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Lecture 8: AUGUST 13, 2016
Recap of Lecture 7
Describe Organizational Analysis or Internal Audit in one sentence?
What are the characteristics of resources under RBV approach and
what are the resources?
Describe Value-Chain Analysis?
Recap of Lecture 7
Organizational Analysis is to use information to build strategies which will turn
the firms weaknesses into strengths and turn strengths into distinctive
competencies and eventually into competitive advantage.
Under Resource-based View approach, the characteristics of resource which
meets the conditions of Empirical Indicators are rare, hard to imitate, and not
easy to substitute; the resources are physical, human, and organizational.
Value-chain Analysis identifies where low-cost advantages or disadvantages exist
anywhere along the value chain from raw material to customer service activities,
develops and nurtures a core competence and convert this competence into a
distinctive competence.
There is a third type of vertical integration, called balanced integration, which is a judicious
mix of backward and forward integration strategies
Situation Analysis
A systematic collection and evaluation of past and present
economical, political, social, and technological data, aimed at
1) Identification of internal and external forces that may influence the
organization's performance and choice of strategies
2) Assessment of the organization's current and future strengths, weaknesses,
opportunities, and threats
Situation Analysis
Input Stage
Quantify subjectivity
Making small decisions in the input matrices regarding the relative
importance of external and internal factors allows strategists to more
effectively generate and evaluate alternative strategies
Matching Stage
Tools rely on information derived from the input stage to match external
opportunities and threats with internal strengths and weaknesses
Matching external and internal critical success factors is the key to effectively
generating feasible alternative strategies
SO (strengths-opportunities)
WO (weaknesses-opportunities)
ST (strengths-threats)
WT (weaknesses-threats)
Matching key external and internal factors is the most difficult part of developing a SWOT
Matrix and requires good judgmentand there is no one best set of matches
When a firm has major weaknesses, it will strive to overcome them and make them
strengths
When an organization faces major threats, it will seek to avoid them to concentrate on
opportunities
The SWOT is not the audit, the audit is not the SWOT, the SWOT and the audit are
different
When identifying and prioritizing key external factors in Strategic Planning, make sure the factors selected are
specific, i.e. quantified to the extent possible
Make sure the factors selected are ACTIONABLE, i.e. meaningful in terms of having Strategic implications
For example, regarding actionable, to say the stock market is rising is not actionable because there is no apparent
strategy that the firm could formulate to capitalize on that factor. in contrast, a factor such as the GDP of Brazil is 6.8
percent is actionable because the firm should perhaps open 100 new stores in Brazil.
Select factors that will be helpful in deciding what to recommend the firm to do, rather than selecting nebulous
factors
2)
3)
4)
5)
6)
7)
8)
WEAKNESSES (W)
OPPORTUNITIES
(O)
STRENGTHS
OPPORTUNITIES
(SO)
WEAKNESSES
OPPORTUNITIES
(WO)
THREATS (T)
STRENGTHS
THREATS (ST)
WEAKNESSES
THREATS (WT)
Aggressive
Conservative
Defensive
Competitive
1)
2)
Factors that were included earlier in the firms EFE and IFE Matrices should be considered in
developing a SPACE Matrix
3) Compute an average score for FP, CP, IP, and SP by summing the values given
to the variables of each dimension and then by dividing by the number of
variables included in the respective dimension