Internal appraisal of the firm

1. HYDERALI CHEVIDIKKUNNAN
ROLL NO 100604
internal appraisal
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Internal appraisal of the firm

2. internal appraisal
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Three parts of internal appraisal
Assessment of strength & weakness
Appraisal of the status/health
Identify & asses competitive advantages & corecompetence
3. Purpose, role and importance
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Stands in capabilities and strength & weakness
Opportunity to be tapped in line with its capability
Match the Objective in line with its capability
Asses the capability gap
Select the specific lines in which it can grow
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It is the starting point for developing the competitive advantages & core competencies
5. 1.Assessing strength & weakness
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S-W appraisal: (Tata IBM limited)
Strengths
-excellent workstations
-high brand equity
-IBM itself largest buyers of software
Weaknesses
-late entry into the market
-limit marketing reach
-omission of IBM name in the company name
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S-W appraisal :AT&T
Strength
-manufacturing facility
-strong financial muscle
-top-class research facilities
Weaknesses
-slow in decision-making
-minor player in home market
-slow in recognizing Asian boom
-top management only have North Americans
7. Aspects to be covered & techniques commonly used in S-W analysis
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1.aspects relating to the market growth
-market growth
-market share
-PLC stage of the product
-customer perception about the product
-synergy in the product-mix
-prices, margins, marketing spends
-overall capability in marketing
8. Techniques for analyzing strength & weakness in marketing
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Marketing audit
Market share analysis
Analysis of price-volume relationship
Marketing cost analysis
Product line profit analysis
Sales force productivity analysis
Consumer satisfaction index
Dealer & consumer panels
Brand monitoring surveys
9. Aspects relating to finance
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Return on investment
Liquidity
Leverage
Gearing
Cash flow
Quality of the financial management
10. Techniques (financial)
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Financial Ratios (liquidity, profitability etc)
Cash flow analysis
Payback & IRR
Break-even analysis
Earning ratios (eg;earning to sale )
Earning per share
11. Aspects relating to the manufacturing
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Process, facilities & skills
Quality management
Operating efficiency
Industrial engineering capability
12. Techniques (manufacturing)
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Capacity utilization analysis
Inventory analysis
Cost of production analysis
13. Aspects relating to R & D
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Commitment, status
expertise, experience of the personals
Patent generation
schedules
14. Techniques (R & D)
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Analysis of patent
New product commercialization record
Comparison of R & D investment against successful new product launch
15. Aspects relating to HRD
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Commitment
Financial resources
Personnel knowledge,expertise & experience
Techniques
HRD audit
Personnel turnover ananlysis
Employee morale survey
16. Corporate factors and overall resources
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Company size
Corporate image
Corporate performance record
Innovation record
Adequacy of organization for current & future strategies
Use of information technology extent of use and degree of sophistication
17. APPRAISAL OF THE STATUS/HEALTH OF THE BUSINESS OF THE FIRM
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Healthy portfolio
Business with good growth & profit potential
Kind of industries (growth,mature,emerging
decline)
Rate of growth
Helps to formulate strategy choice
18. Competitive advantages(CA)and core competence(cc)
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Competitive advantages
superiority offirm in function/factor/actvity
Marketing ,production,finanace,new product launch ,brand management,resourse ,capability ,technology
Big firm =strength of size
Small firm = flexibility
19. Example
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flexible manufacturing system(FMS)
low cost in personnel stereo
service within 48 hours in any part of the world
20. NATURE & SIGNIFICANCE OF CA
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Competitive advantage back-up for strategy
For strategy to work the firm must have the relevant CA
CA is distinct from strength
-strength ie superior to competitor
-result in cost advantage or a differentiation advantage
-strength cant form back-up for strategy
-CA needs SW analysis
-strength can discerned by internal appraisal butCA need both internal & external appraisal
21. Sources of CA
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In marketing
-market share
-customer satisfaction level
-customer service level
-price leadership
-Advertising effectiveness
-marketing cost
-market research capability
-product-wise position in
-profitability
-stage of product in the life cycle
-brand power
22. Cont
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In finance
-Assets
-Liquidity
-Leverage
-Cash flow
-Quality of financial management
-knowledge & dynamism in tax planning
23. Cont
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In manufacturing/operation
-capacity of production
-location advantages
-raw material cost, quality & delivery
-cost of production
-Break-even position
-productivity
-inventory management
-flexibility
-Automation
24. Cont
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In R&D
-Nature ,depth & quality of R&D
-Resource allocation to R&D
-Quality , expertise and experience of personnel
-speed of R & D
-Record of patent generated
-Comparison of R & D investment Vs new productlaunched
25. Cont.
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In Human Resources
-Quality ,knowledge ,expertise & experience of personnel
-Morale andmotivation of personnel
-personnel turnover
-Labour cost
-industrial relations
26. Cont.
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In corporate factors and overall resources
-company size
-corporate image
-The CEO
-Board of Directors
-corporate performance record
-innovation record
-Use of IT
27. Cont
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Any CA finally manifests as either a cost advantage or a differentiation advantage
CA appraisal
Identifying the CA factors of the firm
-Hindustan Lever in distribution
-ModiXeroxs Service within 24 hours
-Reliance Textiless distribution & promotion
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Drawing up the CA profile (CAP) of the firm
CAP of Bajaj Auto Limited
CA factorCompanys position in the factor
Marketing product line,capacity,productupgradation,large sales turnover,consumerloyality,brandimage,strongdistribution,high market share
29. Cont
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CA factorCompanys position in the factor
Finance strong position in profit
surplus working capital
Manufacturingstrong in engg
strong quality assurance
Technology strong in-house
& High budget
R&D
30. cont....
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Corporate &Third largest two- wheeler
overall resource created entry barrier
factor global player of India
31. HOW DO COMPANIES ACQUIRE CA
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Building CA is task of corporate strategy
-Strategy uses and creates CA
Internal appraisal and industry-competition analysis help identify CA
Benchmarking an effective tool in CA building
32. Cont.
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-Types of benchmarking
-internal
-functional
-competitive
-generic
33. Cont.
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-Benchmarking of Taurus car project
-Benchmarking of Indian firms
-Example of coromondel Fertilisers
Value chain approach will be of use in identifying and building CA
-CA stem from customer value created by the firm
-Analyzing competitors value chain gives useful clues
34. STRATEGIC COST MANAGEMENT - BA122B Spring 2009
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Value Chain Modelfrom Michael E. Porters Competitive Advantage
SUPPORT ACTIVITIES
Firm Infrastructure (General Management)
Human Resource Management
Customer Value
Margin
Technology Development
Procurement
Inbound Logistics
Outbound Logistics
Sales & Marketing
Service and Support
Ops.
Margin
Customer Value
PRIMARY ACTIVITIES
35. Cont.
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Corporate clout confers CA on SBUs & SBU contribute to CA at corporate level
Core skills of the corporation serve as anchor for CA building
Firms build CA using different strategic routes
-innovation
-integration
-R&D
-mergers & acquisition
-strategic alliances with other firms
36. Cont.
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Videocon acquire CA through integration
IDM acquire CA through R&D
Nestle CA through brand power
CA trough alliances
-kotak Mahindras alliance with Bank of Madhura
-Tatas alliance with AT&T in switching system
37. Cont
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Creating entry barriers will also confer CA
-MarutiUdyog & Bajaj Auto
Building CA a conscious and long term process
38. THE CONCEPT OF CORE COMPETENCE
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fundamental , durable , unique ,higher order CA
An enduring competency cannot be imitated
A competency lies at the root of the product
39. Examples of core competence
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=miniaturization
=optical media
= engine
=imaging
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Attributes of core competence
- the firm the access to a variety of product
-contributes significantly to the customer benefits in the end product
-exclusive to the firm
largely it is technological competence
41. Distinction b/w CA & core competencies
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The touchstone of core competency provides lasting superiority
CA does not sure success
CA accrues from the functional strength, but core competency core strength like excellence in technology/processes
CA helps in limited way ,but cc in far-reaching & multifaceted manner
CA = strength to a product/business,but cc helps to playin variety of businesses/products
CA can be imitated easily
cc is fundamental and unique
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The cc competency concept does not restrict no of businesses a firm can be
For
-by using sticky tape=60000 product
43. One cc lead to manyproduct lead to many end product/businesses
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44. competing for the futures author prahlad
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We have to look at the organization as a portfolio of competencies , of underlying strength ,and not just as a portfolio of business units ..We must also identify those core competencies which make us successful in existing business. We must also identify those core competencies that would allow us to create new products; and we must ask ourselves what we can leverage as we move into the future, and what we can do that other companies might find difficult
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How companies acquire cc=invest in technology & R&D
In-house manufacture of core products ,facilitates acquiring cc
cc of Honda
-design & manufacturing of engines
-unmatched performance
46. Cont.
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Focus ,another requirement in building cc
Building cc,aconcious & long term process
For Indian firms,this task will become the prime challenge
47. referece
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Strategic planning formulation of strategy
V S RAMASWAMY
S NAMAKUMARI
www.wikipedia.org
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THANK YOU

Internal appraisal of the firm

Business

internal appraisal4it

home market slow

strength weaknessopportunity

overall capability

productcustomer perception

successful new product

financial management

capability gapselect