Lecture Objectives
(1) Define internal analysis and discuss why it is important.
(2) Describe the relationship between organizational resources, organizational capabilities, core competencies, and distinctive organizational capabilities.
(3) Explain what organizational strengths and weaknesses are.
(4) Define the value chain and describe the primary and support activities on the value chain.
(5) Explain the strategic options for correcting cost competitiveness on the value chain system.
(6) Discuss the steps in conducting a competitive strength assessment
(7) Explain how to use the internal audit process
(8) Discuss the features of an internal environmental analysis process
(9) Describe the steps in capabilities assessment profile
What is Internal Analysis?
• The process of identifying and evaluating an organization’s specific characteristics
– Resources, capabilities, and core competencies
– Looks at organization’s
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Current vision
Mission(s)
Strategic & financial objectives
Strategies
Why Do an Internal Analysis?
• Enables a firm to identify its strengths and weaknesses. • Enables a firm to make good strategic decisions.
• Information from internal environment provides basis for developing strategic alternatives.
A Quick Review of
Organizational Resources
• Organizational resources are assets an organization has for carrying out work activities and processes
– Financial resources
• Current debt, credit lines, equity, cash reserves, etc.
A Quick Review of
Organizational Resources
– Intangible resources
• Brand names, patents, trademarks, copyrights, etc.
– Structural-cultural resources
• Culture, history, work systems policies, formal reporting structures, etc
• Human, intangible, and structural-cultural resources can be a source of competitive advantage – Play important role in determining capabilities or competencies and core competencies
Organizational Capabilities
• Organizational capabilities/competencies
– The complex and coordinated network of company routines and processes that determines how efficiently and effectively the organization transforms its resources into products (goods & services) – Involves complex pattern of coordination between people, & between people and resources
– It’s an internal activity that a company performs better than other internal activities
Organizational Capabilities
• Organizational routines & processes:
• Regular, predictable, and sequential patterns of work activity by organizational members
• Sustainable Competitive Advantage (CA):
• The prolonged maintenance of competitive advantage
• Capabilities that are capable of leading to CA today may not continue to do so as conditions & rivals change
• Dynamic capabilities
• An organization’s ability to build, integrate and reconfigure capabilities to address rapidly changing environments over time.
Core Competencies
• Core competencies
– A well-performed internal activity that is central, not peripheral, to a company’s strategy, competitiveness, and profitability
– Major value-creating skills and capabilities that
• are shared across multiple product lines or multiple
businesses
• Results from the collaboration among different parts of an organization – Gives a company a potentially valuable competitive capability Core Competencies
• Types of Capabilities/Core Competencies
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Skills in manufacturing a high quality product
System to fill customer orders accurately and swiftly
Fast development of new products
Better after-sale service capability
