Internal Scanning:

Organizational Analysis
Group 3:
Jarcia, Xara Mizpah
Jumamil, Nicka
Magpantay, Alyssa Kate
Augusto, Christian
Fujiwara, Daiki
Resource-Based Approach to Organizational Analysis

 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
 Core and Distinctive Competencies
• Resources – are an organization‘s assets and are thus
the basic building blocks of the organization.
• Two types of resources
• 1. Tangible Assets
• 2. Intangible Assets
• Capabilities – refer to a corporation‘s ability to
exploit its resources.
• Ex. A company‘s marketing capability
When these capabilities are constantly being changed and
reconfigured to make them more adaptive, they are called
dynamic capabilities.
 A competency is a cross-functional integration and
coordination of capabilities.
 A core competency is a collection of competencies that
crosses divisional boundaries, is widespread within the
corporation, and is something that the corporation can
do exceedingly well.
Ex. Core competency of AVON Products
Core and Distinctive Competencies
 VRIO Framework – (Barney) for defining
Distinctive Competencies
Value – Does it provide customer value and competitive
advantage?
Rareness – Do no other competitors possess it?
Imitability – It is costly for others to imitate?
Organization – Is the firm organized to exploit the
resource?
 5-Step Resource Approach to Strategy Analysis – (Grant)
1. Identify and classify resources
2. Combine strengths into capabilities
3. Appraise profit potential of capabilities
4. Select strategy that best exploits strengths
5. Identify resource gaps invest in weaknesses
SUSTAINABILITY OF AN ADVANTAGE

 Durability –
Rate at which a firm’s underlying resources and capabilities
depreciate or become obsolete

 Imitability –
Rate at which a firm’s underlying resources and capabilities can be
duplicated by others
– Transparency
– Transferability
– Replicability

 Explicit versus Tacit Knowledge

 Business Model
company’s method for making money in the
current business environment.
Five Elements of Business Model
• Who it serves?
• What it provides?
• How it makes money?
• How it differentiates itself?
• How it provides products/services?
 Types of Models
Customer Solutions Model – is the consulting model.
Profit Pyramid Model – this model is to get the customer to buy at low
priced, low margin entry point and move them up to high priced, high
margin products.
Multi-Component System/Installed Base Model – not just one
product but with one component providing most of the profits
Advertising Model – model that offers its basic product free in order
to make money on advertising.
Switchboard Model – a firm acts as an intermediary to connect
multiple customers to multiple buyers.
Time Model – first to market with a new innovations
Efficiency Model – a company waits until a product becomes
standardized and then enters the market with a low priced
Blockbuster Model – spending large amounts of money in research/
development or results hoping for some to turn out as a sucesful.
Profit Multiplier Model – model that develop a concept that
may or may not money on its own but can spin off many
profitable products.
Entrepreneurial Model – company offers specialized
product/services to market that are too small to be worthwhile to
large competitors but have the potential to grow quickly.
De Facto Standard Model – company offers products free or
at a very low price in order to saturate the market and
become the industry standard
 Value Chain
Linked set of value-creating activities beginning with basic raw
material and ending with distributors getting final goods into
hands of customers

 Typical Value Chain for a Manufactured Product

Corporate Value Chain Analysis
1. Examine each product line’s value chain in terms of
activities involved.
2. Examine the linkages within each product’s value chain.
3. Examine the potential synergies among the value chains of
different product lines.
FUNCTIONAL RESOURCES AND CAPABILITES

 Basic Organizational Structures

– Simple structure – few products/small firm
– Functional structure – functional specialists
– Divisional structure – many product lines
Strategic business units (SBU’s)
1. a unique mission.
2. identifiable competitor
3. an external market focus
4. control of it’s business functions
Conglomerate Structure
- appropriate for a large corporation with many
product lines in several unrelated industries.
Sometimes called “holding companies”
- typically an assemblage of legally independent
firms (subsidiaries) operating under one
corporate umbrella but controlled through the
subsidiaries’ boards of directors.
 Corporate Culture
Collection of beliefs, expectations, and values learned and
shared by a corporation’s members and transmitted from
one generation of employees to another

 Attributes
• Intensity – degree of acceptance
• Integration – shared values
Functions of Corporate Culture
1. Convey a sense of identity for employees
2. Generate employee commitment to the organization
3. Adds to the stability of the organization social system
4. Serves as a frame of reference for employees to make sense
of organizational activities and as a guide for behavior
 Strategic Marketing Issues
– Market Position & Segmentation
– Marketing Mix
– Product Life Cycle
– Brand & Corporate Reputation
 Marketing Mix Variables
STRATEGIC FINANCIAL ISSUES

– Financial leverage
 Ratio of total debt to total assets
– Capital budgeting
 Analysis and ranking of investments in fixed assets
based on a hurdle rate
STRATEGIC RESEARCH AND DEVELOPMENT ISSUES

– R&D Intensity
 Spending as a % of sales

– Technological Competence
 Ability to develop and innovate

– Technology Transfer
 Ability to move products from research to
the market
R & D Mix
Basic
theoretical research leading to patents and publication
Product
product and packaging development focused on sales and profit
increase
Engineering/Process
concentrating on manufacturing quality and efficiency
TECHNOLOGICAL DISCONTINUITY
STRATEGIC OPERATION ISSUES
Manufacturing Systems
 Intermittent (Job Shop)
 High variable costs
 Profit/unit is low above break-even
 Can operate at relatively low production rates
 Continuous (Automated/Assembly Lines)
 High fixed cost/Small labor force
 Breakeven is relatively high
 Profitability is at higher levels of production

Experience Curve
Production costs decline by 20 – 30% every time production
doubles.
STRATEGIC HUMAN RESOURCE MANAGEMENT ISSUE
 HRM –

– Increasing use of teams

– Union relations
– Temporary workers
– Quality of work life
– Human diversity
STRATEGIC INFORMATION SYSTEM ISSUES
Information Systems Impact of Corporate Performance
1. Automation of back office systems (1970’s - Mainframes)
2. Automate the individual’s tasks (1980’s - PC)
3. Enhance key business functions (1990’s - Business Process
Software)
4. Create a competitive advantage (2000’s –
Internet/Intranet/Extranets)
INTERNAL FACTOR ANALYSIS SUMMARY TABLE
 Reference:
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
Thomas L. Wheelen
J. David Hunger