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STRATEGIC CAPABILITIES

(Lec:3)

Asst. Professor Mngt. Science (USA), IMRAN HUSSAIN

Objectives
 Value Chain Process.  Benchmarking.  SWOT Analysis.

Value Chain Process
• Point No. 1…

Michael Porter’s Value Chain Model SUPPORT ACTIVITIES Firm Infrastructure (General Management) Human Resource Management Technology Development Procurement Inbound Logistics Ops. Outbound Logistics Sales & Marketing Service and Support PRIMARY ACTIVITIES .

Porter in Competitive Advantage • Highlights cost advantages and distinctive capabilities--the value processes. 4-5 .Continued… • Developed in 1985 by Michael E.

This generates a quality advantage. • VC focuses cost management efforts. • VC provides for efficient processes which improves the timeliness of operations.Value Chain and the QCT Triangle • VC allows alignment of processes with customers. 4-6 .

Value Chain Benefits • Identifies value processes • Identifies areas for cost improvement 4-7 .

) – Tech.Value Chain Elements • Customer value added • Margin orientation • Primary activities – – – – – Inbound logistics Operations Outbound logistics Sales and marketing Service and support • Support Activities – Human resources (general and admin. development – Procurement 4-8 .

Goals For Value Chain • Driven by customer perceptions • Increase margins • Focus on value processess – Distinctive capabilities – Cost advantages • Some examples – Southwest Airlines – Intel Corporation 4-9 .

Value Chain Analysis • Document the activities • Understand the cost and margins at each step. – Use Activity Based Costing • Map the value chain to the industry value chain – Look for core competencies • Map the cost structure – Note that external values drive cost advantages 4-10 .

• “Pin the process” on a large VC diagram.Discovering Your Own Value Processes • Distribute a summary of the value chain model. • Create functional process lists. • Identify appropriate processes as: – $ (cost advantage) – CC (core competency) 4-11 . • Transfer lists to color-coded labels.

Using the Value Chain • • • • Helps you to stay out of the “No Profit Zone” Presents opportunities for integration Aligns spending with value processes Provides for reconfiguration of the value chain – – – – outsourcing off-shoring co-location with customers or suppliers redesign for efficiency • Involves chain partners: customers & suppliers 4-12 .

Value Chain and the TBC Triangle • Technical: – – – – Increases knowledge of no profit zones Increases knowledge of forward and/or backward integration opportunities Identifies value processes Identifies win-win alliance opportunities • Behavioral: – Focus shifts to “the customer” – Focus shifts from conflict to partnering with customers & suppliers • Cultural – Creates externally focused mindset – Generates information sharing environment with respect for confidentiality 4-13 .

2… .Benchmarking • Point No.

. Limitations of Benchmarking. Types of Benchmarking. Benefits of Benchmarking.Benchmarking      Definitions of Benchmarking. Steps of Benchmarking.

Definition of Benchmarking .

the less useful it is for anything in particular) – be a distillation of the essential attributes of a workload – avoid using single metric to express the overall performance • Computational benchmark kinds – synthetic: specially-created programs that impose the load on the specific component in the system – application: derived from a real-world application program 17 .Definitions Benchmark: a standardized problem or test that serves as a basis for evaluation or comparison (as of computer system performance) [Merriam-Webster] • The term “benchmark” also commonly applies to specially-designed programs used in benchmarking • A benchmark should: – be domain specific (the more general the benchmark.

Continued. . • Benchmarking is an improvement process that is used to identify best practice within a peer group and facilitate it’s incorporation into your organization.. • Benchmarking is a systematic tools that allows a company to determine whether its performance of organization processes and activities represent the best practices..

etc.) 19 .Purpose of Benchmarking • To define the playing field • To provide a tool enabling quantitative comparisons • Acceleration of progress – enable better engineering by defining measurable and repeatable objectives • Establishing of performance agenda – measure release-to-release or version-to-version progress – set goals to meet – be understandable and useful also to the people not having the expertise in the field (managers.

. SIGMOD ‘97 become modifications or optimizations 20 counterproductive.Properties of a Good Benchmark • • • • • • • • Relevance: meaningful within the target domain Understandability Good metric(s): linear. monotonic Scalability: applicable to a broad spectrum of hardware/architecture Coverage: does not over-constrain the typical environment Acceptance: embraced by users and vendors Has to enable comparative evaluation Limited lifetime: there is a point when additional code Adapted from: Standard Benchmarks for Database Systems by Charles Levine. orthogonal.

methods or processes that are more effective at delivering a desired outcome.Why best practice • Best practice refers to techniques. • Incorporating best practice into your organization can lead to greater efficiency and effectiveness and a happier customer. .

– Benchmarking happens as a one off event and not reviewed periodically. – Assumed best practice isn't best practice. – The gap between current state and best practice is captured but nothing is done about it. .Problems with Benchmarking • Problems with benchmarking occur where: – Data is not obtained for the process being measured – and analysis becomes subjective. – No peer group/best practice identified (including data available).

• This requires data.Importance of Data • In order to measure the gap between the measuring organization and best practice quantifiable measures need to be taken. • Follow on improvement activity can have negligible impact. . • Unless this method is followed results can be subjective and inaccurate.

• The importance is measuring your performance against another “peer” with a different standard.g. . • Peers could be a different group in the same organization (e.Using your Peer-group • Benchmarking relies on a partner organization or “peers” which will be measured against. two purchasing departments in a multinational organization) or a completely separate company.

Types of Benchmarking .

Internal Benchmarking • Benchmark within a corporation. (for example: Between Business Units…) .

Competitive Benchmarking • Benchmark performance or processes with competitors. .

.Financial Benchmarking • Benchmark similar processes within an industry.

.Generic Benchmarking • Comparing operations between unrelated industries.

) . (for example: Subsidiaries of multinational in different countries or an industry organization.Collaborative Benchmarking • Carried out collaboratively by groups of companies.

Steps of Benchmarking .

• Choose benchmark partner(s). • Analysis of the discrepancies. units indicators and data collection method. .Steps of Benchmarking • Scope of definition. • Determine measurement methods. • Make improvement plans or new procedures. • Monitor progress and plan ongoing benchmark. • Present the result and discuss implications/ improvement areas and goals.

Benefits of Benchmarking .

• Undertaking benchmarking can lead to improvements being incorporated into processes and systems delivering gains in efficiency and effectiveness. . • Benchmarking can help align improvement activity with strategic goals and objectives.Benefits of Benchmarking • Benchmarking helps identify the gaps between the organization that is undertaking the benchmarking assessment and best practice.

Budgetary reason. Professionalizing the organization/processes. .Continued.. Improving communication.. • • • • In outsouring projects.

Limitations of Benchmarking .5.

• Regular reviews of performance should be taken especially if improvement activity is underway to transition to “best practice”. • Regular reviews of the peer group should be taken to cater for any changes/improvement made. .Limitations of Benchmarking • Benchmarking should be viewed as a continuous improvement method.

Continued. • Benchmarking is a tough process that needs a lot of commitment to succeed. . • What are the downsides of adopting a practice. • Time consuming and expensive... • Comparing performance and processes with “best in class” is important and should ideally be done on a continuous basis.

SWOT Analysis • Point No. 3… .

• Creating a SWOT analysis using post harvest losses as a case study.SWOT Analysis • Internal and external factors. . • Major benefits of SWOT analyses.

• One of the most effective tools in the analysis of environmental data and information.SWOT • A widely used framework for organizing and using data and information gained from situation analysis. • Encompasses both internal and external environments. .

and capacities to the social environment in which they operate. • When combined with a dialogue. • It is an instrument within strategic planning. programs.SWOT description • A SWOT analysis generates information that is helpful in matching an organization’s or a group’s goals. . it is a participatory process.

SWOT • Factors affecting an organization can usually be classified as: • Internal factors – Strengths (S) – Weaknesses (W) Strengths Weaknesses • External factors – Opportunities (O) – Threats (T) Opportunities Threats .

They are within the organization’s control.SWOT: internal factors • Strengths: – Positive tangible and intangible attributes. • Weaknesses: – Factors that are within an organization’s control that detract from its ability to attain the core goal. In which areas might the organization improve? . internal to an organization.

What opportunities exist in the environment which will propel the organization? – Identify them by their “time frames.” . The organization may benefit by having contingency plans to address them should they occur – Classify them by their “seriousness” and “probability of occurrence. beyond an organization’s control. which could place the organization’s mission or operation at risk.” • Threats – External factors.SWOT: external factors • Opportunities – External attractive factors that represent the reason for an organization to exist and develop.

• Set goals and objectives. – Take advantage of some new opportunities. like with any other plan. – Overcome or minimize your weaknesses. – Respond to the threats.Create a plan of action • What steps can you take to: – Capitalize on your strengths. .

Lower costs.Major Benefits of SWOT Analyses • • • • • Simplicity. Integration and synthesis. . Collaboration. Flexibility.

For a Productive SWOT analysis
• Stay focused. Be specific and avoid grey areas. Keep your swot short and simple. Avoid complexity and over analysis. • Collaborate with other functional areas. • Examine issues from the customers’/ stakeholders’ perspective. • Look for causes, not characteristics. • Separate internal issues from external issues.

1- Stay focused
• It can be a mistake to complete just one generic SWOT analysis for the entire organization. • When we say SWOT analysis, we mean SWOT analyses.

2- Collaborate with other functional areas
• Information generated from the SWOT analysis can be shared across functional areas. • SWOT analysis can generate communication between managers that ordinarily would not communicate. – Creates and environment for creativity and innovation.

overall value. customer service.3. the analyst should ask: – What do stakeholders (and non-stakeholders) believe about us as an organization? – What do stakeholders (and non-stakeholders) think of our product quality. convenience. service quality. and promotional messages in comparison to our competitors? – What is the relative importance of these issues as stakeholders see them? • Taking the stakeholders’ perspective is the cornerstone of a well done SWOT analysis.Examine issues from stakeholders’ perspectives • To do this. price. .

4. • Major types of resources: – Financial – Organizational – Intellectual – Informational – Legal – Relational – Human – Reputation .Look for Causes not Characteristics • Causes for each issue in a SWOT analysis can often be found in the organization’s and competitors’ resources.

– Know yourself. – Know your competitors.Separate internal and external issues • Failure to understand the difference between internal and external issues is one of the major reasons for a poorly conducted SWOT analysis. . – Know your customer/stakeholder. – Know your environment.5.

– Trends in the socio-cultural environment. and value of reputation. • Opportunities and threats: – Trends in the competitive environment. legal. – Trends in the technological environment. .The elements of a SWOT analysis • Strengths and weaknesses: – Scale and cost economies. – Intellectual. – Size and financial resources.

SWOT-driven planning 1. Achieving goals and objectives depends on transforming strengths into capabilities by matching them with opportunities. Threats can be converted into opportunities with the right resources. . 4. The assessment of strengths and weaknesses should look beyond products. services and resources to examine processes that meet customers’ or stakeholders’ needs. Weaknesses that cannot be converted become limitations which must be minimized if obvious or meaningful to customers or stakeholders. Weaknesses can be converted into strengths with strategic investment. 3. 2.

The SWOT matrix .

Two people rarely come up with the same final version of a SWOT. Do not rely too much on it. . • Use it as a guide and not as a prescription.Caution • SWOT analysis can be very subjective.

Post Harvest losses • Strengths: .Many fishermen co-operatives are well organized and capable to support developments to reduce PHL.Sri Lanka possesses strong institutional capacity that can contribute to changes in the current situation. . . .Example .There is increasing governmental interest in the fisheries sector.

– Lack of awareness. – Acceptance of low quality fish and purchasing power of consumers in domestic market.Post Harvest losses • Weaknesses (1): – Little political pressure from fishermen boat owners.Example . – Lack of infrastructure. – Inferior design of multi-day boats fishery harbours. and and low the .

– High volume harvests of cultivated fish when seasonal tanks are being emptied.Post Harvest Losses • Weaknesses (2): – Rapid policy changes due to frequent changes in politically elected authorities within the governmental sector. – Tropical weather conditions. – Limited knowledge of financial accounting among fishermen. – Excess governmental subsidies to increase fishermen recruitment without them having proper training or fishing equipment. .Example .

Possibilities to increase export volume and value of fish products by reducing PHL.Example .Possibilities to increase nutritional and economical value of fish products.and vessel owners to increase their revenue and income by reducing PHL. . . .Possibilities to strengthen financial resources of costal fisheries communities.Vessel owners have recently formed an association at the national level that is likely to support developments to reduce PHL.Possibilities for fishermen. . .post harvest losses • Opportunities: .

Post Harvest losses Threats:  PHL reduce the chances of fishermen and vessel owners to maintain profitable and sustainable livelihood.Example . poor hygiene practices on boats and lack of facilities at landing sites and in harbours increases the likelihood of PHL. improper sewage management. .  Insufficient availability of clean water.  PHL reduces the nutritional value of fish products.

THANK YOU .