Chapter 6 - Understanding the internal environment Flashcards
What is a relative strength / weakness?
Relative strength means that you are compared to your competitors better in something, e.g. your brand name is stronger
Relative weakness means that you are compared to your competitors not as good, e.g. you have higher production costs
Describe the Value chain and the different kind of activities within a company!
The value chain explains how companies create value. There are usually primary and support activities.
Primary activities → bottom of the value chain → core of the business
e.g. inbound logistics, operations, outbound logistics, sales and marketing, after-sale service
Support activities → not part of the core process but support primary activities
e.g. HR will recruit and select the right people for the organization, organizing training and development, performance appraisals, etc. // research and development will improve existing products or services but also develop new ones
Having good primary activities because you have optimal support from the support activities, it can promote your margin.
For each step within the value chain, you try to find out if you can do it cheaper on your own or if you should outsource some of the activities → make or buy decision
Both primary and support services can be outsourced
Describe the post-job organization according to Mintzberg!
Distinction between four groups:
- The core personnel: People considered performing activities related to the core business
- Subcontractors: Companies to whom certain activities are being outsourced
- Temporary and alternative contracts: e.g. Randstad; they offer a wide range of services when it comes to interim jobs.
- Customers: They more and more perform activities themselves, e.g. self-banking, IKEA furniture
What is Benchmarking? Describe Internal and External Benchmarking!
Benchmarking means to compare your company with other companies inside or outside your own organization.
Internal benchmarking: You compare yourself with another company (of the same group), e.g. bringing together all sales and marketing divisions of all countries to compare the different marketing departments and techniques.
External benchmarking: This takes place when you compare yourself with an outside company (either your own industry or a total different industry).
How can the Value Chain be helpful with increasing a margin?
Answer the questions:
- How can we save money?
- How can we boot the quality of our distribution services?
→ Find out if outsourcing or doing vertical integration if it’s cheaper
