Chapter 5: Internal Scanning: Organizational Analysis

Front 1

Organizational Analysis

Back 1

concerned with identifying and developing an organization's resources and competencies

Front 2

Resources

Back 2

an organizations assets and thus are the building blocks of the organization.

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Tangible assets

Back 3

plant, equipment, finances and location

Front 4

Human Assets

Back 4

employees, their skills, and motivation

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Intangible assets

Back 5

technology (patent and copyrights), culture, and reputation

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Capabilities

Back 6

a corporation's ability to exploit its resources

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Competency

Back 7

a cross-functional integration and coordination of capabilities
ex) competency in new product development in one division of a corporation may be the the consequence of integrating management of information systems capabilities, marketing capabilities, R&D capabilities, and production capabilities within the division.

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core competency

Back 8

a collection of competencies that cross divisional boundaries, is wide spread throughout the corporation and is something that the corporation does exceedingly well
ex) new product development is a core competency if it goes beyond one division.
ex) Avon door to door selling

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distinctive competency

Back 9

core competencies that are superior to those of the competition.
ex) GE distinctive competency in management development

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Durability

Back 10

the rate at which a firm's underlying resources, capabilities, or core competencies depreciate or become obsolete.

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Imitability

Back 11

the rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others

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transparency

Back 12

the speed at which other firms under the relationship of resources and capabilities support a successful strategy.
ex) gillette and dominance in the razor market

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transferability

Back 13

the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
ex) french wine

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replicability

Back 14

the ability of competitors to use duplicated resources and capabilities to imitate the other firm's success

Front 15

explicit knowledge

Back 15

knowledge that can be easily articulated and communicated. competitive intelligence activities can quickly identify and communicate

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tacit knowledge

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knowledge that is not easily communicated because it is deeply rooted in employee experience or in the company's culture. it is much more difficult for competitors to imitate

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Business models

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a company's method for making money in the current business environment. it includes the key structural and operational characteristics of a firm- how it earns revenue and makes a profit

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5 elements of a business model

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1) who it serves
2) what it provides
3) how it makes money
4) how it differentiates/sustains competitive advantage
5) how it provides its product/service

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customer solutions model

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ex) IBM uses this model to make money not by selling IBM products, but by selling its expertise to improve its customer's operations. This is a consulting model.

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multi-component system

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ex) Gillete invented this classic model to sell razors at break even pricing in order to make money on higher margin razor blades. HP does the same thing with printers and printer cartridges
- the product is thus a system, not just one product, with one component providing most of the profits

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advertising model

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similar to the multi-component system/installed base model, this model offers its basic product free in order to make money on advertising. Originating in the newspaper industry, this model is used heavily in commercial radio and television. Internet based firms, such as Google, offer free services to users in order to expose them to the advertising that pays the bills.

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profit pyramid model

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ex) GM offers a full line of automobiles in order to close out any niches where a competitor might find a position. The key is to get customers to buy in at the low priced, low margin entry point and move up to high priced, high margin products where the company makes its money

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blockbuster model

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in some industries, such as pharmaceuticals and motion picture studios, profitability is driven by a few key products. The focus is on high investments in a few products with high potential payoffs- especially if they can be protected by patents

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profit multiplier model

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the idea of this model is to develop a concept that may or may not make money on its own, through synergy, can spin off many profitable products.
ex) Walt Disney invented this concept by using cartoon characters to develop high margin theme parks, merchandise, and licensing opportunities

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Simple Structure

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has no functional or product categories and is appropriate for a small, entreprenuer-dominated company with one or two product lines that operates in a reasonably small, easily identifiable market niche. employees tend to be generalists and jacks of all trades. This is a stage 1 company

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Functional structure

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appropriate for a medium sized firm with several product lines in one industry. employees tend to be specialist in the business functions that are important to that industry, such as manufacturing, marketing, finance, and human resources. This is a second stage company.

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Divisional structure

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appropriate for a large corporation with many product lines in several related industries. employees tend to be functional specialists organized according to product/market distinctions. Management attempts to find some synergy among divisional activities through the use of committees and horizontal linkages.

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Strategic business units

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divisions or groups of divisions composed of independent product-market segments that are given primary responsibility and authority for the management of their own functional areas. SBU's must have:
1) a unique mission
2) identifiable competitors
3) external market focus
4) control of its business functions

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conglomerate structure

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appropriate for a large corporation with many product lines in several unrelated industries.

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market position

Back 30

refers to the selection of specific areas for marketing concentration and can be expressed in terms of market, product, and geographic locations.

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marketing mix

Back 31

the particular combination of key variables under a corporation's control that can be used to affect demand and to gain competitive advantage

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brand

Back 32

a name given to a company's product which identifies that item in the mind of consumer

Front 33

corporate brand

Back 33

a type of brand in which the company's name serves as the brand

Front 34

corporation's reputation

Back 34

-stakeholders' perception of a corporation's ability to produce quality goods
-a corporation's prominence in the minds of stakeholders

Front 35

financial leverage

Back 35

-ratio of total debt to total assets
-describe how the debt is used to increase the earnings available to common shareholders
-greater leverage has a positive (negative) impact on performance for firms in stable (dynamic) environments

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capital budgeting

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the analyzing and ranking of possible investments in fixed assets in terms of additional outlays and receipts that will result from each investment

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hurdle rate

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criteria for the purpose of strategic decision making
ex) years to pay pack investment , rate of return, or time to break even point.

Front 38

R&D intensity

Back 38

spending on R&D as a percentage of sales revenue
- means of gaining market share in Global competition
- corporations should spend at a normal rate for that particular industry unless its strategic plan calls for unusual expenditures

Front 39

technology competence

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the development and use of innovative technology
-the corp should make a consistent research effort and should be proficient in managing research personnel and integrating their innovations into its day to day operations

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technology transfer

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the process of taking new technology from the lab to the marketplace.

Front 41

basic R&D

Back 41

-focuses on theoretical problems
-patents and research publications

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product R&D

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concentrates on marketing and is concerned with product or product packaging improvements

Front 43

engineering R&D

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concerned with engineering, concentrating on quality control, and the development of design specifications and improved production and equipment

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technology discontinuity

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when a technology cannot be used to enhance current technology, but substitutes for the technology to yield better performance

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intermittent systems

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item is normally processed sequentially but the work and sequence of the process vary
-ex)auto body repair shop

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continuous systems

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work is laid out in lines on which products can be continuously assembled or processed
ex) automobile assembly line

Front 47

operating leverage

Back 47

impact of a specific change in sales volume on net operation income
-advantage of high operating leverage: once the firm reaches break even, its profits rise faster than do those of less automated firms having lower leverage
-a firm with high operating leverage is likely to suffer huge losses during a recession

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experience curve (learning curve)

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unit production costs decline by some fixed percentage each time the total accumulated volume of production units doubles.

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flexible manufacturing for mass customization

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use of large, continuous, mass production facilities to take advantage of experience-curve economies has recently been criticized.
-Computer assisted design
-computer assisted manufacturing
-robot technology means that learning times are shorter and products can be economically manufactured in small, customized batches in a process called mass customization.