CHAPTER 5 Internal Scanning Organizational Analysis STRATEGIC MANAGEMENT

CHAPTER 5 Internal Scanning: Organizational Analysis STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1

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 2

Resource-Based Approach to Organizational Analysis • Resources • Capabilities • Competency • Core competency • Distinctive competency 3

Core and Distinctive Competencies VRIO Framework -–Value –Rareness –Imitability –Organization 4

Resource-Based Approach to Organizational Analysis 5 -Step Approach Strategy Analysis -1. 2. 3. 4. 5. Identify and classify resources Combine strengths into capabilities Appraise profit potential of capabilities Select strategy that best exploits Identify resource gaps invest in weaknesses 5

Continuum of Sustainability 6

Sustainability of Advantage Durability -–Rate at which a firm’s underlying resources and capabilities depreciate or become obsolete 7

Sustainability of Advantage Imitability -–Rate at which a firm’s underlying resources and capabilities can be duplicated by others 8

Sustainability of Advantage Core Competency can be imitated -–Transparency –Transferability –Replicability 9

Business Models Company’s method for making money in the current business environment. 10

Business Models Types of Models -–Customer Solutions Model –Profit Pyramid Model –Multi-Component System/Installed Base Model –Advertising Model –Switchboard Model 11

Business Models Types of Models -–Time Model –Efficiency Model –Blockbuster Model –Profit Multiplier Model –Entrepreneurial Model –De Facto Standard Model 12

Value-Chain Analysis Linked set of value-creating activities beginning with basic raw material and ending with distributors getting final goods into hands of customers 13

Value-Chain Analysis Typical Value Chain for a Manufactured Product 14

Corporate Value-Chain Analysis • Primary activities • Support activities 15

Corporation’s Value Chain 16

Scanning Functional Resources & Capabilities Basic Organizational Structures -–Simple structure –Functional structure –Divisional structure –Strategic business units (SBU’s) –Conglomerate structure 17

Basic Organizational Structures 18

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 19

Strategic Marketing Issues –Market Position & Segmentation –Marketing Mix –Product Life Cycle –Brand & Corporate Reputation 20

Product Life Cycle 21

Strategic Financial Issues –Financial leverage –Capital budgeting 22

Strategic Research & Development Issues –R&D Intensity –Technological Competence –Technology Transfer 23

Technological Discontinuity 24

Strategic Human Resource Management Issues HRM – –Increasing use of teams –Union relations –Temporary workers –Quality of work life –Human diversity 25

Internal Factor Analysis Summary Table 26