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Internal Scanning:

Internal Scanning:. Organizational Analysis. Homework . CASE 11 : McAfee 2005: Anti-virus and Anti-spyware  questions: Conduct SWOT analysis. Prepare EFA and IFA. A Comprehensive Strategic Management Model. Feedback. Perform external audit. Develop Mission statement.

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Internal Scanning:

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  1. Internal Scanning: Organizational Analysis Chapter 4 Wheelen/Hunger

  2. Homework • CASE 11: McAfee 2005: Anti-virus and Anti-spyware •  questions: • Conduct SWOT analysis. • Prepare EFA and IFA Chapter 4 Wheelen/Hunger

  3. A Comprehensive Strategic Management Model Feedback Perform external audit Develop Mission statement Establish long term objectives Generate, Evaluate, and select strategies Establish policies and annual objectives Allocate resources Measure and evaluate performance Perform internal audit Formulation Evaluation Implementation Chapter 4 Wheelen/Hunger

  4. Situational Analysis • SWOT -- • Internal • Strengths/Weaknesses • External • Opportunities/Threats Chapter 4 Wheelen/Hunger

  5. TOWS Matrix Chapter 4 Wheelen/Hunger

  6. Resource-Based Approach 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. Chapter 4 Wheelen/Hunger

  7. Resource-Based Approach Resource: An asset, competency, process, skill, or knowledge controlled by the corporation. Chapter 4 Wheelen/Hunger

  8. Evaluating Key Resources VRIO Framework • How to identify the key resources? Base on four criteria: • Value: Does it provide competitive advantage? • Rareness: Do other competitors possess it? • Imitability: Is it costly for others to imitate? • Organization: Is the firm organized to exploit the resource? • If the answer is use to all it is considered distinctive competence. Chapter 4 Wheelen/Hunger

  9. Core and distinctive competencies • Capabilities: organization ability to utilize its resources. Its business process and routine. • Competency: cross-functional integration and coordination of capabilities. E.g., new product development. • Core-competency: collection of competencies that crosses divisional boundaries. E.g., new product development is a core-competency if it goes beyond one division. • Distinctive competencies: when core- competencies are superior to those of the competitions. Chapter 4 Wheelen/Hunger

  10. Keys of Strategic Outsourcing Success 1- Understand the bus core competencies. ‘What it gives competitive Differentiation’ Core comp. Is the integration of technologies, constituent skills and collective learning which makes healthy bus. 2- Mapping out the work of bus. 3- Requires trust between parties 4- Understand the type of work of bus. Chapter 4 Wheelen/Hunger

  11. Competitive advantage analysis • Analyzing competences and core competences: The analysis here determines how resources are deployed Competitive advantage is built on the uniqueness of resources or on the core competences. Chapter 4 Wheelen/Hunger

  12. Strategic Outsourcing for Competitive Advantage • Used mainly for downsizing and cost reductions at corporations. • Usually corps outsourcing non-essential work, why? To free valuable resources and focus on its areas of competitive advantage. To do this org. must know its core competences. Chapter 4 Wheelen/Hunger

  13. Why some nations are more competitive than others? • M. Porter in his diamond, suggests that there are inherited reasons why some nations are more competitive, and there organizations are as well, than others. • Porter believes that national home base of an organization influence the global success of organization. Chapter 4 Wheelen/Hunger

  14. Porter’s Determinants of National Advantage There are four forces: 1- The conditions of the nation, availability of skills, infrastructure. 2- Home country’s demand for products. 3- The presence or absence of supporting industries. 4- The firm’s strategy, structure, rivalry, establishment process.. Chapter 4 Wheelen/Hunger

  15. Four Nation’s Distinct Strategies • S-O, or maxi-maxi • S-T, or maxi-mini • W-O, or mini-maxi • W-T, or mini-mini Chapter 4 Wheelen/Hunger

  16. Resource-Based Approach 5-Step approach to strategy analysis: • 1- Identify & classify firm’s resources • Strengths & weaknesses • 2- Combine firm’s strengths into capabilities • Core competencies • Distinctive competencies Chapter 4 Wheelen/Hunger

  17. Resource-Based Approach 5-Step approach to strategy analysis: • 3- Appraise the Profit potential of resources • Sustainable competitive advantage • 4- Select strategy • Exploits firm’s resources relative to external opportunities • 5- Identify resource gaps • Invest in upgrading weaknesses Chapter 4 Wheelen/Hunger

  18. Determining the Sustainability of an Advantage Durability: Rate at which a firm’s underlying\basic resources and capabilities (core competencies) depreciate or become obsolete. E.g., new technology can make the company core competency irrelevant. Chapter 4 Wheelen/Hunger

  19. Sustainability of an Advantage Imitability: Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others. Chapter 4 Wheelen/Hunger

  20. Core Competencies Imitability of core competencies determined by: • Transparency/clearly understood • Transferability. Ability of competitors to gather necessary resources and capabilities. • Replicability/ do it exactly by the competitors :imitate other firms’ success. Chapter 4 Wheelen/Hunger

  21. Core Competencies Is it easy to imitate another company’s core competency? Depends if it comes from: Explicit Knowledge: • Knowledge that can be easily articulated and communicated. Tacit/unexpressed Knowledge: • Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation’s culture . Chapter 4 Wheelen/Hunger

  22. Resource Sustainability Chapter 4 Wheelen/Hunger

  23. Competitive advantage analysis • Steps of analyzing competences: 1- Value chain analysis: describes the activities within and around the organization, and relates them to an analysis of the competitive strength of the organization. 2- the bases of core competences. Chapter 4 Wheelen/Hunger

  24. Corporate Value Chain Chapter 4 Wheelen/Hunger

  25. Corporate Value Chain Analysis steps: • Examine each product line’s value chain • Core competencies & core deficiencies • Examine the “linkages” within each product line’s value chain • Connections between the way one value activity is performed and the cost of performance of another activity • Examine the synergies among the value chains of different product lines or business units • Economies of scope Chapter 4 Wheelen/Hunger

  26. Value Chain • قدمها مايكل بورتر في كتابة الميزة التنافسية. • تقوم على تحليل سلسة الأنشطة التي تؤديها الشركة ومن خلالها يمكن تحديد مصادر الميزة التنافسية للشركة. • وتقوم فكرة التحليل على المقارنة مع أكبر المنافسين • قسم بوتر الأنشطة إلى مجموعتين: 1- الأنشطة الأولية 2- الأنشطة المساعدة Chapter 4 Wheelen/Hunger

  27. Value Chain 1- الأنشطة الأولية: الامدادات الداخلية- العمليات التشغيل والتصنيع- المخرجات من المنتجات- التسويق والمبيعات- الخدمة 2- الأنشطة المساعدة: البنية الأساسية للشركة مثل محاسبة- إدارة الموارد البشرية- التطور التكنولوجي والبحوث- عملية شراء المدخلات Chapter 4 Wheelen/Hunger

  28. Competitive advantages • When competitive advantage is materialized? When a firm earns persistently higher rate of profit over its rivals. • Determinants of profit level 1- Value of company products in customers’ eyes. 2- Company production cost. Chapter 4 Wheelen/Hunger

  29. Competitive advantage • It can be created in certain industrial field, through the adoption of low-cost-differentiation strategy. . M. Porter Chapter 4 Wheelen/Hunger

  30. Bases of establishing competitive advantages 1- الكفاءة Efficiency: output/input إن إنتاجية الموظف هي أهم مكونات الكفاءة. 2- الجودة: Quality التي تزيد من قيمة المنتج في اعين المستهلكين. 3- التجديد Innovation : أي شىء جديد يتعلق بادارة الشركة ومنتجاتها. 4- الاستجابة لحاجات العميل : وهذا يتطلب القدرة على معرفة حاجات العميل واشباعها بشكل متميز. Chapter 4 Wheelen/Hunger

  31. What is the success strategy • The strategy which enables organizations developing new advantages, or maintaining the existing advantages. Chapter 4 Wheelen/Hunger

  32. Market segmentation analysis • It aims to identify similarities and differences between groups of customers or users . Not all customers are the same. • Some criteria for market segmentation: • Characteristics of customers (e.g., income, gender), • Purchase situation (e.g., behavior, its size, importance), • Users needs and preferences for product characteristics (e.g., quality, price, brand). Chapter 4 Wheelen/Hunger

  33. Assessing Effectiveness Value added • Customer requirements • Product attributes • Service expectations • Price sensitivity Degree of Matching • Value-added features • Product features • Service performance • communication Chapter 4 Wheelen/Hunger

  34. What is efficiency and effectiveness? Management (cont.) elements of definition Efficiency - getting the most output from the least amount of inputs “doing things right” concerned with means Effectiveness - completing activities so that organizational goals are attained “doing the right things” concerned with ends 1-34 Chapter 4 Wheelen/Hunger

  35. Boston Consulting Group Matrix • It portrays differences among divisions in terms of relative market share position and industry growth rate. • The matrix allows multidivisional corp. to manage its portfolio of business effectively. Chapter 4 Wheelen/Hunger

  36. Boston Consulting Group Matrex مصفوفه بوستن Relative market share الحصة السوقية high 11 low 0.5 0.0 20+ high Industrial Growth Rate معدل نمو الصناعة % 0 low 20- Chapter 4 Wheelen/Hunger

  37. Benchmarking • . Benchmarking is the search for the best practices among competitors or non-competitors that lead to their superior performance. • The benchmarking process typically follows four steps. • a. A benchmarking planning team is formed. The team’s initial task is to identify what is to be benchmarked, identify comparative organizations, and determine data collection methods. • b. The team collects internal and external data. • c. The data is analyzed to identify performance gaps and to determine the cause of the difference. • d. An action plan is prepared and implemented. 9 -

  38. Steps In Benchmarking Best Practices Gather internal and external data Analyze data to identify performance gaps Form a benchmarking planning team Prepare and implement action plan © Prentice Hall, 9-38

  39. Suggestions for improving benchmarking • Link benchmarking efforts with strategic objectives. • Have the right size team -6-8 persons. • Involve those people who will be directly affected by the benchmarking. • Focus on specific targeted issues rather than broad. • Set realistic timetable. 9 -

  40. Goals & Objectives Defined • Goals: The desired general ends towards which efforts are directed e.g., expand firm size. • Objectives: are specific quantified, e.g., increase sales by 10% each year. • “We may derive a number of objectives from a goal” Chapter 4 Wheelen/Hunger

  41. Long-Term Objectives • Objectives: Specific results an organization seeks to achieve in pursuing its basic mission. • Long-term objective: More than 3 years. Objectives should be: challenging, measurable, consistent, reasonable and clear. Ex. Our objective is to achieve 20% return on equity. Chapter 4 Wheelen/Hunger

  42. Annual Objectives • Short-term that the organization must achieve to reach long-term objectives. Objectives Characteristics: Measurable, quantitative, challenging, realistic, consistent and prioritized. Annual objectives are important for strategy implementation, whereas, long-term objectives are important for strategy formulating. Chapter 4 Wheelen/Hunger

  43. Objectives • We must avoid generalities e.g.: maximize profits reduce costs become more efficient increase sales Chapter 4 Wheelen/Hunger

  44. Difference between Long term planning and Strategic planning • Long term planning: The goals and objectives are based on the assumption of org. stability. • Strategic planning: The role of the org. is examined within the context of its environment. Chapter 4 Wheelen/Hunger

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