© 1998 Addison Wesley Longman, Inc. TM-74 The Internal Environment Approaches to Organizational...

© 1998 Addison Wesley Longman, Inc. TM-1

The Internal Environment The Internal Environment Approaches to Approaches to

Organizational AnalysisOrganizational Analysis

1. Can use resource-based approach1. Can use resource-based approach

2. Can use value chain analysis2. Can use value chain analysis

3. We use functional resource analysis3. We use functional resource analysis


Resources: VRIO Resources: VRIO FrameworkFramework

1. Values (Does it provide competitive edge?)1. Values (Does it provide competitive edge?)

2. Rareness (Do other competitors posses it?)2. Rareness (Do other competitors posses it?)

3. Imitability (Is it costly for others to imitate?)3. Imitability (Is it costly for others to imitate?)

4. Organization (Is the Firm organized to support?)4. Organization (Is the Firm organized to support?)

If answers are “YES”, you have a distinctive If answers are “YES”, you have a distinctive competence.competence.

4.1 Resources: VRIO Framework p. 82


Core Competencies and Core Competencies and Distinctive CompetenciesDistinctive Competencies

Core CompetenciesCore Competencies

• Things a corporation can do exceedingly wellThings a corporation can do exceedingly well

Distinctive CompetenciesDistinctive Competencies

• Core competencies that are superior to those of Core competencies that are superior to those of competitorscompetitors

4.2 Core Competencies and Distinctive Competencies p. 83


Factors Determining Factors Determining Sustainability of a Sustainability of a

Distinctive CompetencyDistinctive Competency• DurabilityDurability (Rate competencies depreciate or (Rate competencies depreciate or

become obsolete)become obsolete)• ImitabilityImitability ( How easily resources can be ( How easily resources can be

duplicated)duplicated)

4.3 Sustainability of Distinctive Competency p. 83


ImitabilityImitability

• TransparencyTransparency (How easily firms understand (How easily firms understand resources organization)resources organization)

• TransferabilityTransferability (The ability of competitors to get (The ability of competitors to get right resources)right resources)

• ReplicabilityReplicability (How easily ability of a firm with the (How easily ability of a firm with the above resources can duplicate your company’s above resources can duplicate your company’s successsuccess


Continuum of Resources SustainabilityContinuum of Resources Sustainability

4.4 Continuum of Resources Sustainability (Fig. 4.1) p. 84

High(Hard to Imitate)

Low (Easy to Imitate)

Level of Resource Sustainability

Slow-Cycle Resources

Standard-Cycle Resources

Fast-Cycle Resources

Strongly shielded Patents, brand name Gillette: Sensor razor

Easily duplicated Idea driven Sony: Walkman

Standardized mass production Economies of scale Complicated processes Chrysler: Mini-van

Source: Suggested by J. R. Wiliams, “How Sustainable Is Your Competitive Advantage?” California Management Review (Spring 1992), p. 33.


Typical Value Chain for a Typical Value Chain for a Manufactured ProductManufactured Product

4.5 Industry Value Chain p. 85

Product Producer

Fabrication Distributor RetailerRaw Materials

Primary Manufacturing

Source: Suggested by J. R. Galbraith, “Strategy and Organization Planning,” in The Strategy Process: Concepts, Contexts, Cases, 2nd ed., edited by H. Mintzberg and J. B. Quinn (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 316.


Using Value Chain AnalysisUsing Value Chain Analysis

• Examine your value chainExamine your value chain• Determine how you reduce non-value workDetermine how you reduce non-value work• Determine how to link work together Determine how to link work together

(salesperson’s inspect)(salesperson’s inspect)• Gain economies of scope by sharing functions Gain economies of scope by sharing functions

between productsbetween products


Corporate Value ChainCorporate Value Chain

4.6 Corporation Value Chain p. 87

Support Activities

Primary Activities

Profit Margin

Firm Infrastructure (general management, accounting, finance, strategic planning)

Human Resource Management (recruiting, training, development)

Technology Development (R&D, product and process improvement)

Procurement (purchasing of raw materials, machines, supplies)

Inbound Logistics (raw materials handling and warehousing)

Operations (machining, assembling, testing)

Outbound Logistics (warehousing and distribution of finished product)

Marketing and Sales (advertising, promotion, pricing, channel relations)

Service (installation, repair, parts)

Source: Adapted/reprinted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.


We Use Functional We Use Functional Approach When Approach When

Investigating Investigating Internal Internal EnvironmentEnvironment

A. Organizational StructureA. Organizational Structure

B. Organizational CultureB. Organizational Culture

C. Organizational ResourcesC. Organizational Resources


Basic Structures of Basic Structures of Corporations: Simple and Corporations: Simple and

FunctionalFunctional

4.7aBasic Structures of Corporations: Simple and Functional (Fig. 4.4) p. 88

I. Simple Structure

II. Functional Structure

Owner-Manager

Workers

Top Management

Manufacturing Sales Finance Personnel


Basic Structures of Basic Structures of Corporations: DivisionalCorporations: Divisional

4.7b Basic Structures of Corporations: Divisional (Fig. 4.4)p. 88

III. Divisional Structure*

Manufacturing Finance Manufacturing Finance

Top Management

Product Division A Product Division B

*Conglomerate structure is a variant of the division structure.

Sales Personnel Sales Personnel


A corporate conglomerate is A corporate conglomerate is an organizational structure an organizational structure

made up of SBU’smade up of SBU’s


Strategic Business Unit Strategic Business Unit (SBU)(SBU)

Independent product-market unit with:Independent product-market unit with:

1. Unique mission1. Unique mission

2. Identifiable competitors2. Identifiable competitors

3. External market focus3. External market focus

4. Control of its business functions4. Control of its business functions

4.8 Strategic Business Unit p. 89


After We Evaluate After We Evaluate Organizational Structure Organizational Structure

We Evaluate Organizational We Evaluate Organizational Culture:Culture:

• Collection of beliefs, expectations, and values Collection of beliefs, expectations, and values learned and shared by members and transmitted learned and shared by members and transmitted from one generation of workers to the next from one generation of workers to the next generation.generation.


Attributes of Corporate Attributes of Corporate CultureCulture

• IntensityIntensity - degree member accept norms and - degree member accept norms and valuesvalues

• IntegrationIntegration - event to which members in various - event to which members in various departments share organizational culturedepartments share organizational culture

4.9 Attributes of Corporate Culture p. 89


Functions of Corporate Functions of Corporate CultureCulture

1. Conveys sense of identity1. Conveys sense of identity

2. Generates employee commitment2. Generates employee commitment

3. Adds to organizational stability3. Adds to organizational stability

4. Serves as a frame of reference4. Serves as a frame of reference

4.10 Functions of Corporate Culturep. 90


Marketing Mix VariablesMarketing Mix Variables

4.11 Marketing Mix Variables (Table 4.1)p. 93

Product Place Promotion Price

Quality Channels Advertising List price

Features Coverage Personal selling Discounts

Options Locations Sales promotion Allowances

Style Inventory Publicity Payment periods

Brand name Transport Credit terms

Packaging

Sizes

Services

Warranties

Returns

Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 89. Copyright © 1980. Reprinted by permission of Prentice-Hall, Inc.


The Product Life CycleThe Product Life Cycle4.12The Product Life Cycle (Fig. 4.5) p. 94

Introduction Growth* Maturity Decline

Time

Sal

es

*The right end of the Growth stage is often called Competitive Turbulence because of price and distribution competition that shakes out the weaker competitors. For further information, see C. R. Wasson, Dynamic Competitive Strategy and Product Life Cycles, 3rd ed. (Austin, Tex.: Austin Press, 1978).


R&D MixR&D Mix

• Basic R&D Basic R&D • Product R&DProduct R&D• Process (Engineering) R&DProcess (Engineering) R&D

4.13R&D Mix p. 94-95


Technological DiscontinuityTechnological Discontinuity4.14Technological Discontinuity (Fig. 4.6) p. 97

What the S-Curves Reveal

Research Effort/Expenditure

In the corporate planning process, it is generally assumed that incremental progress in technology will occur. But past developments in a given technology cannot be extrapolated into the future, because every technology has its limits. The key to competitiveness is to determine when to shift re-sources to a technology with more potential.

Mature Technology

New Technology

Source: P. Pascarella, “Are You Investing in the Wrong Technology?” Industry Week (July 25, 1983), p. 38. Copyright © 1983 Penton/IPC. All rights reserved. Reprinted by permission.

Pro

du

ct P

erfo

rman

ce


Technological CompetenceTechnological Competence - can develop and use - can develop and use new technologynew technology

Technological TransferTechnological Transfer - take technology form lab - take technology form lab to marketto market


Finance (Resources)Finance (Resources)

• Do Appendix A - see Individual & Team Case Do Appendix A - see Individual & Team Case OutlineOutline


OperationsOperations

• Intermittent SystemsIntermittent Systems• Fixed Assembly LinesFixed Assembly Lines• Product Process SystemsProduct Process Systems


Information SystemsInformation Systems


ConclusionConclusionInternal EnvironmentInternal Environment

• Organizational StructureOrganizational Structure• Organizational CultureOrganizational Culture• Resources - Marketing, R & D, Finance, Resources - Marketing, R & D, Finance,

Operations, Information SystemsOperations, Information Systems


Economies of Scale Economies of Scale versusversus

Economies of Scope Economies of Scope

4.15Economies of Scale versus Scope p. 98


Internal Factor Analysis Internal Factor Analysis Summary (IFAS)Summary (IFAS)

4.16Internal Factor Analysis Summary (IFAS): Blank p. 102

Internal Factors Weight RatingWeighted Score Comments

1 2 3 4 5

1.00

Strengths

Weaknesses

Total Weighted Score

Notes: 1. List opportunities and threats (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how well the company is responding to the strategic factors in its external environment.Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and Hunger Associates. Reprinted by permission.


Internal Factor Analysis Summary Internal Factor Analysis Summary (IFAS):(IFAS):

Maytag as ExampleMaytag as Example

4.17Internal Factor Analysis Summary (IFAS): Maytag as Example (Table 4.2) p. 102

Internal Factors Weight RatingWeighted Score Comments

1 2 3 4 5

1.00

Strengths• Quality Maytag culture

• Experienced top management

• Vertical integration

• Employee relations

• Hoover’s international orientation

Weaknesses• Process-oriented R&D

• Distribution channels

• Financial position

• Global positioning

• Manufacturing facilities

Total Weighted Score

Quality key to success

Know appliances

Dedicated factories

Good, but deteriorating

Hoover name in cleaners

Slow on new products

Superstores replacing small dealers

High debt load

Hoover weak outside the United Kingdom and Australia

Investing now

3.05

.15

.05

.10

.05

.15

.05

.05

.15

.20

.05

5

4

4

3

3

2

2

2

2

4

.75

.20

.40

.15

.45

.10

.10

.30

.40

.20

Date post:	25-Dec-2015
Category:	Documents
Upload:	anis-hodge
View:	221 times
Download:	0 times

© 1998 Addison Wesley Longman, Inc. TM-74 The Internal Environment Approaches to Organizational...

Documents