ORGANISATIONAL

APPRAISAL

Presented By:
Vinay Sharma
 Organizational Appraisal
• Determination of organizational capability in terms of
strength & weakness that lie in different functional areas.
• Analysis of Internal Environment for analyzing the
strengths & Weaknesses of the organization.
• Dynamics of Internal Environment
• Organization resources
• Physical Resources: technology, plant & equipment,
geographical location etc.
• Human Resources: training, experience, intelligence,
relationship etc.
 Organizational Appraisal
• Organization behaviour
• Identity & character of an organization
• leadership, Mgt. Philosophy, values, culture, Quality of
work environment, Organization climate, organization
politics etc.
• Resource Behaviour

• Distinctive competence - Any advantage a company

has over its competitor - it can do something which they
cannot or can do better - opportunity for an organization
to capitalize - low cost, Superior Quality, R&D skills
etc.
 ORGANIZATIONAL APPRAISAL
Organization capability - Capacity & ability to use
distinctive competencies to excel in a particular field
-Ability to use its ‘S’ & ‘W’ to exploit ‘O’ &
face ‘T’ in its external environment
Evaluation of external environment leads to “what a firm
should choose to do”.
Evaluation of Internal environment leads to “what it can
do” by using its resources.
 ORGANIZATIONAL APPRAISAL
•Organizational Capability Factors:
i. Financial Capability
ii. Marketing Capability
iii. Operations Capability
iv. Personnel Capability
v. Information Management Capability
vi. General management Capability
 Factor affecting organizational appraisal
•There are three factors that generally affect the
organizational appraisal:
• The strategist {how analytical}
• The organization {size }
• Larger organisation- more difficult to appraise than
• Smaller organisations-
• Internal environment{political forces}
 METHODS & TECHNIQUES USED FOR
ORGANIZATIONAL APPRAISAL
(1)Internal analysis
a. VRIO framework
b. value chain analysis
c. quantitative analysis
-financial
-non-financial
d. qualitative analysis
 METHODS & TECHNIQUES USED FOR
ORGANIZATIONAL APPRAISAL
COMPARITVE ANALYSIS
1. HISTORIACAL ANALYSIS
2. INDUSTYRY NORMS
3. BENCHMARKING
COMPREHENSIVE ANALYSIS
1. KEY FACTOR RATING
2. BUISNESS INTELLIGENCY SYSTEMS
3. BALANCE SCORE CARD
 VRIO FRAMEWORK
VRIO: It stands for valuable, rare, inimitable and organized for
usage. These terms are defined below:-
Valuable:- Unique Values :The ability to generate an amicable
relationship with the govt. or to provide high quality after-sale
service to customers.
Rare:-Exclusive capabilities: Capability derived out of an exclusive
location or the presence of a highly satisfied and motivated work
force.
Inimitable: Organizational capabilities that are difficult or not
worthwhile to duplicated or substituted by the competitors.
Organised for usage:- Capabilities that can be used only by the
firm having unique organizational structure, business processes
etc. The availability of component R&D personal and research
laboratories to innovate new and improved products continually
or the availability of potential business partners who are
competent and willing to integrate their information systems
with that of the firm.
 VALUE CHAIN ANALYSIS
Value chain analysis:-It is a set of interlinked value-creating activities performed
by an organisation.These, activities may begin with the procurement of basic
raw material and go through processing in various stages right up to the end
products marketed to the ultimate consumer. It is divided into PRIMARY and
SUPPORT activities.
Primary activities are:-
 Inbound logistics:- Inbound logistics are activities performed in an organization
in material handling, warehousing and inventory control.
 Operations:- These are assembling ,fabricating, machining, maintaining and
packaging.
 Out bound logistics:-These are materials handling order processing, physical
distribution and ware housing.
 Marketing and sales:-These are pricing, developing products, advertising,
promoting and distributing.
 Service:-These are installation, repair, maintenance and customer training
 VALUE CHAIN ANALYSIS
Support activities are:-
 Firm infrastructure:- These are accounting, finance,
planning, general management, legal support and
managing govt. relations.
 Human resource management :- These are recruitment,
selection and training, developing, appraising and
compensating employees.
 Technology development:- These are research and
development, product design, process design, equipment
design and servicing procedures.
 Procurement:-These are machinery and equipments, raw
material and supplies.
 QUANTITATIVE ANALYSIS
It is on numbers for assessing the performance of an organization.
Among the no. are financial figures. It has two types:-
1. Financial Analysis: The traditional methods used for evaluating
financial performance. A technique such as
I. the financial ratio analysis assesses the liquidity, profitability,
leverage, and activity aspects of an organization.
II. It can be used for analyzing strengths and weakness and
provides valuable data that can be used in an organizational
appraisal.
2. Non-financial quantitative analysis: Quantification of intangibles
such as goodwill or employee morale may be possible, but it is not
desirable to do so in monetary terms. Example of non-financial
quantitative measures are : employee turnover, absenteeism, market
ranking, rate of advertising recall, total cycle time of production,
inventory units used per period, service call rate, number of patents
registered per period, etc.
 Qualitative & Comparative Analysis
QUALITATIVE ANALYSIS: This analysis is based on informed
opinion, judgment, intuition or hunch.
COMPERATIVE ANALYSIS:
1. HISTORICAL ANALYSIS: It include balance sheets and profit and
loss accounts in the annual reports of the companies.
2. INDUSTRY NORMS:
3. BENCH MARKING: The purpose of bench marking is to find the
best performers in an area so that one could match ones home
performance with them and even surpass them.
1. Internal Benchmarking
2. Competitive Benchmarking
3. Generic Benchmarking
4. Functional Benchmarking
 COMPREHENSIVE ANALYSIS
• It includes
 KEY FACTOR RATING: It is used
 For financial capability factors
 For marketing capability factors
 For operational capability factors
 For personnel capability factors
 For information management capability factors
 For general management capability factors
 Business intelligence system:
• Business Intelligence is defined as a broad category of
application and technologies for gathering, storing,
analyzing and providing access to data to help enterprise
user make better business decisions.

• BALANCE SCORECARD (Kaplan & David P Norton)

• Balance score card is considered as “ a set of measures
that gives top managers a fast but comprehensive view
of the business.
 BALANCE SCORECARD

Financial Perspective
How do we look to
our Shareholders?

Customer Internal Business

Perspective Perspective
How do our customers What we must excel
look at us? at?

Learning and Growth

Perspective
How can we continue to
improve?
 TOWS Matrix
Internal (S) (W)
List 5-10 List 5-10
External Internal strengths Internal
Weakness
(O) SO Strategies WO Strategies
List 5-10 Use ‘S’ to take Take advantage
External advantage of ‘O’ of ‘O’ by
Opportunities
overcoming ‘W’
(T)
ST Strategies WT Strategies
List 5-10
Use ‘S’ to avoid Minimize ‘W’ and
External Threats
‘T’ avoid ‘T’
 STRUCTURING ORGANIZATIONAL
APPRAISAL
• Organizational Capability Profile (OCP) –
• Financial Capability Profile
• (a) Sources of funds
• (b) Usage of funds
• (c) Management of funds
• Marketing Capability Profile
• (a) Product related
• (b) Price related
• (c) Promotion related
• (d) Integrative & Systematic
 ORGANIZATIONAL APPRAISAL
• Operations Capability Factor
• (a) Production system
• (b) Operation & Control system
• (c) R&D system
• Personnel Capability Factor
• (a) Personnel system
• (b) Organization & employee characteristics
• (c) Industrial Relations
• General Management Capability
• (a) General Management Systems
• (b) External Relations (c) Organization climate
VINAY SHARMA