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Economic. Sociocultural. Environment. Demographic. General. Industry Environment. General. Global. Competitor Environment. Environment. Environment. Political/Legal. General. Technological. External and Internal Analyses.

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External and Internal Analyses


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external and internal analyses

Economic

Sociocultural

Environment

Demographic

General

Industry

Environment

General

Global

Competitor

Environment

Environment

Environment

Political/Legal

General

Technological

External and Internal Analyses

By studying the external environment, firms identify what they might choose to do

Opportunities and threats

external and internal analyses1

The Firm

External and Internal Analyses

Externaland Internal Analyses

By studying the internal environment, firms identify what they can do

Unique resources, capabilities, and core competencies

(sustainable competitive advantage)

components of internal analysis

Discovering Core

Competencies

Value Creation

Value

Chain

Analysis

Four Criteria

of Sustainable

Advantages

Core

Competencies

Competitive

Advantage

Capabilities

  • Valuable
  • Rare
  • Costly to Imitate
  • Nonsubstitutable
  • Resources
  • Tangible
  • Intangible
  • Outsource
Components ofInternal Analysis
challenge of internal analysis
Challenge of Internal Analysis
  • How do we effectively manage current core competencies while simultaneously developing new ones?
  • How do we assemble bundles of resources, capabilities and core competencies to create value for customers?
  • How do we learn to change rapidly?
conditions affecting managerial decisions about resources capabilities and core competencies
Conditions Affecting Managerial Decisions About Resources, Capabilities, and Core Competencies
  • Uncertaintyregarding characteristics of the general and the industry environments, competitors’ actions, and customers’ preferences
  • Complexityregarding the interrelated causes shaping a firm’s environments and perceptions of the environments
  • Intraorganizational Conflictsamong people making managerial decisions and those affected by them
slide6

Discovering Core

Competencies

  • Resources
  • Tangible
  • Intangible

Resources are what a firm has to work with--its assets--including its people and the value of its brand name

Resources represent inputs into a firm’s production process... such as capital equipment, skills of employees, brand names, finances and talented managers

slide7

Discovering Core

Competencies

  • Resources
  • Tangible
  • Intangible
  • Tangible Resources
  • Financial
  • Organizational
  • Physical
  • Technological
  • Intangible Resources
  • Human
  • Innovation
  • Reputation
slide8

Discovering Core

Competencies

Capabilities

Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage

slide9

Discovering Core

Competencies

Capabilities

Capabilities are what a firm does, and represent the firm’s capacity to deploy resources that have been purposely integrated to achieve a desired end state

slide10

Discovering Core

Competencies

Core

Competencies

Core competencies are resources and capabilities that serve as a source of competitive advantage over rivals

Core competencies distinguish a company competitively and make it distinctive

McKinsey and Co. recommends using three to four competencies when framing strategic actions

slide11

Discovering Core

Competencies

Four Criteria

of Sustainable

Advantages

  • Valuable
  • Rare
  • Costly to Imitate
  • Nonsubstitutable

Valuable: Capabilities that help a firm neutralize threats or exploit opportunities

slide12

Discovering Core

Competencies

Four Criteria

of Sustainable

Advantages

  • Valuable
  • Rare
  • Costly to Imitate
  • Nonsubstitutable

Rare: Capabilities that are not possessed by many others

slide13

Discovering Core

Competencies

Four Criteria

of Sustainable

Advantages

  • Valuable
  • Rare
  • Costly to Imitate
  • Nonsubstitutable
  • Costly to imitate: capabilities that other firms cannot develop easily, usually due to
  • Unique historical conditions
  • Causal ambiguity
  • Social complexity
slide14

Discovering Core

Competencies

Four Criteria

of Sustainable

Advantages

  • Valuable
  • Rare
  • Costly to Imitate
  • Nonsubstitutable
  • Nonsubstitutable: capabilities that do not have strategic equivalents
  • Invisible to competitors
  • Firm specific knowledge
  • Trust-based working relationships between managers and nonmanagerial personnel
sustainability of a competitive advantage
Sustainability of a Competitive Advantage
  • Sustainability of a competitive advantage is a function of:
    • the rate of core-competence obsolescence due to environmental changes
    • the availability of substitutes for the core competence
    • the imitability of the core competence
core competencies cautions and reminders
Core Competencies: Cautions and Reminders
  • Never take for granted that core competencies will continue to provide a source of competitive advantage
  • All core competencies have the potential to become core rigidities
  • Core rigidities are former core competencies that now generate inertia and stifle innovation
slide17

SWOT MATRIX

  • Opportunities
  • External
  • Future Oriented
  • Niches
  • Strengths
  • Internal
  • Competitive Advantage
  • Distinctive Competence
  • Threats
  • External
  • Vulnerability
  • Attack Point
  • Weaknesses
  • Internal
  • Disadvantage
  • Area for Improvement
  • Purposes
  • Qualitative Assessment of Current Condition
  • Competitor Assessment
  • Strategic “What-if” Analysis
  • Product to Business Unit to Corporate Analysis