1. Measuring Strengths and Weaknesses (Scanning the Internal Environment)

2. What are Strengths and Weaknesses? ä Strengths - a company’s competitive advantages and other distinctive competencies ä distinctive competency - something an organization does exceedingly well ä Weaknesses - constraints that hinder movements in certain directions

3. Types of Competencies ä Superior manufacturing skills in producing a high quality product. ä Superior system for delivering customer orders accurately and swiftly. ä Better after-sale service capability. ä More skill in achieving low operating costs. ä Superior product design capability. ä Unusual innovativeness in new product development. ä Better merchandising and product display skills. ä Superior mastery of an important technology. ä Better marketing and customer research. ä Unusually effective salesforce. ä Expertise in integrating multiple technologies to create whole families of new products.

4. Company Resources can be Strengths or Weaknesses ä Companies control resources (assets, competencies, processes, skills or knowledge). They can be strengths or weaknesses. Must ask: 1. Does it provide a competitive edge? (value) 2. Do other competitors posses it? (rareness) 3. Is it costly for others to imitate? (imitability) 4. Is the firm organized to exploit the resource? (organization)

5. Value Chain Analysis ä Analyzing the firm’s value creating activities. ä This is a good way to begin analyzing strengths and weaknesses.

6. Corporate Value Chain Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.

7. Using Value Chain Analysis ä Examine your value chain for strengths and weaknesses. ä Determine how to reduce non-value work. ä Examine linkages between activities.

8. Scanning Internal Resources Scan the internal environment and evaluate: A. Organizational Structure B. Organizational Culture C. Organizational Resources 1. Marketing 2. Finance 3. Research & Development 4. Operations 5. Human Resources 6. Information Systems

9. Typical Strengths & Weaknesses of Some Functional Areas of the Firm FunctionStrengthsWeaknesses MarketingStrong salesforceInsufficient salesforce Excellent distributionPoor forecasting Excellent mktg information Finance/AcctExcess cashUsing wrong cost system Large credit lineHeavily leveraged Excellent cost infoNo timely reporting (e.g., inventory) R&D/DesignExperienced designersInsufficient R&D spending Patent protection OperationsExcellent qualityHigh production costs Short cycle timesUnreliable delivery Excellent delivery times

10. Measuring Strengths and Weaknesses at Maytag Internal Factors Weight Rating Weighted Score Comments 12345 1.00 Strengths Quality Maytag culture Experienced top management Vertical integration Employee relations Hoover’s international orientation Weaknesses Process-oriented R&D Distribution channels Financial position Global positioning Manufacturing facilities Total Weighted Score Quality key to success Know appliances Dedicated factories Good, but deteriorating Hoover name in cleaners Slow on new products Superstores replacing small dealers High debt load Hoover weak outside the United Kingdom and Australia Investing now 3.05.15.05.10.05.15.05.15.20.05 54433222245443322224.75.20.40.15.45.10.30.40.20