Strategic Management Lecture 8

STRATEGIC MANAGEMENT CONCEPT AND CASES FRED R. DAVID 13 TH EDITION

Topic Week 5 Lecture 8

STRATEGY Q.1 What is Internal environment and Functional areas of
FORMULATION: Internal environment?
Q.2 What is management and functions of management?
Internal Assessment/ What is marketing and its functions.
The Internal Q.4 How financial analysis is done in internal
Environmental environment?
3
Analysis Q.5 Identify key internal organizational factors that affect
an organizations operation?
Q.6 Determine the strengths and weaknesses of an
Class organization?
Discussion/Group
Discussion

Operation/ Production Function

“The definition of operations includes the process of transforming input/resources (e.g. steel, oil, etc.)
into products/outputs that are of higher value to the user.”

The transformation could be physical (size, shape, appearance) or in content (mixture, separated,
etc.). In the case where expertise, skill or knowledge is required (e.g. lawyer or lecturer), operations
are in the form of services.

Efficient implementation of business activities is important for company running its business. Basic
functions (decisions) with in operations/production.

1. Process: These decisions include Choice of technology, facility layout, process flow analysis,
facility location, line balancing, process control and transportation analysis.
2. Capacity:Forecasting, planning, aggregate planning, scheduling, capacity planning.

3. Inventory: To manage level of raw materials, work in process, and finished goods, especially
considering what to order, when to order, how much to order, and material handling.
4. Workforce:To manage the skilled, clerical and managerial employees by caring for job design,
work measurement, job enrichment, work standards and motivation techniques.
5. Quality: To ensure high quality goods and services are produced, by caring for quality control,
sampling, testing, cost control.
Steps in operations analysis.

According to Zainal Abidin (2007) following internal aspects considered in operational analysis.
1. Operations Cost analysis: Evaluate cost of raw materials, labor and fixed costs used to run
daily operations.

2. Break-even point analysis: Determines

what sales volume must be reached
before the company breaks even (total
costs equal total revenues) and no
profits are earned.

3. Inventory analysis:It is the technique to determine the optimum level of inventory for a

firm.The four types of inventory most commonly used are Raw Materials, Work-In-Progress (WIP),
Finished Goods, and Maintenance, Repair, and Overhaul (MRO). When you know the type of inventory
you have, you can make better financial decisions for your supply chain.

4. Efficiency and productivity analysis:This analysis focus on increasing aspects in the efficiency
of machines and developing new techniques.

5. Usage of equipment and machinery analysis . Used to determine efficiency level of equipment
and machinery in the company.

Research and Development

Research and development (R&D) include activities that companies undertake to innovate and
introduce new products and services. It is often the first stage in the development process. The goal
is typically to take new products and services to market and add to the company's bottom line

Strengths and weaknesses of and organization

SWOT standsfor Strengths, Weaknesses, Opportunities, and Threats. Strengths and

weaknesses are internal to your company—things that you have some control over and can change.
... Opportunities and threats are external—things that are going on outside your company, in the
larger market.

To determine the actual performance of a company more precisely a comparison of following factors
are necessary: