Chapter 4: The internal assesment
Key Internal Forces
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Building competitive advantages involves taking advantage of distinctive competencies.
A firm’s strengths that cannot be easily matched or imitated by competitors
Distinctive competencies
The Process of Performing an Internal Audit
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The internal audit
Requires gathering and assimilating information about the firm’s management, marketing, finance/accounting, production/operations, research and development (R&D), and management information systems operations
Provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization
The Resource-Based View (RBV)
contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage
Proponents of the RBV contend that organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories: physical resources, human resources, and organizational resources
Integrating Strategy and Culture
Organizational culture significantly affects business decisions and thus must be evaluated during an internal strategic-management audit.
If strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, then management often can swiftly and easily implement changes.
Management
The functions of management consist of five basic activities: planning, organizing, motivating, staffing, and controlling.
Basic function of management
Planning
Organizing
Motivating
Staffing
Controlling
Marketing
the process of defining, anticipating, creating, and fulfilling customers’ needs and wants for products and services
Function of marketing
Customer analysis
Selling product/services
Pricing distribution
Marketing distribution
Opportunity analysis
Cost/Benefit Analysis
- compute the total costs associated with a decision,
- estimate the total benefits from the decision,
- compare the total costs with the total benefits.
Finance/Accounting Functions
The functions of finance/accounting comprise three decisions:
the investment decision
the financing decision
the dividend decision
Production/Operations
Production/operations function
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consists of all those activities that transforms inputs into goods and services
Production/operations management deals with inputs, transformations, and outputs that vary across industries and markets.
Management Information Systems
A management information system’s purpose is to improve the performance of an enterprise by improving the quality of managerial decisions
An effective information system thus collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions
Value Chain Analysis (VCA)
refers to the process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing product(s) to marketing those products
Benchmarking
an analytical tool used to determine whether a firm’s value chain activities are competitive compared to rivals and thus conducive to winning in the marketplace
The Internal Factor Evaluation (IFE) Matrix