Internal Scanning: Organizational Analysis: Session 3

INTERNAL SCANNING :
Organizational Analysis
SESSION 3
APPROACH TO ORGANIZATIONAL ANALYSIS
2
Scanning & analyzing external environment for

Opportunity and Threats - to better understand its
competitive environment & its place in the environment
Identify internal strategic factors to find Strength and

Weaknesses – to take advantage of opportunities while
avoiding threats
Organizational analysis- identify, develop & take

advantage of an organization’s resources and competencies
03_Internal Scanning
Core and Distinctive Competencies
3
Resources - an organization’s assets and basic

building blocks of the organization
 Tangible – plant, equipment, finances & location
 Intangible – technology assets, patent
Capabilities - a corporation’s ability to exploit its
resources
 Consist of business process and routines to
turn inputs into outputs
4
Competency - a cross-functional integration and

coordination of capabilities
Core competency - a collection of competencies

that cross divisional boundaries, is wide-spread
throughout the corporation and is something
the corporation does exceedingly well
Distinctive competency - core competencies that

are superior to those of the competition
Example
5
FB's core competency is its large client base. It has

1.5 billion users now. It will be nearly impossible to
create another platform and persuade all the users to
move from FB to that new platform. The transfer cost
is too high.
Apple's distinctive competencies encompass
innovation, marketing, quality, strong customer
service, simplicity and a strong financial performance.
6
VRIO framework (Barney)

1. Value : Does it provide customer value and
competitive advantage?
2. Rare : Do not other competitors posses it?
3. Imitability : Is it costly for others to imitate?
4. Organization : Is the firm organized to exploit the
resources?
Using Resources to Gain Competitive Adv.
7
1. Identify and classify resources in terms of

strengths and weaknesses
2. Combine the firm’s strengths into specific
capabilities and core competencies
3. Appraise profit potential- Are there any distinctive
competencies?
4. Select the strategy that best exploits the firm’s
capabilities and competencies relative to external
opportunities
5. Identify resource gaps and invest in upgrading
weaknesses
Access to a Distinctive Competency
8
1. Asset endowment , exp. key patent

2. Acquired from someone else, exp. Disney
bought Pixar
3. Shared with another business, exp. Samsung
4. Built and accumulated within the company,
exp. Honda started from motorcycles to
autos, etc.
Access to a Distinctive Competency
9
Clusters- geographic concentrations of

interconnected companies and industries
According to Michael Porter, it gives access to:

 Employees
 Suppliers
 Information
 Complementary products
Determining the Sustainability of an Adv.
10
Durability- the rate at which a firm’s underlying

resources, capabilities, or core competencies
depreciate or become obsolete
Imitability- the rate at which a firm’s

underlying resources, capabilities, or core
competencies can be duplicated by others
11
Core competency can be imitated to these extent:

 Transparency- the speed at which other firms
under the relationship of resources and
capabilities support a successful strategy
 Transferability- the ability of competitors to
gather the resources and capabilities necessary
to support a competitive challenge
 Replicability- the ability of competitors to use
duplicated resources and capabilities to imitate
the other firm’s success
12
The ease of learning and imitate other’s CC if:
Explicit knowledge- knowledge that can be easily

articulated and communicated
Tacit knowledge- knowledge that is not easily

communicated because it is deeply rooted in
employee experience or in the company’s culture
BUSINESS MODELS
13
 is a company’s method for making money in the

current business environment, composed of :
 Who it serves
 What it provides
 How it makes money
 How it differentiates and sustains competitive
advantage
 How it provides its product/service
Possible Business Models
14
 Customer solutions model (IBM)

 Profit pyramid model (General Motor)
 Multi-component system/installed model (hp)
 Advertising model (Google & Facebook)
 Switchboard model (e-Bay & Bukalapak)
 Efficiency model
 Blockbuster model
 Profit multiplier model
 Entrepreneurial model
 De Facto industry standard model
VALUE CHAIN ANALYSIS
15
 Value Chain- a linked set of value creating activities that begin

with basic raw materials coming from suppliers, moving on to a
series of value-added activities involved in producing and
marking a product or service, and ending with distributors
getting the final goods into the hands of the ultimate consumer
Industry Value-Chain Analysis
16
Value chain segments include:

 Upstream
 Downstream
Center of gravity- the part of the chain where the company’s

greatest expertise and capabilities lie – core competencies
(or, the point the company started)
 Vertical integration - getting competitive advantage in its core
competencies then move forward or backward along the value chain
Corporate Value Chain Analysis
17
Primary activities Support activities

 Inbound logistics Procurement
 Operations Technology
 Outbound logistics development
Human resource
management
Firm infrastructure
Corporate Value – Chain Analysis
18
Corporate Value – Chain Analysis
19
1. Examine each product line’s value chain in

terms of the various activities involved in
producing the product or service
2. Examine the linkages within each product
line’s value chain
3. Examine the potential synergies among the
value chains of different product lines or
business units
SCANNING FUNCTIONAL RESOURCES
CAPABILITIES
20
 Analyze corp.’s value chain is by examining its

traditional functional areas for potential strength
and weaknesses.
 Functional resources & capabilities incl. financial,
physical, human assets, ability of people in the
area to formulate & implement necessary
functional objectives, strategies & policies
 If used properly, these resources & capabilities
serve as strength to carry out value added
activities & support strategic decisions.
Basic Organizational Structures
21
 Simple
 Functional
 Divisional
 Strategic Business Units
 Conglomerate
22
Corporate Culture: The Company Way
23
Corporate culture- the collection of beliefs, expectations and
values learned and shared by a corporation’s members and
transmitted from one generation of employees to another
2 Distinct Attributes of Corporate Culture

Cultural intensity- the degree of which members of a unit accept
the norms, values and other cultural content associated with
the unit
• Shows the depth of the culture
Cultural integration- the extent of which units throughout the
organization share a common culture
• Shows the width of the culture
Functions of Corporate Culture
24
• Conveys a sense of identity for employees

• Generates employee commitment
• Adds to the stability of the organization as a social system
• Serves as a frame of reference for employees to
understand organizational activities and as a guide for
behavior
Strategic Marketing Issues
25
Market position & Segmentation

• Who are our customers? – the selection of
specific areas for marketing concentration in
terms of product, market & geographic locations
Marketing Mix - the particular combination of key

variables under a corporation’s control that can
be used to affect demand and to gain
competitive advantage (4 P’)
26
27
Product life cycle- product monetary sales over time from
introduction through growth and maturity to decline - to
discuss 4P’s
28
Brand & Corporate Reputation

Brand- a name given to a company’s product which identifies
that item in the mind of the consumer
Corporate brand- a type of brand in which the company’s
name serves as the brand
Corporate reputation- a widely held perception of a company
by the general public
 Stakeholders’ perceptions of quality
 Corporation’s prominence in the minds of stakeholders
Strategic Financial Issues
29
Financial leverage- ratio of total debt to total

assets
 Used to describe how debt is used to increase earnings
available to common shareholders
Capital budgeting- the analyzing and ranking of
possible investments in fixed assets in terms of
additional outlays and receipts that will result
from each investment
 Hurdle rate, exp. years to pay back investment, rate of
return, time to BEP
Strategic Research and Development Issues
30
R & D intensity- pending no R & D as a percentage

of sales revenue
Technology competence- the development and use

of innovative technology
Technology transfer- the process of taking new

technology from the laboratory to the
marketplace
31
R & D Mix
Basic R & D- focuses on theoretical problems

Product R & D- concentrates on marketing and is
concerned with product or product packaging
improvements
Engineering R & D is concerned with engineering,
concentrating on quality control, and the
development of design specifications and
improved production equipment
32
Technology discontinuity
is when a new technology cannot be used to
enhance current technology, but substitutes for
the technology to yield better performance
 Moore’s Law
Strategic Operations Issues
33
Intermittent Systems- item is normally processed

sequentially, but the work and sequence of the
process vary
Continuous systems- work is laid out in lines on
which products can be continuously assembled
or processed
Operating leverage- impact of a specific change in
sales volume on net operation income
Strategic Operations Issues
34
Experience curve
unit production costs decline by some fixed percentage each
time the total accumulated volume of production units
doubles
Flexible Manufacturing for Mass Customization

the low cost production of individually customize goods and
services
 The use of CAD/CAM robot able to customize small batches
 Replacing economies of scale
Strategic Human Resource Issues
35
Increasing Use of Teams

Autonomous (self-managed)- a group of people
working together without a supervisor to plan,
coordinate and evaluate their work
Cross-functional work teams- various disciplines
are involved in a project from the beginning
Concurrent engineering- specialists work side-by-
side and compare notes constantly to design cost-
effective products with features customers want
36
Virtual Teams- groups of geographically or

organizationally dispersed coworkers that are
assembled using a combination of
telecommunications and information technologies
to accomplish organizational tasks
37
5 driver trends virtual teams replacing

traditional work groups
 Flatter organizational structures
 Turbulent environments
 Increased employee autonomy and decision making
 Higher knowledge requirements
 Increased globalization
 Increased
38
Quality of Work Life & Human Diversity

Quality of Life considers in the design of jobs to reduces
employee dissatisfaction & existing unionization efforts,
which should include improvements in:
 Introducing participative problem solving
 Restructuring work
 Introducing innovative reward systems
 Improving the work environment
Human diversity- the mix in the workplace of people from

different races, cultures and backgrounds
 Provides a sustainable competitive advantage
Strategic IS/IT Issues
39
Impact on Performance
with the contribution of :
1. Automation of back office processes (1970s)
2. Automation of individual tasks (1980’s)
3. Enhancement of key business functions (1990’s)
4. Development of a competitive advantage (2000)
Current trends in Information systems/technology Internet
include:
 Intranet – for marketing
 Extranet – internal communication
 Web 2.0 – wikis, blogs, social networks, podcast
Strategic IS/IT Issues
40
Supply chain management

networks for sourcing raw materials,
manufacturing products or creating services,
storing, and distributing goods, and delivering
them to customers and consumers

Internal Scanning: Organizational Analysis: Session 3

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INTERNAL SCANNING :

Scanning & analyzing external environment for

Identify internal strategic factors to find Strength and

Organizational analysis- identify, develop & take

Resources - an organization’s assets and basic

Competency - a cross-functional integration and

Core competency - a collection of competencies

Distinctive competency - core competencies that

FB's core competency is its large client base. It has

VRIO framework (Barney)

1. Identify and classify resources in terms of

1. Asset endowment , exp. key patent

Clusters- geographic concentrations of

According to Michael Porter, it gives access to:

Durability- the rate at which a firm’s underlying

Imitability- the rate at which a firm’s

Core competency can be imitated to these extent:

The ease of learning and imitate other’s CC if:

Explicit knowledge- knowledge that can be easily

Tacit knowledge- knowledge that is not easily

 is a company’s method for making money in the

 Customer solutions model (IBM)

 Value Chain- a linked set of value creating activities that begin

Value chain segments include:

Center of gravity- the part of the chain where the company’s

Primary activities Support activities

1. Examine each product line’s value chain in

 Analyze corp.’s value chain is by examining its

2 Distinct Attributes of Corporate Culture

• Conveys a sense of identity for employees

Market position & Segmentation

Marketing Mix - the particular combination of key

Brand & Corporate Reputation

Financial leverage- ratio of total debt to total

R & D intensity- pending no R & D as a percentage

Technology competence- the development and use

Technology transfer- the process of taking new

Basic R & D- focuses on theoretical problems

Intermittent Systems- item is normally processed

Flexible Manufacturing for Mass Customization

Increasing Use of Teams

Virtual Teams- groups of geographically or

5 driver trends virtual teams replacing

Quality of Work Life & Human Diversity

Human diversity- the mix in the workplace of people from

Supply chain management

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