Contenu connexe
Similaire à Strategic Mangement Lecture 4 (20)
Plus de jillmitchell8778 (20)
Strategic Mangement Lecture 4
- 1. Chapter 4
The Internal Assessment
Strategic Management:
Concepts & Cases
13th Edition
Global Edition
Fred David
Copyright © 2011 Pearson Education Ch 4 -1
- 3. Internal Assessment
“Great spirits have always encountered
violent opposition from mediocre minds.”
– Albert Einstein
“Weak leadership can wreck the soundest
strategy.”
– Sun Tzu
Copyright © 2011 Pearson Education Ch 4 -3
- 4. Internal Audit
Identify strengths and weaknesses in
Management
Marketing
Finance and accounting
Production and operations
Research and development
Management information systems
Copyright © 2011 Pearson Education Ch 4 -4
- 5. Nature of an Internal Audit
Basis for Objectives & Strategies
Internal strengths/weaknesses
External opportunities/threats
Clear statement of mission
Copyright © 2011 Pearson Education Ch 4 -5
- 6. Key Internal Forces
Distinctive Competencies:
Firm’s strengths that cannot be
easily matched or imitated by
competitors
Copyright © 2011 Pearson Education Ch 4 -6
- 7. Key Internal Forces
Distinctive Competencies:
Building competitive advantage
involves taking advantage of
distinctive competencies
Copyright © 2011 Pearson Education Ch 4 -7
- 8. Internal Audit Process
Parallels process of external audit
Information gathered from:
Management
Marketing
Finance/accounting
Production/operations
Research & development
Management information systems
Copyright © 2011 Pearson Education Ch 4 -8
- 9. Internal Audit
Involvement in performing an
internal strategic-management audit
provides a vehicle for understanding
the nature and effect of decisions in
other functional business areas of
the firm
Copyright © 2011 Pearson Education Ch 4 -9
- 11. Internal Audit
Managers and employees from
all areas provide information
A team of managers then selects
10 to 15 key organizational
strengths and weaknesses to
focus on
Copyright © 2011 Pearson Education Ch 4 -11
- 12. Internal Audit
Financial Ratio Analysis
Exemplifies complexity of
relationships among functional areas
of the business
Copyright © 2011 Pearson Education Ch 4 -12
- 13. Resource Based View (RBV)
Approach to Competitive Advantage
Internal resources are more
important than external factors
Copyright © 2011 Pearson Education Ch 4 -13
- 14. Resource Based View (RBV)
Three All-Encompassing Categories
1. Physical resources
2. Human resources
3. Organizational resources
Copyright © 2011 Pearson Education Ch 4 -14
- 15. Resource Based View (RBV)
Empirical Indicators
Rare
Hard to imitate
Not easily substitutable
Copyright © 2011 Pearson Education Ch 4 -15
- 16. Integrating Strategy & Culture
Organizational Culture
Pattern of behavior developed by an
organization as it learns to cope with its
problem of external adaptation and
internal integration . . . is considered valid
and taught to new members as the correct
way to perceive, think, and feel
Copyright © 2011 Pearson Education Ch 4 -16
- 17. Integrating Strategy & Culture
Organizational Culture
Resistant to change
May represent:
Strength
Weakness
Copyright © 2011 Pearson Education Ch 4 -17
- 18. Integrating Strategy & Culture
Values
Legends Beliefs
Cultural
Heroes Rites
Products
Symbols Rituals
Myths
Copyright © 2011 Pearson Education Ch 4 -18
- 19. Integrating Strategy & Culture
Organizational Culture Can Inhibit
Strategic Management
Miss external changes due to
strongly held beliefs
Natural tendency to “hold the
course” even during times of
strategic change
Copyright © 2011 Pearson Education Ch 4 -19
- 21. Management
Stage When Most
Function Important
Planning Strategy Formulation
Organizing Strategy Implementation
Motivating Strategy Implementation
Staffing Strategy Implementation
Controlling Strategy Evaluation
Copyright © 2011 Pearson Education Ch 4 -21
- 22. Management
Planning
Beginning of management process
Bridge between present & future
Improves likelihood of attaining desired
results
Copyright © 2011 Pearson Education Ch 4 -22
- 23. Management
Developing a mission
Forecasting future events
and trends
Planning
Establishing objectives
Choosing strategies to
pursue
Copyright © 2011 Pearson Education Ch 4 -23
- 24. Planning
Synergy
Can develop through planning
Exists when everyone pulls
together as a team that knows
what it wants to achieve
Copyright © 2011 Pearson Education Ch 4 -24
- 25. Management
Organizing
Achieves coordinated effort
Defines task & authority relationships
Determines who does what
Determines who reports to whom
Copyright © 2011 Pearson Education Ch 4 -25
- 26. Management
Organizing
Breaking down tasks into jobs
Combining jobs to form
departments
Delegating authority
Copyright © 2011 Pearson Education Ch 4 -26
- 27. Management
Motivating
Influencing to accomplish specific objectives
Four components include:
Leadership
Group dynamics
Communication
Organizational change
Copyright © 2011 Pearson Education Ch 4 -27
- 28. Management
Staffing
Personnel management
Human resource management
Copyright © 2011 Pearson Education Ch 4 -28
- 29. Management
Staffing
Recruiting Evaluating
Interviewing Rewarding
Testing Disciplining
Selecting Promoting
Orienting Transferring
Training Demoting
Developing Dismissing
Caring for
Copyright © 2011 Pearson Education Ch 4 -29
- 30. Management
Controlling
Establishing performance standards
Ensure actual operations conform to
planned operations
Taking corrective actions
Copyright © 2011 Pearson Education Ch 4 -30
- 31. Management
Controlling
1. Establish performance standards
2. Measure individual and organizational
performance
3. Compare actual performance to
planned performance standards
4. Take corrective action
Copyright © 2011 Pearson Education Ch 4 -31
- 32. Management Audit Checklist
Does the firm use strategic
management concepts?
Are objectives/goals measurable? Well
communicated?
Do managers at all levels plan
effectively?
Copyright © 2011 Pearson Education Ch 4 -32
- 33. Management Audit Checklist
Do managers delegate well?
Is the organization’s structure
appropriate?
Are job descriptions clear?
Are job specifications clear?
Is employee morale high?
Copyright © 2011 Pearson Education Ch 4 -33
- 34. Management Audit Checklist
Is employee absenteeism low?
Is employee turnover low?
Are the reward mechanisms effective?
Are the organization’s control
mechanisms effective?
Copyright © 2011 Pearson Education Ch 4 -34
- 35. Marketing
Customer Needs or Wants for Products
and Services
1. Defining
2. Anticipating
3. Creating
4. Fulfilling
Copyright © 2011 Pearson Education Ch 4 -35
- 36. Marketing
Marketing Functions
1. Customer analysis
2. Selling products/services
3. Product & service planning
4. Pricing
5. Distribution
6. Marketing research
7. Opportunity analysis
Copyright © 2011 Pearson Education Ch 4 -36
- 37. Marketing
Customer surveys
Consumer information
Market positioning
Customer
strategies
Analysis
Customer profiles
Market segmentation
strategies
Copyright © 2011 Pearson Education Ch 4 -37
- 38. Marketing
Advertising
Sales Promotion
Publicity
Selling
Products/Services Personal Selling
Sales force management
Customer relations
Dealer relations
Copyright © 2011 Pearson Education Ch 4 -38
- 40. Marketing
Test marketing
Brand positioning
Devising warranties
Packaging
Product/Service Product features/options
Planning Product style
Quality
Deleting old products
Providing for customer
service
Copyright © 2011 Pearson Education Ch 4 -40
- 41. Marketing
Consumers
Governments
Pricing
Suppliers
Major Stakeholders Distributors
Competitors
Copyright © 2011 Pearson Education Ch 4 -41
- 42. Marketing
Warehousing
Distribution channels
Retail site locations
Distribution Sales territories
Inventory levels
Transportation
Wholesaling
Retailing
Copyright © 2011 Pearson Education Ch 4 -42
- 43. Marketing
Gather data
Marketing Research Record data
Analyze data
Copyright © 2011 Pearson Education Ch 4 -43
- 44. Marketing
Assessing costs
Cost/Benefit Assessing benefits
Analysis
Assessing risks
Copyright © 2011 Pearson Education Ch 4 -44
- 45. Marketing Audit
1. Are markets segmented effectively?
2. Is the organization positioned well among
competitors?
3. Has the firm’s market share been
increasing?
4. Are the distribution channels reliable &
cost effective?
5. Is the sales force effective?
Copyright © 2011 Pearson Education Ch 4 -45
- 46. Marketing Audit
6. Does the firm conduct market research?
7. Are product quality & customer service
good?
8. Are the firm’s products and services
priced appropriately?
9. Does the firm have effective promotion,
advertising, and publicity strategies?
Copyright © 2011 Pearson Education Ch 4 -46
- 47. Marketing Audit
10. Are the marketing, planning, and
budgeting effective?
11. Do the firm’s marketing managers have
adequate experience and training?
12. Is the firm’s Internet presence excellent
as compared to rivals?
Copyright © 2011 Pearson Education Ch 4 -47
- 49. Basic Financial Ratios
Firm’s ability to meet its
short-term obligations
Liquidity Ratios
Ratios
Current ratio
Quick (or acid test) ratio
Copyright © 2011 Pearson Education Ch 4 -49
- 50. Basic Financial Ratios
Extent of debt financing
Ratios
Leverage Ratios
Debt-to-total assets
Debt-to-equity
Long-term debt-to-equity
Times-interest-earned
Copyright © 2011 Pearson Education Ch 4 -50
- 51. Basic Financial Ratios
Effective use of firm’s
resources
Ratios
Activity Ratios
Inventory turnover
Fixed assets turnover
Total assets turnover
Accounts receivable turnover
Average collection period
Copyright © 2011 Pearson Education Ch 4 -51
- 52. Basic Financial Ratios
Effectiveness shown by
returns on sales and
investment
Profitability Ratios Ratios
Gross profit margin
Operating profit margin
Net profit margin
Return on total assets (ROA)
Copyright © 2011 Pearson Education Ch 4 -52
- 53. Basic Financial Ratios
Effectiveness shown by
returns on sales &
investment
Profitability Ratios Ratios
(cont’d)
Return on stockholders’
equity (ROE)
Earnings per share
Price-earnings ratio
Copyright © 2011 Pearson Education Ch 4 -53
- 54. Basic Financial Ratios
Firm’s ability to
maintain economic
position
Ratios
Growth Ratios
Sales
Net Income
Earnings per share
Dividends per share
Copyright © 2011 Pearson Education Ch 4 -54
- 55. Growth Ratios
Ratio Annual percentage
growth in
Sales Total sales
Net Income Profits
Earnings per share EPS
Dividends per share Dividends per share
Copyright © 2011 Pearson Education Ch 4 -55
- 60. Finance/Accounting Audit
1. Where is the firm financially strong/weak as
indicated by financial ratio analysis?
2. Can the firm raise needed short-term capital?
3. Can the firm raise needed long-term capital
through debt and/or equity?
4. Does the firm have sufficient working capital?
5. Are capital budgeting procedures effective?
Copyright © 2011 Pearson Education Ch 4 -60
- 61. Finance/Accounting Audit
6. Are dividend payout policies reasonable?
7. Does the firm have good relations with its
investors and stockholders?
8. Are the firm’s financial managers
experienced and well trained?
9. Is the firm’s debt situation excellent?
Copyright © 2011 Pearson Education Ch 4 -61
- 64. Production/Operations Audit
•Are suppliers of materials, parts, etc.
reliable and reasonable?
•Are facilities, equipment, machinery, and
offices in good condition?
•Are inventory-control policies and
procedures effective?
Copyright © 2011 Pearson Education Ch 4 -64
- 65. Production/Operations Audit
•Are quality-control policies & procedures
effective?
•Are facilities, resources, and markets
strategically located?
•Does the firm have technological
competencies?
Copyright © 2011 Pearson Education Ch 4 -65
- 66. Research & Development
Research & Development Functions
Development of new products before
competitors
Improving product quality
Improving manufacturing processes to
reduce costs
These functions can be done internally or
externally
Copyright © 2011 Pearson Education Ch 4 -66
- 67. Research & Development
Financing as many
projects as possible
Use percent-of-sales
method
R&D Budgets
Budgeting relative to
competitors
How many successful
new products are
needed
Copyright © 2011 Pearson Education Ch 4 -67
- 68. Research & Development Audit
•Are the R&D facilities adequate?
•If R&D is outsourced, is it cost-effective?
•Are the R&D personnel well qualified?
•Are R&D resources allocated effectively?
Copyright © 2011 Pearson Education Ch 4 -68
- 69. Research & Development Audit
•Are MIS and computer systems
adequate?
•Is communication between R&D and
other organizational units effective?
•Are present products technologically
competitive?
Copyright © 2011 Pearson Education Ch 4 -69
- 71. Management Information Systems
Audit
Do all managers use the information system
to make decisions?
Is there a CIO or Director of Information
Systems position in the firm?
Are data updated regularly?
Do managers from all functional areas
contribute input to the information system?
Are there effective passwords for entry into
the firm’s information system?
Copyright © 2011 Pearson Education Ch 4 -71
- 72. Management Information Systems
Audit
Are strategists of the firm familiar with the
information systems of rival firms?
Is the information system user-friendly?
Do all users understand the competitive
advantages that information can provide?
Are computer training workshops provided for
users?
Is the firm’s system being improved?
Copyright © 2011 Pearson Education Ch 4 -72
- 73. Value Chain Analysis
The process whereby a firm determines
the costs associated with:
Purchasing raw materials
Manufacturing products
Marketing products
And compares them to the value chain
of rival firms
Copyright © 2011 Pearson Education Ch 4 -73
- 74. Value Chain Analysis
Core competencies
Distinctive competencies
Benchmarking
Copyright © 2011 Pearson Education Ch 4 -74
- 75. Transforming Value Chain Activities into Sustained
Competitive Advantage
Value Some
Chain Some Core Distinctive
Core
Activities Competencies Competencie
Competencies
Are Evolve into s Yield
Arise in Some
Identified Distinctive Sustained
Activities
and Competencies Competitive
Assessed Advantages
Copyright © 2011 Pearson Education Ch 4 -75
- 76. Internal Factor Evaluation (IFE) Matrix
1. List key internal factors
2. Assign a weight ranging from 0.0 to 1.0
3. Assign a 1 to 4 rating to each factor
4. Multiply the weight times the rating
5. Sum the weighted scores
Copyright © 2011 Pearson Education Ch 4 -76
- 77. GROUP EXERCISE
Learning Exercise 4A p160
Copyright © 2011 Pearson Education Ch 4 -77
- 78. FOR NEXT WEEK
• Readings 7 & 8 Strategic Management Supplement for
Southern Africa
• Assurance of Learning exercise 4B – Group exercise
• Read Business Report, www.busrep.co.za
• Read CNBC, www.cnbc.com
Copyright © 2011 Pearson Education Ch 3 -78