughly assesses an organization's various internal functional areas Are the necessary resources available so that the people in these functional areas can perform their assigned work activities and how well do they perform these assigned work activities?

Dickson Chiu 2006 COMP5331-7-13

Using an internal audit

 Six Primary Functional Areas  Productions-Operations      Marketing Research and Development Financial and Accounting Management (including HRM) Information Systems Dickson Chiu 2006 COMP5331-7-14

How to do an internal analysis – Assessment Profile Capabilities Complex Analysis of Capabilities   Not as easily identifiable as organizational functions Hard for competitors to imitate Two-phased Capability Assessment   Phase I: Identify distinctive capabilities Phase II: Develop and leverage these distinctive capabilities Dickson Chiu 2006 COMP5331-7-15

Identifying Distinctive Organizational Capabilities

Step 1 Prepare current product-market profile.

Step 2 Step 3 Identify sources of competitive advantage and disadvantage in the main product-market segments.

Describe all the organizational capabilities and competencies.

Step 4 Step 5 Sort the core capabilities and competencies according to strategic importance.

Identify and agree on the key capabilities and competencies .

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Criteria to Judge Organizational Strengths and Weaknesses

Past Performance Trends Comparison Against Competitors Are organizational resources and capabilities strengths or weaknesses?

Specific Goals or Targets

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Personal Opinions of Strategic Decision Makers or Consultants

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Why Do an Internal Analysis?

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It is the only way to identify an organization’s strengths and weaknesses 2.

It’s needed for making good strategic decisions Dickson Chiu 2006 COMP5331-7-18