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- By Vidushi Sharma
Any organization can be divided into many
small divisions which are scanned/ appraised to find out the strengths and weaknesses of the organization :1. Finance 2. Marketing 3. Operations 4. Personnel 5. Information Technology 6. General Management
It deals with factors related to availability, usage
and management of funds. Factors :1. Factors related to sources of funds – Capital Structure Procurement of capital Working Capital availability Capital and Credit availability Reserves and Surplus Relationship with lenders & financial institutions
2. Factors related to usage of funds: Capital Investment Fixed asset acquisition Current assets Loans & advances Dividend distribution 3. Factors related to management of funds: Budgeting system Management Control System Return & risk management Tax planning
Effective capital structure allowing flexibility in raising
additional capital. Amicable relations with shareholders & financial institutions. High level of credit worthiness Low cost of capital as compared to competitors. Efficient capital budgeting system. High level of shareholder’s confidence.
E.g. Mahindra & Mahindra has a surplus of Rs 2000 crore, also its debt-equity ratio is low which allows the company to raise more funds. Reliance Industries have a good image amongst lenders and can plan Rs. 61,700 crore of capital expenditure.
Marketing is moving goods and services from producers to
customers Marketing factors are mainly related to the 4P’s. Product related factors: variety, quality, mix, packaging Price related factors: pricing policies, protection, objectives Promotion related factors: promotional tools, successful advertising campaigns Distribution related factors: distribution network, marketing channels, transportation & logistics, sales force Other factors: company image, marketing information system
Strengths: • Wide variety of products • Better quality of products • Low prices compared to competitors • High quality customer service • Effective advertisement, sales promotion, distribution • Good company & product image.
E.g. LG India has a strong distribution network – 43 branches, 150 area offices, 1000 trade partners & 2 factories.
It includes factors related to production of products &
services, use of material resources, organizational capability etc. Factors: Factors related to production system: capacity, location, layout, degree of automation Factors related to operations & control system: aggregate production planning, material supply, inventory, cost & quality system Factors related to R&D system: product development, patents, level of technology, technological collaboration etc.
Strengths: • High level of capacity utilization • High degree of vertical integration • Reliable sources of supply • Efficient control of operational cost • Good inventory management system • High level of R&D
• Technical collaborations abroad
It is related to the use of human resources and skills Factors:
Factors related to personnel system: selection, development,
compensation, appraisal Factors related to employee & organizational characteristics: corporate culture, quality of managers, working conditions Factors related to Industrial Relations: union – management relations, welfare of workers, employee satisfaction
Strengths: • Efforts for human resource development • Organization perceived as fair employer • Excellent training opportunities • Highly satisfied & motivated workforce • Safe working conditions • Low level of absenteeism
• High level of employee loyalty
Information Management Capability
It is related to availability and flow of information etween
organization and outside. Factors: Sources, quality, quantity, retention and capacity of information Database management system, software capability Speed, scope , coverage of information Availability of IT infrastructure, up gradation of technology, availability of computer professionals. E.g. banking sector, Wal-Mart, NIIT
General Management Capability
It is related to the integration, co-ordination & direction of
various functional capabilities Factors: Factors related to general management system: strategic intent, formulation of strategy, implementation machinery, strategy evaluation system Factors related to managers: Risk bearing, values, capacity to work Factors related to external relationships: relations with govt. regulatory institutions, public relations, sense of social responsibility Factors related to organizational climate: culture, use of power, acceptance of change
Some important terms:
Organizational Resources: Every organization has tangible & intangible resources. Resources are classified into – physical, human & organizational resources. Physical Resources: Technology, plant, equipment, location, access to raw materials Human Resources: training, relationship, intelligence, experience Organizational Resources: systems & structures of organization Availability of resources is one of the crucial factor for success of organization
2. Organizational Behavior: These are the factors or influences which create ability or constraints for usage of resources. Organizational Behavior includes quality of leadership, management philosophy, shared values, culture etc. 3. Strengths & Weakness: Resources & behavior combine to create strengths & weakness. Strengths: It is the inherent capability which creates strategic advantage. Weakness: It is the inherent constraint which creates strategic disadvantage.
4. Synergetic Effects: 5. Competencies: these are special qualities possessed by the organization that make them withstand the competition. Core competencies : competencies practiced over a period of time Distinctive Competency : Any advantage over the competitors.
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