1、Assessing the InternalEnvironment of the FirmChapter ThreeLearning ObjectivesAfter reading this chapter, you should have a good understanding of:LO3.1 The benefits and limitations of SWOT analysis in conducting an internal analysis of the firm.LO3.2 The primary and support activities of a firms valu

2、e chain.LO3.3 How value-chain analysis can help managers create value by investigating relationships among activities within the firm and between the firm and its customers and suppliers.LO3.4 The resource-based view of the firm and the different types of tangible and intangible resources, as well a

3、s organizational capabilities.3-2Learning Objectives (cont.)LO 3.5 The four criteria that a firms resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees.LO 3.6 The usefulness of financial ratio analysis, its inherent limitations, and how to

4、make meaningful comparisons of performance across firms.LO 3.7 The value of the “balanced scorecard” in recognizing how the interests of a variety of stakeholders can be interrelated.LO 3.8 How firms are using Internet technologies to add value and achieve unique advantages. (Appendix)3-3The Limitat

5、ions of SWOT AnalysisStrengths may not lead to an advantageSWOTs focus on the external environment is too narrowSWOT gives a one-shot view of a moving targetSWOT overemphasizes a single dimension of strategy3-4Value-Chain AnalysisValue-chain analysis a strategic analysis of an organization that uses

6、 value creating activities.Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue3-5Value-Chain AnalysisPrimary activities contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its service aft

7、er the sale. inbound logistics, operations, outbound logistics, marketing and sales, and service3-6QUESTIONIn assessing its primary activities, an airline would examine: A. Employee training programsB. Baggage handlingC. Criteria for lease versus purchase decisionsD. The effectiveness of its lobbyin

8、g activities3-7Value-Chain AnalysisSupport activities activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities procurement, technology development, human resource management, and general a

9、dministration.3-8The Value Chain3-9Exhibit 3.1Primary Activity: Inbound LogisticsAssociated with receiving, storing and distributing inputs to the product Location of distribution facilities Warehouse layout and designs3-10Primary Activity: OperationsAssociated with transforming inputs into the fina

10、l product form Efficient plant operations Incorporation of appropriate process technology Efficient plant layout and workflow design3-11Primary Activity: Outbound LogisticsAssociated with collecting, storing, and distributing the product or service to buyers Effective shipping processes to provide q

11、uick delivery and minimize damages Shipping of goods in large lot sizes to minimize transportation costs.3-12Primary Activity: Marketing and SalesAssociated with purchases of products and services by end users and the inducements used to get them to make purchases Innovative approaches to promotion

12、and advertising Proper identification of customer segments and needs3-13Primary Activity: ServiceAssociated with providing service to enhance or maintain the value of the product Quick response to customer needs and emergencies Quality of service personnel and ongoing training3-14Support Activity: P

13、rocurementFunction of purchasing inputs used in the firms value chain Procurement of raw material inputs Development of collaborative “win-win” relationships with suppliers Analysis and selection of alternate sources of inputs to minimize dependence on one supplier3-15Support Activity: Human Resourc

14、e ManagementActivities involved in the recruiting, hiring, training, development, and compensation of all types of personnel Effective recruiting, development, and retention mechanisms for employees Quality relations with trade unions Reward and incentive programs to motivate all employees3-16Suppor

15、t Activity: Technology DevelopmentRelated to a wide range of activities and those embodied in processes and equipment and the product itself Effective R&D activities for process and product initiatives Positive collaborative relationships between R&D and other departments Excellent professio

16、nal qualifications of personnel3-17Support Activity: General AdministrationTypically supports the entire value chain and not individual activities Effective planning systems Excellent relationships with diverse stakeholder groups Effective information technology to integrate value-creating activitie

17、s3-18Interrelationships among Value-Chain Activities within and across OrganizationsInterrelationships among activities within the firmRelationships among activities within the firm and with other organization (e.g., customers and suppliers)3-19Two levelsValue Chains in Service Industries3-20Exhibit

18、 3.4Resource-Based View of the FirmResource-based view of the firm perspective that firms competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.3-21Resource-Based View of the FirmTwo perspectives The internal ana

19、lysis of phenomena within a company An external analysis of the industry and its competitive environment3-22Types of ResourcesTangible resources organizational assets that are relatively easy to identify, including physical assets, financial resources, organizational resources, and technological res

20、ources.3-23Types of ResourcesIntangible resources organizational assets that are difficult to identify and account for and are typically embedded in unique routines and practices, including human resources, innovation resources, and reputation resources.3-24Types of ResourcesOrganizational capabilit

21、ies The competencies and skills that a firm employs to transform inputs into outputs.3-25QUESTIONGillette combines several technologies to attain unparalleled success in the wet shaving industry. This is an example of their A. Tangible resourcesB. Intangible resourcesC. Organizational capabilitiesD.

22、 Strong primary activities3-26Firm Resources and Sustainable Competitive AdvantagesFirst, the resource must be valuable in the sense that it exploits opportunities and/or neutralizes threats in the firms environment. Second, it must be rare among the firms current and potential competitors. 3-27Firm

23、 Resources and Sustainable Competitive AdvantagesThird, the resource must be difficult for competitors to imitate. Fourth, the resource must have no strategically equivalent substitutes.3-28Sources of InimitabilityPhysical uniquenessPath dependencyCausal ambiguitySocial complexity3-29The Generation

24、and Distribution of a Firms ProfitsEmployee bargaining powerEmployee replacement costEmployee exit costsManager bargaining power3-30Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generateEvaluating Fir

25、m PerformanceFinancial ratio analysis Balance sheet Income statement Historical comparison Comparison with industry norms Comparison with key competitorsStakeholder perspective Employees Customers Owners3-31Financial Ratio AnalysisFive types of financial ratios Short-term solvency or liquidity Long-

26、term solvency measures Asset management (or turnover) Profitability Market value3-32Financial Ratio AnalysisHistorical comparisonsComparison with industry normsComparison with key competitors3-33Five Types of Financial Ratios3-34The Balance ScorecardProvides a meaningful integration of many issues that come into evaluating a firms performanceFour key perspectives How do