Assessing Strengths and Weakness: an Internal Analysis

1. Assessing Strengths and Weakness:an Internal Analysis Austin Bastian Philip Winfield Dana Cook Tyler Buschman Jordan Jones Ian Walraven Stephanie Light Bryson Bell

2. What is an Internal Analysis? • Internal Analysis- the process of evaluating and organization’s resources and capabilities. • Provides important information about an organization’s assets, skills, and work activities. • Most important part is looking at the organization’s resources, capabilities, and core competencies.

3. Review of Organizational Resources • Financial Resources • Physical Resources • Human Resources • Intangible Resources • Structural-Cultural Resources

4. Hallmark Case • Dedicated to being the “best” • Beliefs • Products and services enrich people’s lives • Creativity and quality are essential to success • The people of Hallmark are most valuable resource

5. Hallmark Case • Values • Excellence in all we do • High standards of ethics and integrity • Caring and responsible corporate citizenship for Kansas City and for each community in which we operate

6. From Resources to Organizational Capabilities • Resources are the inputs needed to perform its work • Combining organizational resources in a way to get the most value out of them • Ex: chef, Southwest Airlines • Using organizational capabilities, routines and processes, and dynamic capabilities

7. Core Competencies and Distinctive Capabilities • Core competencies- any major value-creating capabilities • Ex. Nordstrom's customer service is their core competency that comes from their capabilities in sales training and employee recruitment • Capabilities are the building blocks for core competencies

8. Distinctive Organizational Capabilities • These are the special and unique capabilities that distinguish an organization from its competitors. • Ex. Southwest Airlines • These distinct capabilities lead to a sustainable competitive advantage

9. Characteristics of Distinctive Organizational Capabilities 1. A distinctive capability contributes to superior customer value and offers real benefits • Why be good at something that your customers don’t want? 2. A distinctive capability should be difficult for competitors to imitate. 3. A distinctive organizational capability should be able to be used in a variety of ways.

10. Strengths and Weaknesses • Strengths- resources that the organization possesses and capabilities that it has developed • Can be exploited and developed into a sustainable competitive advantage • Weaknesses- resources that are lacking or deficient and prevent the organization from developing a sustainable competitive advantage • Should be corrected if they are preventing a sustainable competitive advantage • How can I strategically manage these areas of strengths and weaknesses to high levels of performance?

11. How to do an Internal Analysis • 3 Different approaches for doing an • internal analysis • Value Chain Analysis • Using an Internal Audit • Developing a capabilities assessment profile

12. Value Chain Analysis • A systematic way of examining all the organization’s functional activities and how well they create customer value. • Porter’s nine activity groups (5 primary and 4 support)

13. Porter’s nine activity groups • Primary: • Inbound Logistics • Operations • Outbound Logistics • Marketing and Sales • Customer Service • Support: • Firm Infrastructure • Human Resource Management • Technology Development • Procurement Examples: -Hallmark -Harley Davidson

14. Using an Internal Audit • An internal audit is a thorough assessment of an organization’s internal areas • Similar to an external financial audit, focuses on internal data in order to better the organization from the inside out. • Identifies what functions of the organization are operating well or operating poorly. • Strategic decision makers use the internal audit to assess the organizations resources and capabilities from the perspective of its different functions and organizational elements

15. Using an Internal Audit • An internal audit looks to six organizational functional areas and asks questions to test management’s assertions. • Production/operations • Does the organization have reliable and reasonably priced supplies? • Are facilities, offices, machinery, and equipment in good working condition? • How does the company do on quality assessments? • Marketing • What’s the organizations market position or rank? • Is the advertising strategy effective? • Are marketing planning and budgeting effective? • Research and development • Does the organization have adequate R&D facilities? • Are the organizations products technologically competitive?

16. Using an Internal Audit • The six organizational functional areas contin… • Financial/accounting • Is the organization able to raise short-term capital? • Is the organization able to raise long-term capital? • Has the organization established reasonable financial goals? • Management(includes Human Resources and other general management activities) • Do the organization’s employees manage strategically? • Is the organizations structure appropriate? • How does the organization treat its employees? • Information systems • Is the information system updated regularly? • Is the information system secure? • Is the information system user friendly?

17. Using an Internal Audit • All of these assessments concentrate on the availability or lack of critical resources and the level of capabilities in each functional area. • An internal audit should also look at three other important organizational elements: • Strategic Managers • Organizational structure • The organizational culture

18. Capabilities Assessment Profile • An in-depth evaluation of an organization’s capabilities • It provides some guidelines for identifying the organization’s distinctive capabilities • Consists of 2 phases: • Identifying distinctive capabilities • Developing and leveraging these distinctive capabilities

19. The 5 Steps for Assessing Organizational Capabilities • 1.) Prepare a current product-market profile • Emphasizes organization-customer interactions • 2.) Identify sources of competitive advantage and disadvantage in the main product-market segments • Figure out why customers choose our products instead of our competitors • Involves identifying specific cost, product, and service attributes

20. The 5 Steps for Assessing Organizational Capabilities (cont’d) • 3.) Describe all the organizational capabilities and competencies • To identify the capabilities, you need to examine the resources, skills, and abilities of the organization’s divisions • An analysis of the organizational resources and the routines and processes behind the capabilities • 4.) Sort the core capabilities and competencies according to strategic importance

21. The 5 Steps for Assessing Organizational Capabilities (cont’d) • Identify the capabilities that are strategically important by using three criteria: • 1.) Does the capability provide tangible customer benefits? • 2.) Is the capability difficult for competitors to imitate? • 3.) Can the capability provide wide access to a number of different markets? • 5.) Identify and agree on the key capabilities and competencies • Agreement is important in order to sustain competitive advantage

22. Determining Strengths and Weaknesses • More than just identify these factors, need to determine the organization’s strengths and weaknesses • What are the strong points? • What are the weak points? • What resources and capabilities can be enhanced and exploited for a sustainable competitive advantage? • What resources and capabilities are lacking or not used effectively?

23. Determining Strengths and Weaknesses • Criteria to Judge Organizational Strengths and Weakness

24. Determining Strengths and Weaknesses • Past Performance Trends • Could include any performance measure • Such quantitative measures can be used as indicators of organizational strengths and weaknesses. • Specific Goals or Targets: Organizational Goals • Organizational goals are statements of desired outcomes. • State what it hopes to accomplish and by when. Goals provide direction for an organization

25. Determining Strengths and Weaknesses • Comparison Against Competitors • Comparing resources and capabilities against competitors, an organization can see how it stacks up. • A key consideration for gathering this information is whether competitive-intelligence methods are legal and ethical. • Personal Opinions of Strategic Decision Makers or Consultants • Sometimes the best assessment is the personal opinion of those who are directly involved in the activity.

26. Why is an Internal Analysis Important? • It is the only way to identify an organization’s strengths and weaknesses • It is needed for making good strategic decisions • Provides the basis for deciding what strategic actions are necessary for sustainable competitive advantage

27. Why is an Internal Analysis Important? With the information from the internal analysis, decision makers can make judgments about: • Competitive advantages the organization might have • What might be potentially developed into competitive advantages • What might be preventing competitive advantages from being developed

28. Summary of Important Points • An internal analysis is the process of evaluating an organization’s resources and capabilities • Three techniques of an internal analysis: • Value Chain • Internal Audit • Capabilities Assessment Profile • The internal analysis is important for two reasons: • It is the only way to identify strengths and weaknesses • It is needed for making good decisions

29. Under Armour • Strengths • Brand Name, Innovation, Collegiate Endorsements • Weaknesses • Pricing, Advertising, Narrow Focus Compared to Competition http://www.dravesarchery.com/media/catalog/category/under-armour-pic.gif