Strategic Mgmt - Internal and external 3.pptx

Strategic management - External and internal analysis

1. Strategic Management – Unit 3 Alex Kuruvilla

2. Syllabus Internal and External Analysis Internal and external analysis ; SWOT analysis; benefits and pitfalls of SWOT analysis; role of SWOT analysis in strategic management. Gap analysis, organizational capability profile; strategic advantages profile; core competencies; McKinsey’s 7 S framework.

3. Environment analysis - Introduction

4. Internal Environment analysis These are factors from inside the firm that could affect performance and decision making Finance Available Ability of Staff Information Available ICT Availability Ability of Management Changes in Cost Mission and vision Culture Marketing R & D

5. External Analysis - This is an analysis of the factors outside the firms influence but impacting the firm’s decision making Macro environment P olitical E conomic S ocial T echnological E nvironmental D emographic Micro environment Suppliers Customers Competitors Publics Marketing intermediaries

6. Turning your SWOT into strategies

7. Benefits of SWOT in strategic management It is a source of information for strategic planning. Builds organization’s strengths. Reverse its weaknesses. Maximize its response to opportunities. Overcome organization’s threats. It helps in identifying core competencies of the firm. It helps in setting of objectives for strategic planning. It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out

8. Limitations of SWOT analysis Over emphasize strengths and downplay threats SWOT can be static and can ignore change Over emphasize a single strength Strength is not necessarily a source of competitive advantage

9. GAP analysis Gap analysis is used to identify the strategic and operational gaps in the performance “What are we doing today and how will this lead us to our next goal?” It analysis the current capabilities of the company and its future development

10. Gaps Strategic gap Operational gap Operational gap Performance gap Competitive gap

11. Procedure – Gap Analysis strategic planning

12. Gap analysis model – Servqual Model

13. Organization capability profile Key functional strengths of organizations Compare and measure the capability in functional areas. Organizational capability factors are strategic strengths and weaknesses existing in different companies which are crucial in strategy formulation and implementation. Six functional crucial areas Finance Marketing Operations Personnel Information General management

14. Core competencies Capabilities that the firm emphasizes and performs especially well while pursuing its vision. ————————————————————— Core competencies help the firm achieve a competitive advantage when the firm’s core competencies are different from those held by competitors. Core competencies enable a firm to complete activities effectively. Distinctive competencies provide products to customers that are superior to those provided by competitors.

15. Managing Resources to Develop Capabilities and Core Competencies

16. Examples of 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 System to fill customer orders accurately and swiftly

17. Examples Financial Capability Bajaj: Cash management LIC: centralized payment, decentralized collection Reliance: High investor confidence Marketing Hindustan Lever: distribution channel IDBI: Wide variety of products Tata: Company / Product Image Operation GE: Global production Toyota: High Quality Personnel Apollo Tyres: Industrial relation General Management Malayalam Manaroma: U nchallenged leadership, unified and stable

18. Mckinsey’s 7S framework Developed in the early 1980s by Tom Peters and Robert Waterman T he basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it wa n ts to be successful .

19. Where 7S model can be used? To improve the performance of a company , To examine the likely effects of future changes within a company , To align departments and processes , To determine what is the best way to implement a proposed strategy .

20. The Seven Elements Hard elements Soft elements Strategy Shared values Structure Skills Systems Style Staff "Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems. " Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful .

21. The key point of the model is that all the seven areas are interconnected and a change in one area requires change in the rest of them for it to function effectively.

22. Strategy:  the plan devised to maintain and build competitive advantage over the competition. Structure:  the way the organization is structured and who reports to whom. Systems:  the daily activities and procedures that staff members engage in to get the job done.

23. Shared Values:  these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style:  the style of leadership adopted. Staff:  the employees and their general capabilities. Skills:  the actual skills and competencies of the employees working for the company

24. Apple Inc Shared Values - business is aligned around the values of design and user experience Strategy - focus on a small number of products and to make them innovative and excellent – enabling the business to capture a huge market share relative to its size, and build a loyal customer following

25. Staff - offers their employees huge benefits Skills - highly qualified and creative employees Systems - supply chain with built capacity for launching and supplying huge new market-dominating products Style - people are free to innovate – as long as they met Jobs’ high standards

26. How to use the tool? Step 1. Identify the areas that are not effectively aligned Step 2. Determine the optimal organization design Step 3. Decide where and what changes should be made Step 4. Make the necessary changes Step 5. Continuously review the 7s