3.1 Dynamics of internal envt.ppt

DYNAMICS

1. Dynamics Of Internal
Environment

2. Framework for the
development of strategic
management
by an organization

3. Organizational resources
Organizational Behavior
Strengths & Weaknesses
Synergetic Effects
Competencies
Organizational capabilities
Strategic Advantage

4. Organization resources
A firm is a bundle of resources –tangible, intangible-
includes assets, capabilities, organizational processes,
information, knowledge, etc
-Physical Resources (technology, plant & equipment,
geographic location, raw material)
-Human Resources (training, experience, judgment,
intelligence, relationships)
-Organizational Resources (formal systems &
structures, informal relations among the groups)

5. ORGANIZATIONAL BEHAVIOUR
Identity&characterofanorganization
Qualityofleadership,Mgt.Philosophy,shared
values,culture,Qualityofworkenvironment,
Organizationclimate,organizationpoliticsetc.
Resource Behavior
CreationofAbilities
Or
PlaceConstraintsontheusageofResources.
(StrengthsandWeaknesses)

6. STRENGTHS & WEAKNESSES
“OR&OBwillexistwithinherentcapabilityor
inherentlimitationastogaincompetitive
advantage/disadvantage”
Strengths:sourcesoffinance,lowcostofcapital,
efficientuseoffunds,etc
Weaknesses:inappropriateplantlocation&layout,
obsoleteplant&machinery uneconomical
operations.
S&Wexistincombinationwithinafunctional
areatocratesynergiceffects.

7. Synergistic Effects
“Synergy is an idea that the whole is
greater or lesser than the sum of its
parts”
2 + 2 = 5 or even 3
e.g. 4 P’s of Marketing
Operating Synergy
--Quality & type of internal environment
--lead to the development of Competencies

8. Competencies
“Competencies are special qualities possessed
by an organization that make them withstand the
pressures of competition in the marketplace”
Competencies
Core Competencies
Distinctive Competencies
Depends on uniqueness associated with
the net synergistic effects occurring within an
organization

9. Competencies vs. Core Competencies vs.
Distinctive Competencies
•A competenceis the product of organizational
learning and experienceand represents real
proficiencyin performing an internal activity
•A core competenceis a well-performed
internal activity central(not peripheral or
incidental) to a company’s competitiveness
and profitability
•A distinctive competenceis a competitively
valuable activitya company performs better
than its rivals

10. Core Competencies –
A Valuable Company Resource
•A competencebecomes a core
competencewhen the well-performed
activity is centralto a company’s
competitiveness and profitability
•Often, acore competence is
knowledge-based, residing in people,
not in assets on a balance sheet
•A core competenceis typically the result of
cross-department collaboration
•A core competencegives a company a
potentially valuable competitive capability
and represents a definitecompetitive asset

11. Examples: Core Competencies
•Expertise in integrating multiple technologies
to create families of new products
•Know-how in creating operating systems
for cost efficient supply chain management
•Speeding new/next-generation products to market
•Better after-sale service capability
•Skills in manufacturing a high quality product
•Capability to fill customer orders accurately and
swiftly

12. •A distinctive competenceis a competitively
valuable activity that a company performs
better than its competitors
•A distinctive competenceis a competitively
potent resource sourcebecause it
–Gives a company a competitively valuable
capability unmatchedby rivals
–Canunderpinand add real punch
to a company’s strategy
–Is a basisfor sustainable competitive advantage
# 1
Distinctive Competence –
A Competitively Superior Resource

13. Examples: Distinctive
Competencies
Toyota
Low-cost, high-quality
manufacturing of motor
vehicles
Starbucks
Innovative coffee drinks
and store ambience

14. Determining the Competitive
Power of a Company Resource
•To qualify as competitively valuable or to be the
basis for sustainable competitive advantage,
a “resource” must pass 4 tests:
1.Is the resource hard to copy?
2.Is the resource durable–does it have staying
power?
3.Is the resource really competitively superior?
4.Can the resource be outplayed by
the different capabilities of rivals?

15. ORGANISATIONAL
CAPABILITY
“OC is the inherent capacity or potential of an
organization to use its S & W in order to
exploit the Opportunities and face the
threats in its external environment.”
Interest of Strategist
--what capacity exists in the organization
to exploit opp or face threats in its Envt.
--what potential should be developed within the
organisation so that opp could be exploited threats could
be faced in future

16. Organizational Capability Factor
Financial Capability:
Factors related to sources of funds, usage of
funds, management of funds
Marketing Capability: 4 Ps
Operations Capability:
Factors related to production system, control
system, R & D system
Personnel Capability:
Factors related to personnel system, employee
characteristics, industrial relations
General Management Capability:
External relations & organizational climate

17. Strategic & competitive
Advantage
Results of the organisational activities
leading to rewards in terms of financial
parameters, such as
-Profit
-Shareholder value
-Market share
-Reputation
-Could be measured in absolute terms (profitability,
historical performance, current performance)
-Relative rather than absolute
-Purposefully done to realize strategic intent

18. Thank You……..