What Tools Are Useful in Assessing Strengths and Weaknesses?

Strategic Business Planning for Commercial Producers
What Tools Are Useful in

Assessing Strengths and
Weaknesses?
Resources, Capabilities, and Core
Competencies
Strengths and
Weaknesses
• Goal: objective assessment of your
strengths and weaknesses
– relative to competitors
– important to customers
Note: This is difficult to do well.

Challenge of Internal
Analysis
• Identifying, developing,
protecting, and deploying
resources, capabilities, and core
competencies
Resources
• Inputs into a firm’s production process such
as capital equipment, skill of individual
employees, patents, finance, and talented
managers
– Tangible Resources – Assets that can be seen and
quantified
– Intangible Resources – Family commitment,
networks, organizational culture, reputation,
intellectual property rights, trademarks, copyrights
• By themselves, resources do not create a
strategic advantage for the firm.
Capabilities
• Capacity to deploy resources that have been
purposely integrated to achieve a desired end
state.
• Primary base for the firm’s capabilities is the skills
and knowledge of its employees.
• Just because the firm has a strong capacity for
deploying resources does not mean it has a
competitive advantage.
Core Competencies
• Resources and capabilities serve as a
source of competitive advantage for a
firm over its rival.
• Not all resources and capabilities are
core competencies.
• Many suggest that firms should identify
and concentrate on only 3 or 4 core
competencies.
Identifying and Building

Core Competencies
• Core competencies must be distinctive.
– Capabilities that are done better than competitors
• Identifying core competencies is key to
development of sound strategy.
• We use the value chain to help identify core
competencies.
The Value Chain

• A framework for identifying core
competencies
– Inside the firm
– In the supply chain
• Can be used to
– Identify strengths and weaknesses
– Identify sources of competitive advantage
– Identify market opportunities
The Value Chain

Firm Infrastructure
Human Resource Management
MA
Supporting
RG
Activities
Technological Development
IN
Procurement
Inbound Outbound Marketing Service

Operations
Logistics Logistics & Sales
N
Activities
Primary
I
RG
MA
Relationship with Suppliers Relationship with Buyers
Elapsed Time - Value added time cost

Primary Activities in the

Value Chain
• Inbound Logistics
– Materials handling, warehousing, inventory control used to receive, store
and disseminate inputs to a product
– Fertilizer and chemical storage, delivery of inputs, application of inputs
• Operations
– Take inputs from inbound logistics and convert to final products
– Plowing, planting, spraying, harvesting, feeding, medicating, weighing,etc.
• Outbound Logistics
– Collecting, Storing, and physical distribution of the final product.
– Crop storage, finished hog handling, Processing and determining delivery
dates, delivery to the packer or elevator etc.
Procurement
Technology
Firm Infrastructure
Human Resource management
Service
Inbound Outbound Marketing

Operations
Logistics Logistics and Sales
Primary Activities in the

Value Chain
• Marketing and Sales
– Provide means through which customers can purchase
products and to induce them to do so
– Advertising, communicating with buyers, developing
customer relationships, pricing products (futures, hedging,
forward contracting, etc.), delivery scheduling
• Service
– Activities designed to enhance or maintain a product’s
value
– Timely delivery, identity preservation, ISO9000, certifying
as organic, etc. Procurement
Human Resource management
Human Resources
Firm Infrastructure

Operations
Supporting Activities in the

Value Chain Procurement
Human Resources
Firm Infrastructure
• Procurement
Service
Operations
– Activities to purchase the inputs needed to produce products

– Negotiating with suppliers, standard timing of replenishing
parts and tools, setting up buying groups, etc.
• Technological Development
– Activities that improve the firm’s products and/or processes
– Volunteering for test plots, being a part of feeding trials,
attending technology seminars/field days, designing equipmen
to make specific production tasks more efficient, etc.
• Human Resources
– Recruiting, hiring, training, developing, and compensating all
personnel
Supporting Activities in
the Human Resource management
Procurement
Value Chain
Technology
Firm Infrastructure
Service
Operations
• Firm Infrastructure
– General Management, planning, finance, accounting,
legal support, governmental relations, etc.
– Establishment of accounting practices, management
information systems, compliance with environmental
regulations, tracking and reporting for government
programs, etc.
– Where strategy development takes place identifying
opportunities and threats, resources and capabilities,
and support of core competencies
The Result of the Value

Chain
• Margins
– Capture the value from performing value-creating
activities as cheaply as possible
– The basic idea is that the consumer is willing to pay a
certain amount for the value you create. This is
depicted as the size of the overall pentagon.
– The size of the individual activity boxes represents the
cost of performing those particular activities.
– Thus, the smaller the size of the individual activity
boxes relative to the value the consumer is willing to
pay, the greater the MARGIN will be for the firm.
The Value
Strategic Chain
Business Planning – Grains
for Commercial Producers
Farm
Firm Infrastructure
Human Resource Management
MA
Supporting
RG
Activities
IN
Procurement

Operations
Logistics Logistics & Sales
N
Activities
Primary
I
RG
MA
Elapsed Time - Value added time cost

Primary Activities for a Grain
Farm
Service
Outbound On-time del-
Operations Logistics Marketing ivery
Inbound & Sales Forward
Logistics Grain contract
Tillage
Planning transport Fwd. contracts IP
Fertilizer and Fertilizing to elevator Futures Storage
chemical storage, Spraying or buyer Options Tracing
custom Cultivate IP grain QA
application Harvest Grain Value added
of inputs transport grain
to storage

Supporting Activities for a
Grain Farm
Infrastructure: management, planning, finance,

accounting, government compliance, quality control
Human Resource: motivation tools, compensation,

training, and directing farm employees, including
family, management, and laborers
Technological Development: research and adoption practices

for things like GPS, VRT, GMO’s, No-Till,
the Internet, IP storage facilities
Procurement: Purchasing inputs: seed, fertilizer, chemicals,

fuel, land, Machinery, storage equipment, office supplies, parts,
tools, insurance etc. with focus on negotiating capabilities
Value Chain Analysis

• A firm’s value chain must be compared to
competitors’ value chains to determine
where competitive advantages exist.
• To be a source of competitive advantage a
resource or capability must allow a firm to:
– Perform an activity in a manner that is superior
to competitor’s performances
– Perform a value-creating activity that
competitors cannot complete
Linkages within the

Value Chain
• Optimization and coordination of activities in the
value chain
• Linkages exist between support activities and
primary activities and between separate
primary activities
• Generic causes for linkages
– Same function can be performed in different ways
– Efforts in indirect activities
– Activities performed inside the firm reduce the need
for activities in the field
– Quality Assurance can be performed in different ways
Value Chain Linkages in

the Supply Chain
Buyer Chain
Supplier
Chain
Firm Chain Buyer Chain
Supplier
Chain
Buyer Chain
Linkages with Supplier

Value Chain
• Linkages between suppliers’ value chains
and a firms chain provide opportunities for
the firm to enhance competitive
advantage.
• Division of benefits between firm and its
suppliers is a function of supplier’s
bargaining power and reflecting in
supplier’s margins.
• Both coordination with suppliers and hard
bargaining are important to competitive
advantage.
The Buyer’s Value Chain

• A firm’s differentiation stems from how its
value chain relates to its buyer’s chain.
• Differentiation derives fundamentally from
creating value for the buyer through a firm’s
impact on the buyer’s value chain.
• Value is created when a firm creates a
competitive advantage for its buyer.
• The buyer must perceive the value to pay a
premium price.
Generating Alternative
Strategies From SWOT
• SWOT analysis is a tool for helping assess the
current situation for the firm.
• However, we need to be able to combine the
information in the SWOT analysis in a meaningful
way to generate alternative strategies that we
might pursue.
• The TOWS matrix is a tool designed to match
external opportunities and threats with our internal
strengths and weaknesses
SWOT Analysis
Strengths Weaknesses
1. 1.
Internal 2. 2.
Environment 3. 3.
Opportunities Threats
1. 1.
External 2. 2.
Environment 3. 3.
TOWS Matrix
• Technique used in strategy
formulation for combining
– External analysis
• Opportunities
• Threats
– Internal analysis
• Strengths
• Weaknesses
TOWS Matrix From External Analysis (EFAS)
From
Opportunities: Threats:
Internal Analysis
1. 1.
(IFAS)
2. 2.
3. 3.
ST Strategies
Strengths: SO Strategies
Take advantage of
1. Use strengths to
Strengths to
2. take advantage
avoid
3. of opportunities
threats
WT Strategies
Weaknesses:
WO Strategies Defensive strategies
1.
Use Opportunities to to minimize
2.
overcome weaknesses weaknesses and
3.
avoid threats
Source: Weihrich

What Tools Are Useful in Assessing Strengths and Weaknesses?

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

What Tools Are Useful in Assessing Strengths and Weaknesses?

Uploaded by

Copyright:

Available Formats

Strategic Business Planning for Commercial Producers

What Tools Are Useful in

Note: This is difficult to do well.

Identifying and Building

The Value Chain

The Value Chain

Human Resource Management

Inbound Outbound Marketing Service

Elapsed Time - Value added time cost

Primary Activities in the

Human Resource management

Inbound Outbound Marketing

Primary Activities in the

Human Resource management

Inbound Outbound Marketing Service

Supporting Activities in the

– Activities to purchase the inputs needed to produce products

The Result of the Value

Human Resource Management

Inbound Outbound Marketing Service

Elapsed Time - Value added time cost

Relationship with Suppliers Relationship with Buyers

Infrastructure: management, planning, finance,

Human Resource: motivation tools, compensation,

Technological Development: research and adoption practices

Procurement: Purchasing inputs: seed, fertilizer, chemicals,

Value Chain Analysis

Linkages within the

Value Chain Linkages in

Linkages with Supplier

The Buyer’s Value Chain

TOWS Matrix From External Analysis (EFAS)

You might also like