Strategic_Management_.pptx Internal Assessment

Internal Assessment

1. Chapter 4 The Internal Assessment Strategic Management: Concepts & Cases 13 th Edition Fred David Ch 4 - 1

2. Ch 4 - 2

3. “ Great spirits have always encountered violent opposition from mediocre minds.” – Albert Einstein Ch 4 - 3 Internal Assessment “ Weak leadership can wreck the soundest strategy.” – Sun Tzu

4. Internal Audit Ch 4 - 4 Identify strengths and weaknesses in Management Marketing Finance and accounting Production and operations Research and development Management information systems

5. Internal strengths/weaknesses External opportunities/threats Clear statement of mission Ch 4 - 5 Nature of an Internal Audit Basis for Objectives & Strategies

6. Key Internal Forces Ch 4 - 6 Distinctive Competencies: Firm’s strengths that cannot be easily matched or imitated by competitors

7. Key Internal Forces Ch 4 - 7 Distinctive Competencies: Building competitive advantage involves taking advantage of distinctive competencies

8. Resource Based View (RBV) Ch 4 - 8 Approach to Competitive Advantage Internal resources are more important than external factors - Robert Grant 1.Physical 2. Human 3.Organizational

9. Internal Audit Process Ch 4 - 9 Information gathered from: Management Marketing Finance/accounting Production/operations Research & development Management information systems Parallels process of external audit

10. 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

11. Integrating Strategy and Culture Cultural products include values, beliefs, rites, rituals, ceremonies, stories , language, etc

12. Ch 4 - 12

13. Internal Audit Managers and employees from all areas provide information A t e a m o f manager s t he n s ele c t s 10 to 15 key organizational strengths and weaknesses to focus on Ch 4 - 13

14. Internal Audit Ch 4 - 14 Exemplifies complexity of relationships among functional areas of the business Financial Ratio Analysis

15. Resource Based View (RBV) Ch 4 - 15 Three All-Encompassing Categories Physical resources Human resources Organizational resources

16. Resource Based View (RBV) Ch 4 - 16 Empirical Indicators Rare Hard to imitate Not easily substitutable

17. Integrating Strategy & Culture Organizational Culture P attern 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 Ch 4 - 17

18. Integrating Strategy & Culture Organizational Culture ■ ■ Ch 4 - 18 Resistant to change May represent: ❑ ❑ Strength W ea k nes s

19. Cultural P r o d u c ts V a l ues L egends B e l iefs Heroes Rites Symbols R i tuals M y ths Integrating Strategy & Culture Ch 4 - 19

20. Integrating Strategy & Culture Organizational Culture Can Inhibit Strategic Management ■ Ch 4 - 20 ■ Miss external changes due to strongly held beliefs Natural tendency to “hold the course” even during times of strategic change

21. Management Ch 4 - 21 Functions of Management Planning Organizing Motivating Staffing Controlling

22. Management Planning Stage When Most Important F un ction Strategy Formulation Organizing Strategy Implementation Motivating Strategy Implementation Staffing Controlling Strategy Implementation Strategy Evaluation Ch 4 - 22

23. Management P l an ni n g ■ Ch 4 - 23 ■ ■ Beginning of management process Bridge between present & future Improves likelihood of attaining desired results

24. Planning Developing a mission Forecasting future events and trends Establishing objectives Choosing strategies to pursue Management Ch 4 - 24

25. Planning Synergy Can develop through planning Exists when everyone pulls together as a team that knows what it wants to achieve Ch 4 - 25

26. Management Organizing ■ Ch 4 - 26 ■ ■ ■ Achieves coordinated effort Defines task & authority relationships Determines who does what Determines who reports to whom

27. Management Organizing Breaking down tasks into jobs Combining jobs to form departments Delegating authority Ch 4 - 27

28. Management M o ti v a ting ■ ■ Ch 4 - 28 Influencing to accomplish specific objectives Four components include: ❑ ❑ ❑ ❑ Leadership Group dynamics Communication Organizational change

29. Management S t a f f i n g ■ ■ Ch 4 - 29 Personnel management Human resource management

30. Management Caring for ■ Ch 4 - 30 St a f f i n g Recruiting Interviewing Testing Selecting Orienting Training Developing Evaluating Rewarding Disciplining Promoting Transferring Demoting Dismissing

31. Management Controlling ■ Ch 4 - 31 ■ ■ Establishing performance standards Ensure actual operations conform to planned operations Taking corrective actions

32. Management Controlling Establish performance standards Measure individual and organizational performance Compare actual performance to planned performance standards Take corrective action Ch 4 - 32

33. Management Audit Checklist Ch 4 - 33 Does the firm use strategic management concepts? A r e o b jec ti ve s / g o al s m e asu r a b l e ? W el l communicated? Do managers at all levels plan effectively?

34. Management Audit Checklist Ch 4 - 34 Do managers delegate well? Is the organization’s structure appropriate? Are job descriptions clear? Are job specifications clear? Is employee morale high?

35. Management Audit Checklist Ch 4 - 35 Is employee absenteeism low? Is employee turnover low? Are the reward mechanisms effective? Are the organization’s control mechanisms effective?

36. Marketing Ch 4 - 36 Customer Needs or Wants for Products and Services Defining Anticipating Creating Fulfilling

37. Marketing Ch 4 -36 Marketing Functions Customer analysis Selling products/services Product & service planning Pricing Distribution Marketing research Opportunity analysis

38. C us t o m e r Analysis Customer surveys Consumer information Market positioning strategies Customer profiles Market segmentation strategies Marketing Ch 4 - 38

39. Advertising Sales Promotion Publicity Personal Selling Sales force management Customer relations Dealer relations Marketing Ch 4 - 39 Selling Pro d u ct s / S e r v i c e s

40. Ch 4 - 40

41. Test marketing Brand positioning Devising warranties Packaging Product features/options Product style Quality Deleting old products Providing for customer service Marketing Ch 4 - 41 P ro d uc t / S e r v i c e Planning

42. Consumers G ove r n m en ts Suppliers Distributors Competitors Marketing Ch 4 - 42 Pricing Major Stakeholders

43. Warehousing Distribution channels Retail site locations Sales territories Inventory levels Transportation Wholesaling Retailing Marketing Ch 4 - 43 Distribution

44. Gather data Record data Analyze data Marketing Ch 4 - 44 Marketing Research

45. Assessing costs Assessing benefits Assessing risks Marketing Ch 4 - 45 C o st/B e n e fit Analysis

46. Marketing Audit Are markets segmented effectively? Is the organization positioned well among competitors? Has the firm’s market share been increasing? Are the distribution channels reliable & cost effective? Is the sales force effective? Ch 4 - 46

47. Marketing Audit Does the firm conduct market research? Are product quality & customer service good? Are the firm’s products and services priced appropriately? Does the firm have effective promotion, advertising, and publicity strategies? Ch 4 - 47

48. Marketing Audit Are the marketing, planning, and budgeting effective? Do the firm’s marketing managers have adequate experience and training? Is the firm’s Internet presence excellent as compared to rivals? Ch 4 - 48

49. Finance/Accounting Investment decision (Capital budgeting) Financing decision Dividend decision Ch 4 - 49

50. Firm’s ability to meet its short-term obligations R atios Current ratio Quick (or acid test) ratio Basic Financial Ratios Ch 4 - 50 Liquidity Ratios

51. Extent of debt financing R atios Debt-to-total assets Debt-to-equity Long-term debt-to-equity Times-interest-earned Basic Financial Ratios Ch 4 - 51 Leverage Ratios

52. Effective use of firm’s resources R atios Inventory turnover Fixed assets turnover Total assets turnover Accounts receivable turnover Average collection period Basic Financial Ratios Ch 4 - 52 Activity Ratios

53. Effectiveness shown by returns on sales and investment R atios Gross profit margin Operating profit margin Net profit margin Return on total assets (ROA) Basic Financial Ratios Ch 4 - 53 Profitability Ratios

54. Effectiveness shown by returns on sales & investment R atios Return on stockholders’ equity (ROE) Earnings per share Price-earnings ratio Basic Financial Ratios Ch 4 - 54 Profitability Ratios (cont’d)

55. Firm’s ability to maintain economic position R atios Sales Net Income Earnings per share Dividends per share Basic Financial Ratios Ch 4 - 55 Growth Ratios

56. R a t i o ■ Sa l e s ■ Net Income ■ Earnings per share ■ Dividends per share ■ Ch 4 - 56 Annual percentage growth in Total sales ■ Pro f i ts ■ EPS ■ Dividends per share Growth Ratios

57. Finance/Accounting Audit Ch 4 - 57 Where is the firm financially strong/weak as indicated by financial ratio analysis? Can the firm raise needed short-term capital? Can the firm raise needed long-term capital through debt and/or equity? Does the firm have sufficient working capital? Are capital budgeting procedures effective?

58. Finance/Accounting Audit Ch 4 - 58 Are dividend payout policies reasonable? Does the firm have good relations with its investors and stockholders? Are the firm’s financial managers experienced and well trained? Is the firm’s debt situation excellent?

59. Production/Operations Production/Operations Functions ■ ■ ■ ■ ■ Ch 4 - 59 Process Capacity Inventory W ork f o rce Quality

60. Ch 4 - 60

61. 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? Ch 4 - 61

62. Production/Operations Audit Are quality-control policies & procedures effective? Are facilities, resources, and markets strategically located? Does the firm have technological competencies? Ch 4 - 62

63. Research & Development Research & Development Functions ■ Ch 4 - 63 ■ ■ ■ Development of new products before competitors Improving product quality Improving manufacturing processes to reduce costs These functions can be done internally or externally

64. Financing as many projects as possible Use percent-of-sales method Budgeting relative to competitors How many successful new products are needed Research & Development Ch 4 - 64 R&D Budgets

65. 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? Ch 4 - 65

66. Research & Development Audit Are MIS and computer systems adequate? Is communication between R&D and other organizational units effective? Are present products technologically competitive? Ch 4 - 66

67. Management Information Systems P ur p o s e ■ Ch 4 - 67 Improve performance of an enterprise by improving the quality of managerial decisions

68. Management Information Systems Audit Ch 4 - 68 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?

69. Management Information Systems Audit Ch 4 - 69 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?

70. Value Chain Analysis Ch 4 - 70 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

71. Value Chain Analysis Ch 4 - 71 Core competencies Distinctive competencies Benchmarking

72. Transforming Value Chain Activities into Sustained Competitive Advantage Value Chain Activities Are Identified and A sse s se d Core C o m p e t en ci e s Arise in Some Activities Some Core C o m p e t en ci e s Evolve into Distinctive C o m p e t en ci e s Some Distinctive C o m pe t e nc i e s Yield Sustained Competitive Advantages Ch 4 - 72

73. Internal Factor Evaluation (IFE) Matrix List key internal factors Assign a weight ranging from 0.0 to 1.0 Assign a 1 to 4 rating to each factor Multiply the weight times the rating Sum the weighted scores Ch 4 - 73