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Management Audit and Environmental Analysis

Management Audit and Environmental Analysis. Geoff Leese October 2005 Revised September 2006, July 2007, August 2008, August 2009. SWOT analysis. Strengths Weaknesses Opportunities Threats. Internal (Management audit). External (Environmental Scanning). Management audit. The 7-S model

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Management Audit and Environmental Analysis

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  1. Management Audit and Environmental Analysis Geoff Leese October 2005 Revised September 2006, July 2007, August 2008, August 2009

  2. SWOT analysis • Strengths • Weaknesses • Opportunities • Threats Internal (Management audit) External (Environmental Scanning)

  3. Management audit • The 7-S model • Value chain analysis • Network analysis

  4. McKinsey’s 7-S Framework • Strategy • Structure • Systems • Shared Values • Staff • Skills • Style

  5. an approach to organising • aid to building a cohesive strategy • all equally important • 7 interdependent variables • change one, impacts others • use this to evaluate strategy developments • soft is harder to measure • good for capturing importance of the links

  6. Value chain analysis (Porter) • Views the organisation as a chain of value-creating activities. • Must create sufficient value to exceed their cost thus generating profit (or at least not generating loss!) • Primary and support value chain activities

  7. Primary value chain activities Operations Inbound logistics Sales and marketing Outbound logistics Service Any or all of these can be important in a given scenario – sometimes defining them is not so simple!

  8. Support value chain activities • Procurement • Technology development • Human Resource Management • Infrastucture management • Legal, financial, QA, estates and buildings etc

  9. Value chain analysis • Identify the activities and process flows • Identify linkages between activities • Identify ways to optimise the value chain • Outsourcing? • Involving the customer? • On-line booking • Self-assembly furniture • Involving suppliers?

  10. Organisational network analysis • Social network analysis applied to organisations • Maps “nodes” (people, groups, functions) and the interactions between them (relationships or flows) • Measures “centrality” of nodes (their importance) using mathematical criteria

  11. Some ONA criteria • Degrees (number of direct connections) • Betweenness (nodes that connect other nodes ) • Closeness (short paths to many nodes)

  12. An ONA diagram

  13. Environmental scanning(1) • Macro environment • PEST,SLEPT,STEP • Micro-environment • Competitors, suppliers, distributors, customers • Methods • Ad-hoc (usually in response to crisis!) • Regular scheduled • Continuous

  14. Macroenvironmental scanning • PEST (STEP, SLEPT) analysis • Political (includes legal!) • Economic • Social (includes “Green”) • Technological

  15. Political factors • Taxation • Employment/Health and Safety law • Regulation/deregulation • Trade restrictions and tariffs (or lack of them!) • Political stability

  16. Economic factors • Connected to political ones • Economic cycle • Growth or recession? • Interest rates • Inflation rates • Exchange rates

  17. Social factors • Demography • Age distribution • Geographical distribution • Cultural norms • “How we live”

  18. Technology factors • Rate of technological change • Automation • Technology incentives • Emerging technologies • Levels of R&D activity

  19. Microenvironmental scanning • Competitor analysis • Competitor array • Competitor profiling • Consumer analysis (market research) • Product innovations

  20. Competitor array example Should we include ourselves?

  21. The SWOT matrix

  22. SWOT Strategies • Strength-Opportunity • Make use of strengths to grasp opportunities that fit them • Strength-Threat • Identify ways to use strengths to minimise external threats • Weakness-Opportunity • Overcome weaknesses to pursue opportunities • Weakness-Threat • Prevent weaknesses from encouraging threats

  23. Summary • SWOT analysis • Assess and analyse strengths and weaknesses • Seven S • Value chain • Organisational network analysis • Assess and analyse opportunities and threats • PEST analysis • Competitor analysis • Market research • Devise strategies based on all four

  24. Further reading • Bennett Chapter 5 • Johnson and Scholes chapters 3 and 4 • For ONA – • http://www.orgnet.com/sna.html • General strategic management stuff • http://www.geocities.com/WallStreet/District/6592/

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