Please enable JavaScript.

Coggle requires JavaScript to display documents.

CHAPTER 4 STRATEGIC ANALYSIS (INTERNAL & EXTERNAL ANALYSIS) - Coggle…

- - - - 2. SOCIAL, CULTURAL, DEMOGRAPHIC & ENVIRONMENTAL FORCES
        
        Have a major impact upon virtually all products, services, markets & customers.
        
        Whether it is SME, large corporation, for profit or non-profit organizations, in all industries are being staggered & challenged by the opportunities & threats arising from these changes.
        
        THE VARIABLES: Number of births, number of deaths, Social Security programs, life expectancy rates, trust in government, Government regulation, social responsibility
        
        Analysis: Population growing older, Increase in younger population & Gap between Rich and Poor are widening.
        
        3. POLITICAL, GOVERNMENTAL, & LEGAL FORCES
        
        The political-legal forces include such as factors as the outcomes from the elections, legislation & judicial court decisions as well the decisions rendered by the various commission and agencies at very level of government.
        
        The stability of a political system can be affect by the appeal of a particular local market. Governments view business organizations as a critical vehicle for social reform. Gov pass legislation which impact the relationship between the firm and its customer, supplier & other companies.
        
        THE VARIABLE: Government Policies, Leadership, & Change in foreign trade policies such as internal political issues and trends in tax policy.
        
        4. TECHNOLOGICAL FORCES
        
        It represent major opportunities & threats that must be considered in formulating strategies.
        
        The technological advancements can create new competitive advantages that are more powerful than existing advantages.
        
        Not all sector of the economy are affected equally by technological developments.
        
        For example, The communications, electronics, aeronautics, & pharmaceutical industries are much more volatile than the textile, forestry and metal industries.
        
        Cell phones & wireless internet are common.
        
        The government of Malaysia identified key digital areas to drive ICT sector which are cloud, IoT, Data analytics, Cybersecurity, data center, e-commerce & AI being the main drivers for Industry 4.0 & Smart City.
        Agencies involved: MESTECC, MCMC, Ministry of Communication & Multimedia Malaysia, MDEC, SIRIM, PIKOM
  - - - 1. Threat of New Entrants
        
        This forces determine how easy/not, to enter a particular industry.
        
        So, if an industry is profitable, & there are few barriers to enter, the rivalry soon intensifies.
        
        When more organization compete for the same market share, profits start to fall.
        
        It is essential for existing organization to create high barriers to enter to deter new entrants.
        
        Such as government regulation, access to supplier & distributors, product differentiation, brand reputation.
      - 2. Bargaining Power of Suppliers
        
        Strong bargaining power allows supplier to sell higher price/lower quality raw materials to their buyers.
        
        This directly affect the buying firm profits because it has to pay more for materials.
        Such as, materials scarcity, number or supplier, supplier size, ability to find substitute materials.
      - 3. Industry Rivalry
        
        This force is the major determinants on how competitive & profitable an industry is.
        
        In competitive industry, firms have to compete aggressively for a market share, which results in low profits such as the number of competitors, cost of leaving an industry, industry growth rate & size, product differentiation, competitor size, customer loyalty
      - 4. Bargaining Power of Buyers
        
        Buyers have the power to demand lower price/ higher product quality from industry producers when their bargaining power is strong.
        
        Lower price means lower revenues for the producer, while higher quality product usually raise production costs.
        
        Both scenario result in lower profit for producers. Such as the number of buyers, size of buyers, size of each order, buyers cost of switching suppliers, price sensitivity
      - 5. Threat of Substitute Products
        
        This force is especially threatening when buyers can easily find substitute product with attractive prices/better quality & when buyers can switch from one product/services to another with little cost.
        
        For example, to switch from coffee to tea doesn't cost anything, unlike switching car to bicycle.
        
        These are: Number of substitutes, performance of substitutes & cost of changing.
        Example are like:
        Butter vs margarine
        Physical vs eBook
        Eyeglass vs contact lens
        Laptop vs desktop computers
- - - - Physical Resources/Tangible
        
        Financial
        
        Funds allocated
        
        The org ability to generate internal funds
        
        Organizational
        
        The firm's formal reporting structure its formal planning, controlling & coordinating systems
        
        Physical
        
        Sophistication location of a firm's plant & equipment
        
        Access to raw materials
        
        Technological
        
        Stock of technology such as patents, trademarks, copyrights and trade secrets.
      - Human Resources/ Intangible
        
        Human Resource
        
        Knowledge
        
        Managerial Capabilities
        
        Organizational Routines
        
        Innovation Resource
        
        Ideas, Scientific capabilities, capacity to innovate
        
        Reputational Resource
        
        Reputation with customer: Brand name, perceptions of product quality, durability & reliability
        
        Reputation with suppliers: For efficient, effective, supportive & mutually beneficial interactions & relationships.
    - - INTERNAL ANALYSIS
        THE PROCESS OF PERFORMING INTERNAL AUDIT
        The process of performing an internal audit is closely parallels to the process of performing external audit.
        
        Representative manager and employees from throughout the firm need to be involved in determining the firm strength and weaknesses.
        
        Performing an internal audit requires gathering, assimilating and evaluating information about the the firms operations.
        
        Compared to the external audit, the process of performing an internal audit provides more opportunity for participants to understand how their job, department and division fit into the whole organization.
        
        Financial Ratio analysis exemplifies the complexity of relationship among the functional areas of business.
      - DEC 2018
        Organizational culture significantly affects organization's decision and thus must be evaluated during an internal strategic management audit. Explain any FOUR (4) consequences of ignoring the culture when implementing strategies in an organisations.