Internal Scanning Organizational Analysis Chapter 4

Chapter Objectives how to scanning internal environment After finish this chapter student will able: how to scanning internal environment to assess organization capability with Business function analysis, Core competency analysis and Value chain analysis. use SWOT analysis to develop strategy.

Nature of an Internal Audit -Besides watching External Environment (Chapter 3) the companies should examine the competitiveness and performance of the firm operations. Basis for objectives and strategies -Understand Internal strengths and weaknesses -Understand External opportunities and threats -a Clear statement of mission

Key Internal Forces- Core competency analysis Distinctive Competencies -A firm’s strengths that cannot be easily matched or imitated by competitors. -Building competitive advantage involves taking advantage of distinctive competences. -Strategies designed in part to improve on a firm’s weaknesses and turn to strengths.

Key Internal Forces- Business function analysis Functional business areas -Vary by organization -Divisions have differing strengths and weaknesses Similar to process of external audit. Gather and assimilate information from: -Management/Marketing -Finance/accounting -Production/operations -Research and development -Management information systems.

*key to organizational success: Involvement in performing an internal strategic-management audit provides vehicle for understanding nature and effect of decisions in other functional business areas of the firm. *key to organizational success: - Coordination and understanding among managers from all functional areas

Functions of management Stage When Most Important Function Planning Strategy Formulation Organizing Strategy Implementation Motivating Strategy Implementation Staffing Strategy Implementation Controlling Strategy Evaluation

Functions of Marketing Process of defining, anticipating, creating, and fulfilling customers’ needs and wants for products and services Customer analysis Selling products/services Product and service planning Pricing Distribution Marketing research Opportunity analysis

Functions of Finance/Accounting Determining financial strengths and weaknesses key to strategy formulation Investment decision (Capital budgeting) Financing decision Dividend decision

Functions of Production/Operation Process Capacity Inventory Workforce Quality

Functions of Research and Development Development of new products before competition Improving product quality Improving manufacturing processes to reduce costs

Functions of Management Information Systems Purpose – Improve performance of an enterprise by improving the quality of managerial decisions. Information Systems Security User-friendly E-commerce

Key Internal Forces- Porter’s Value Chain Value chain analysis is a systematic tool to analyze the interaction among all activities a firm performs. This concept divides a company’s activities in to 2 main activities (5 primary and 4 support activities).

SWOT analysis is a tool to classify the environment affecting the organization. it identifies internal and external factors whether they are favorable and unfavorable. SWOT come from: Strength- organization’s strong points. Weakness- organization’s weak points Opportunities- events support org. Threats – are unfavorable situation.

Improvement, Protection Advantage Disadvantage Internal Environment Strength Weakness External Environment Opportunities Threats Strategic actions Competitiveness Improvement, Protection

Group discussion Break class into group Do SWOT analysis on BBU BM