Ch. 4 Internal Analysis Flashcards
Define internal analysis
the process of evaluating an organization’s resources and capabilities.
What are the assets/resources an organization has?
- physical
- financial
- human
- intangible
- structural-cultural
Give examples of financial resources
- debt capacity
- credit lines
- available equity (stock)
- cash reserves
- other financial holdings
Give examples of physical resources
- buildings
- equipment and fixtures
- raw materials
- office supplies
- manufacturing facilities
- machines
What are human resources?
experiences, knowledge, judgment, skills, accumulated wisdom, and competencies of the organization’s employees
What are intangible resources?
- brand names
- patents
- trademarks
- databases
- copyrights
- registered designs,
What are structural-cultural resources
- organizational history
- culture
- work systems
- policies
- relationships
- organizational structure
What are organizational resources?
An organization’s resources are the inputs needed to perform its work
How do organizational resources become core competencies or distinctive capabilities?
Organizational members do their work using organizational resources and routines and processes, they learn how best to capture the value of these resources
What are core competencies
Major value-creating capabilities that are essential to the business
How are core competencies created?
Any core competencies of an organization are created out of:
- routines and processes
- accumulated knowledge
- actual work activities
Define “distinctive organizational capabilities”
Unique capabilities that distinguish an organization from its competitors
What are the 3 characteristics of distinctive organizational capabilities
- Contributes to superior customer value
- Difficult to imitate by competitors
- Can be used in a variety of ways
What is competitive advantage and where does in stem from?
It’s what sets an organization apart and comes from an organization’s unique resources or from its distinctive capabilities
What are 3 broad categories value can come from?
- The product is unique (differentiation)
- The product is low cost (cost)
- The product meets customer needs quickly and efficiently (service)
What are primary activities in the value chain?
Primary activities are those that create customer value. These are:
- inbound logistics
- operations
- outbound logistics
- marketing & sales
- service
What are the support activities in the value chain?
Support activities aid the primary activities in creating customer value. They are:
- Firm infrastructure
- Human resource
- Technology
- Procurement
What’s the internal audit approach based on?
Every organization has a function to perform. And these can either be performed well or poorly.
What is an internal audit?
An internal audit is a thorough assessment of an organization’s internal areas. It focuses on the availability or lack of critical resources and the level of capabilities.
The audit areas are:
- productions-operations
- marketing
- R&D
- financial-accounting
- management
- information systems
Organizational elements of focus:
- strategic managers
- organizational structure
- organizational culture
What are the 3 ways you can do an internal analysis?
- value chain analysis
- internal audit
- capabilities assessment profile
How do you perform a capabilities assessment?
- Identify distinctive capabilities
2. Develop and leverage them
What does the current-market profile consist of?
- what are you selling?
- who are you selling to?
- are you providing customer value?
What are the 5 steps in identifying/assessing an organization’s distinctive capabilities?
Internal audit method.
- create a current-market profile
- identify sources of competitive advantage/disadvantage
- describe all capabilities & competencies
- sort them according to strategic importance
- identify and agree on key capabilities and competencies
What are 3 criteria to determine if core capability/competencies are strategically important?
- Does it provide tangible customer benefits?
- is it difficult for competitors to imitate?
- Does it provide access to different markets?
Why is the capabilities assessment profile not suitable to lower level managers?
it requires assessing a vast number of underlying organizational capabilities that don’t always fit nicely and neatly into narrowly defined specific functional areas.
What are the 4 criteria to determine strengths and weaknesses?
- past performance trends
- actual performance vs. specific performance goals
- compare against competitors
- personal opinions of strategic decision-makers
Why is an internal analysis importanat?
Two reasons:
- It’s the only way to identify strengths and weaknesses
- It’s needed for strategic decision-making
What is a value chain analysis?
a systematic way of examining all the organization’s functional activities and how well they create customer value.
