Organisational appraisal

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Framework for the development of strategic advantage by an organisation

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STRATEGIC ADVANTAGE

ORGANISATIONAL CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND WEAKNESSES

ORGANISATIONAL BEHAVIOUR

ORGANISATIONAL RESOURCES
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ORGANISATIONAL RESOURCES
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Firm is bundle of resources tangible / intangible

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P Physical resources h y s i H Human resources c u a m l a r n O Organizational resources e r s e g o s a u o n r u i c r z e c a s e 2/27/12 DR SUNANDA MITRA ti

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Physical resources Plant / equipment Technology Geographical location Access to raw material

Human Organizational resources resources relations Informal hip relationship judgment Formal system Training Experien ce Intelligen ce

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Strategic advantage can be get if resources possessed

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Organizational behaviour

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Unique in sense

Special identity

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Quality of leadership

Management philosophy

Shared values

culture

Quality of work environment

Organizational politics
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Hard side (resources)

Marriage

Soft side (behaviour)

Together they produce strength & weakness for organization 2/27/12 DR SUNANDA MITRA

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Strength & weakness

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Strength & weakness dont exist in isolation

They should be combined

Strength (inherent

Weakness(inherent limitation)

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Synergistic effect

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Strong point

Bigger strong point

Strong point

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Weak

Bigger Weak point

Weak

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competencies

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Resources + behaviour

Strength / weakness

Synergistic effect

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Mostly developed in functional areas

FINANCE, MARKETING, R&D ..

Exix ts

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Finance capability

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AVAIBILITY

USAGE

MANAGEMENT OF FUNDS

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Sources Of Funds

Usage Of Fund Relationship With Shareholders Current Assets Fixed Assets Capital Investment Dividend Distribution

Management Of Funds

Credit Availability Reserves & Surplus Procureme nt Of Capital Capital Structure Working Capital

Inflation Return & Risk Management Budgeting System Financial Health

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STRENGTHS FOR FINANCIAL CAPABILITIES ACCESS TO FINANCIAL RESOURCES

GOOD RELATIONSHIP WITH FINANCIAL INSTITUTIONS

EFFICIENT CAPITAL BUDGETING

LOW COST OF CAPITAL

SHAREHOLDERS CONFIDENCE

TAX BENEFIT

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MARKETING CAPABILITIES

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STRENGTH FOR MARKETING FACTORS

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OPERATIONAL CAPABILAITIES
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LOCATION, LAYOUT, PRODUCT DESIGN, AUTOMATION,

PRODUCTION PLANNING, MATERIL SUPPLY, COST & QUALITY CONTROL,

PRODUCT DEVELOPMENT , TECHNOLOGY USED

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I T C R F H N O E A I C N L V G E T I A H N R A U T I O B R L O C L A E R A E B V Y L E S E L C O U P O N E L F T L C A R A E N C O B T A L R O P F L A T O C S C I

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PERSONNEL CAPABILITIES

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PESONNE PESONNE L SYSTEM L SYSTEM

ORG. EMPLOYEES ORG. EMPLOYEES CHARECTERISTICS CHARECTERISTICS

INDUSTRIAL INDUSTRIAL RELATION RELATION

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General management capability

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General management system

General managers

External relationship

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Methods & techniques used for organizational appraisal

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INTERNAL INTERNAL ANALYSIS ANALYSIS

COMPARATIVE COMPARATIVE ANALYSIS ANALYSIS

COMPREHENSIVE COMPREHENSIVE ALANIYSIS ALANIYSIS

VALU E CHAI QUANTATIVE N ANALYSIS HIST ORIC AL INDUST RY NORMS BENC HMAR KING BALANCE SCORE CARD KEY 2/27/12 FACTOR

VALUE CHAIN QUANTATIVE ANALYSIS HIST ORIC AL INDUSTR Y NORMS BENCH MARKI NG BALANCE SCORE CARD KEY FACTOR DR SUNANDA MITRA RATING

VALUE CHAIN QUANTATIVE ANALYSIS HISTO RICAL INDUSTRY NORMS BENCHM ARKING BALANCE SCORE CARD KEY FACTOR 4545 RATING

INTERNAL ANALYSIS
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Strengths Possessed Resources developed capabilities Weaknesses lacking Resources deficient capabilities

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Second level

Third level

Fourth level Fifth level

Prevents an organization from developing a sustainable competitive advantage

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Value Chain Analysis

Value Chain Analysis Customers want (demand) some type of value from the goods and services they purchase or obtain Customer value arises from

(1) Uniqueness of product or service (2) Low-priced product/service (3) Quick response to specific or distinctive customer needs

Allow assessment of cost

VALUE CHAIN Michael porter MITRA 2/27/12 DR SUNANDA (1985)

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The Value Chain

The value chain identifies the separate activities and business processes performed(inter-linked activities) to create customer value. Consists of two types of activities Primary activities : create customer value Inbound logistics, Operations; Outboard logistics; Sales & Marketing; & Customer Service Support activities: Support primary activities Procurement; Technological development; HRM; General Administration (Firm infrastructure)

A Typical Value Chain

rimary Activities and Costs

Inbound Logistics

Operations

Outbound Logistics

Sales and Marketing

Service

Profit Margin

rocurement; purchasing, physical recourses, Product R&D, Technology, Human Resources Management General Administration (Firm Infrastructure) Support

The Value Chain System

Upstream Value Chain Firms Own Value Chain

Downstream Value Chains

Activities, Costs, & Margins of Suppliers

Internally Performed Activities, Costs, & Margins

Activities, Costs, & Margins of Forward Channel Allies & Strategic Partners

Buyer/User Value Chains

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Identifying a Companys Capabilities and Value Chain

Functional Area
Corporate head office Management information Research and development Manufacturing Product design Marketing Sales and distribution

Capability
Capability in basic research Ability to produce innovative products Speed of new product development

Example
e.g., IBM, AT&T, Sony APPLE Canon

Source: Robert M. Grant, Contemporary Strategy Analysis, Basil Blackwell, 1991.

Soft Drinks Industry

Processing of basic ingredients Syrup manufacture Bottling & can filling Wholesale distribution Retailing

Computer Software Industry

Programming

COMPARATIVE ANALYSIS COMPARATIVE ANALYSIS

HISTORICAL

INDUSTRY NORMS

BENCHMARKING
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BENCHMARKING

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process of identifying "best practice" in relation to both products & processes search for "best practice" can take place both inside a particular industry, also in other industries

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The objective To understand and evaluate current position of a business organisation

The Benchmarking Process

Understand in detail existing business the processes Analyse the business or processes of others

Compare own In relation to "best business practice" & performance with 2/27/12 DR SUNANDA MITRA GHOSH 5959 that of others To identify areas of analysed performance Implement the steps improvement.

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Types of Benchmarking
Type Description Most Appropriate for the Following Purposes
Re-aligning business strategies that have become inappropriate

Strategic Benchmarking

Performance or Competitive Benchmarking

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Assessing relative level of performance in key areas or activities in comparison with others in the same sector 6161 and finding ways of

Type

Description

Functional Benchmarking

External Benchmarking

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To benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions can lead to innovation and dramatic improvements. Involves analysing Where examples of outside organisations good practices can be that are known to be found in other organisation best in class. External benchmarking s and there is a lack of provides opportunities good practices of learning from those within internal who are at the "leading business units 6262 DR SUNANDA MITRA

Most Appropriate for the Following Purposes Improving activities or services for which counterparts do not exist

are there lessons to be learned from other industries

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Metro systems have grabbed the imagination of urban planners in India

UNCOMMON BUREAUCRAT

The Delhi Metro Rail Corporation (DMRC), which implemented the Metro network ahead of schedule Nearly three years ahead of schedule and on budget, Now consultant for many projects The corporation has also been a consultant to Jakarta Mass Rapid Transit System in Indonesia. Of cials from Pakistan, Ireland, Syria, Sri Lanka and Vietnam have
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For lack of funds, he went overseas, tapping the Japan Bank of International Cooperation for loans to cover 60% of the cost. By comparison, it took the city of Kolkata 22 years to build its own metro because of a paucity of funds. Looked world for top companies with extensive experience in the field. Pacific Consultants International from Japan advised on the engineering matters, Korea's Rotem and Japan's Mitsubishi supplied the initial shipment of coaches, France's Alstom responsible for the design of the automatic train control system.

also interacted with the DMRC.

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INTERNAL INTERNAL ANALYSIS ANALYSIS

COMPARATIVE COMPARATIVE ANALYSIS ANALYSIS

COMPREHENSIVE COMPREHENSIVE ALANIYSIS ALANIYSIS

VALU E CHAI QUANTATIVE N ANALYSIS HIST ORIC AL INDUST RY NORMS BENC HMAR KING BALANCE SCORE CARD KEY 2/27/12 FACTOR

VALUE CHAIN QUANTATIVE ANALYSIS HIST ORIC AL INDUSTR Y NORMS BENCH MARKI NG BALANCE SCORE CARD KEY FACTOR DR SUNANDA MITRA RATING

VALUE CHAIN QUANTATIVE ANALYSIS HISTO RICAL INDUSTRY NORMS BENCHM ARKING BALANCE SCORE CARD KEY FACTOR 6666 RATING

COMPREHENSIVE ALANIYSIS COMPREHENSIVE ALANIYSIS

BALANCE SCORE CARD

KEY FACTOR RATING

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BALANCE SCORE CARD

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Balanced Scorecard

Balanced Scorecard A model integrating financial and non financial measures.

(Kaplan & Norton 1996)

Causal link between outcomes drivers of such outcomes

and

performance

Translates the vision and strategy of a business unit into objectives and measures in 4 distinct areas Financial Customer Internal Business process Learning and growth

BALANCED SCORECARD- KAPLAN & NORTON

4 performance measures Customer perspective Internal business perspective Innovation & learning perspective Financial perspective

The Balanced Scorecard

Purpose of Balanced Scorecard:
A method of implementing a business strategy by translating it into a set of performance measures derived from strategic goals that allocate rewards to executives and managers based on their success at meeting or exceeding the performance measures.

BSC as a Measurement System

Financial

Customer Relations

Vision and Strategy

Internal Service Process

Learning, Innovation and Growth

Casual link between the measures

Financial Perspective How do we look to our Shareholders?

Customer Perspective How do our customers look at us? Learning and Growth Perspective How can we continue to improve?

Internal Business Perspective What we must excel at?

BSC: Causal Relationships

Strategy

Customer

Financial

Internal Process

Learning

Linking BSC and Strategy

Learning & Growth Drivers Outcomes

Strategic Initiatives

Internal Process Drivers Outcomes

Financial Goals

Customer Perspective Drivers Outcomes

BALANCED SCORECARDKAPLAN & NORTON

4 performance measures Customer perspective Internal business perspective Innovation & learning perspective Financial perspective

The US Army was one of the first users of the balanced scorecard - and still uses it today, all round the world.

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The USACE and the balanced scorecard The US Army Corp of Engineers (USACE), presence from Belize to New Zealand, measures its performance across a basket of strategic measures
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AT LAST
1.

Translating the vision into operational goals; Communicating the vision and link it to individual performance; Business planning; index setting Feedback and learning, and adjusting the strategy accordingly.
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2.

3. 4.

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