Unit 14.2 Flashcards
Internal Analysis
Identifying aspects of a firm’s competitive advantage and weaknesses
Tangible resources provide…
little advantage to a firm
Intangible resources provide…
advantage. Build over longer periods of time.
Human capital is…
intangible and tangible
VRIO
Valuable, Rare, Costly to Imitate, Organized to capture value
Jay Barney
Resource based view
- Firm can only achieve competitive advantage with VRIO resources
Value Chain Analysis
Helps the firm understand how they create value
Value Chain
the full range of activities a company does to create value
Primary Activities
- Inbound Logistics
- Manufacturing and Assembly
- Distribution
- Marketing and Sales
- Post-Sales Support
Supporting Activities
- Research and Development
- Information Systems
- Human Resources
- Firm Infrastructure
- Accounting, Finance and Planning
3 fundamental financial documents
- Balance Sheet
- Income statement
- Statement of cash flows
+ Operational metrics and cost accounting data
4 Financial ratios used
- Activity and Asset Quality
- Liquidity
- Capital Adequacy
- Earnings and Profitability
10 Key Ratios for Internal Analysis
- Days Sales Outstanding
- Inventory Turnover
- Asset Turnover
- Current Ratio
- Quick Ratio
- Debt to Equity Ratio
- Gross Margin
- Net Profit Margin
- Return on Assets
- Return on Equity
Benchmarking
Comparing processes and performance with internal and external benchmarks.
Types of Benchmarking
- Internal
- Competitive
- Non-Competitive
