INTERNAL

ENVIRONMENT
ANALYSIS
 Strategic Management Model

Strategy Formulation
Perform External
Strategy Implementation
Audit
Strategy Evaluation

Implement
Generate, Implement Measure,
Develop Vision & Establish Long-term Strategies Mkt,
Evaluate, Choose Strategies Mgt’ Evaluate
Mission Statement Objective Fin, R&D, Performance
Strategies Issues
Prod/Op, MIS

Perform Internal
Audit
Resource-Based View of the Firm (RBV)
Coca-Cola Vs Pepsi Illustration :
Stock analyst look at the two and frequently conclude that Coke is the clear leader.
They cite Coke’s superiority in tangible assets (warehouse, bottling facilities,
computerization, cash etc) and intangible assets (reputation, brand name
awareness, tight competitive culture, global business system).

They also mention that Coke leads Pepsi in several capabilities to make use of these
assets effectively-managing distribution globally, influencing retailer shelf space
allocation, managing franchise bottler relations, marketing savvy, investing in
bottling infrastructure, and speed of decision making to take quick advantage of
changing global condition
Three Basic Resource
1. Tangible Assets, are the easiest to identify and often found on a firm’s
balance sheet. They include production facilities, raw materials, financial
resources, real estate and computers. Tangible assets are the physical and
financial means a company uses to provide value to its customers.
2. Intangible Assets, are not assets that you can touch or see, they are very
often critical in creating competitive advantage like brand name, company
reputation, organizational morale, technical knowledge, patent & trade mark
and accumulated experiences
3. Organizational Capabilities, are not specific inputs like tangible and
intangibles assets, they are skill-the ability and ways of combining assets,
people and process to transform inputs to outputs.
 What Makes a Resource Valuable
1. Competitive superiority : Does the resources help fulfill a customer’s need
better than competitors ?
2. Resource scarcity : Is the resource in short supply ?
3. Inimitability : Is the resource easily copied or acquired ?
a. Physically unique resources
b. Path-dependent resource
c. Causal ambiguity
d. Economic deterrence
4. Appropriability : Who actually gets the profit created by a resource?
5. Durability : How rapidly will the resource depreciate
6. Substitutability : Are other alternatives available ?
 Key Resources across Functional Area
Firm’s product-service : breadth of product line
Concentration of sales in a few product or to a few customers
Ability to gather needed information about markets
1. Marketing Market share and submarket share
Product service mix and potential : life cycle of key product, profit-sales balance in product service. Etc and other 8
resources

Ability to raise short-term capital

Ability to raise long-term capital : debt-equity
2. Financial and Corporate-level resources (multi business firm)
Accounting Cost of capital relative to that of industry and competitors
Tax consideration
Relation with owners, investors and stockholders, etc and other 7 resources

Raw materials cost and availability, supplier relationship

Inventory control system, inventory turn over
3. Production, Location of facilities, layout and utilization of facilities
Operation, Technical Economies of scales
Technical efficiencies of facilities and utilization of capacity
Effectiveness of subcontracting use, etc and other 6 resources
 Management personal
Employee’s skill and morale
4. Personal Labor relation costs compared to those of industry and competitors
Efficiency and effectiveness, etc and other 5 resources

Relationship with suppliers and customers

5. Quality Management Internal practices to enhance quality of products and services
Procedures for monitoring of quality.

Timelines and accuracy of information about sales, operations, cash, and supplier
Relevance of information for tactical decision
6. Information System Information to manage quality issues : Customer services
Ability of people to use the information that is provided

Organization structure
Firm’s image and prestige
7. Organization and Firm’s record in achieving objectives
General Management Organization of communication sysem
Overall organization control system
Organization climate, organization culture
 The Basic Function of Management

Function Description Stage of Strategic Management

Planning Planning consist of all managerial activities to preparing for the future . Specific task include
Strategy Formulation
forecasting, establishing objective, devising strategy, developing policies and setting goals

Organizing Organizing include all managerial activities that result in a structure of task and authority
relationship. Specific areas include organization design , job specialization, job description, Strategy
job specification, span of control, unity of command, coordination, job design, and job Implementation
analysis.
Motivating Motivating involves efforts directed toward shaping human behavior. Specific topics include Strategy
leadership, communication, work group, behavior mo dification, delegation of authority, jog Implementation
enrichment, job satisfaction, needs ful- fillment , organizational change, employee morale
and managerial morale
Staffing Staffing activities are centered of personal and human resource management. Include wage
and salary administration, employee benefit, in- terviewing, hiring, firing, training,
Strategy
development, employee safety, affirmative action, etc Implementation

Controlling Controlling refers to all those management activities directed toward ensure that actual result
are consistent with plan results. Key areas of concern include quality, financial control, sales Strategy Evaluation
control, inventory control, expense control, analysis of variance, rewards and sanction
 The Basic Function of Production Management

Function Description
Process Process decision concern the design of the physical production system. Specific decision include choice of
technology, facilities layout, process flow analysis, facility location, line balancing, process control, and
transportation.
Capacity Capacity decision concern determination of optimal output levels for the organization-not too much and not too
little. Specific decision include forecasting, facilities planning, aggregate planning, scheduling, capacity planning,
and queuing analysis.
Inventory Inventory decision involve managing the level of raw material, work-in-process, and finished good. Specific
decision include what to order, when to order, how much to order, and materials handling.

Workforce Workforce decision are concerned with managing the skilled, unskilled, clerical, and managerial employees. Specific
decision include job design, work measurement, job enrichment, work standard, and motivation technique.

Quality Quality decision are aimed at ensuring that high-quality good and services are produced. Specific decision include
quality control, sampling, testing, quality assurance, and cost control
 Analysis of Strength and Weaknesses
A Few Tools For Internal Analysis
Finance and Accounting : Capital asset pricing model, payback period, accounting return, present
values, internal rate of return, financial ratios, fixed and variable budget

Human Resources : Turn over analysis, morale surveys, training budget, analysis of personal needs and
capabilities.

Marketing : Sales forecast, market share analysis, price volume relationship, sales force analysis,
product and market lines analysis.

Operation : Inventory analysis, aggregate and shop-floor analysis, break event analysis, labor, material
and overhead-cost analysis

R & D : Patent generated, project analysis, value analysis.

Value Chain

General Administration
Support Activities

Human Resource Management

Research, Technology and System Development

Procurement
Primary Activities

Marketing
And Sales
Inbound Outbound Service
Logistic Logistic
 Primary Activities
Activities, cost and assets associated with :

Inbound Logistic : Fuel, energy, raw materials, parts component, merchandise, consumable items
from vendors, suppliers.

Operation : converting inputs into final product from (production, assembly, packaging, equipment
maintenance, facilities, operation, quality assurance, environmental protection).

Outbound Logistic : physical distributing product to buyers (finish good warehousing, order
processing, order picking and packing, shipping, delivery vehicles

Marketing and Sales : sales force, advertising and promotion, market research, dealer and
distributor support.

Service : providing assistance to buyers (installation, spare parts, maintenance and repair, technical
assistance, buyers inquiry, complain.
 Support Activities
Activities, cost and assets associated with :

General Administration: general management, accounting and finance, legal and

regulatory, safety and security, management information system, other overhead
function.
Human Resource Management : recruitment, hiring, training, development and
compensation, labor relation, development of knowledge base skill.
Research, Technology and System Development: product R&D, process design and
improvement, equipment design, computer software development, telecommunication
system, new data base capabilities
Procurement: purchasing and providing raw materials, supplies, services, outsourcing
 Translate Value Chain Activity to Competitive Advantage

Competencies and Company proficiency in

Company proficiency in Company gains a
Company capabilities gradually performing a core
performing one or two
performs emerge in certain competence basis for sustainable
value chain activities
activities in its competitively continuous to build and competitive
value chain
rises to the level of a
important value chain evolve in to a advantage
core competence
activities distinctive competence
Strategic Advantage Profile
Internal Area Competitive Strength or Weakness

Marketing + Product line is extensive, and service is excellence

- Channels of distribution are weak in the southwest

R&D - No R & D performed

Operations + Excellence sourcing of raw materials

- Facilities are old and becoming out of date

Corporate Resources 0 Company size is about average of the industry

0 Profit has been consistent but average
- Union employees complain frequently

Finance + Balance sheet show ability to obtain needed capital, low debt equity ratio,
high working capital and favorable stock price
Internal Factors Evaluation (IFE)
1. List key internal factors, use a total of 10-20 internal factors, list strength first
and then weaknesses
2. Assign a weight that range from 0,00 (not important) to 1,00 (all-important),
internal strength or weaknesses that have greatest effect on org’ performance
should be assigned highest weight
3. Assign 1-4 rating to each factor to indicate that factor represent a major
weakness (rating=1), a minor weakness (rating=2), a minor strength (rating=3),
a major strength (rating=4). Rating is company based, weighting is Industry
based
4. Multiply each factor to determine score, and sum the score to determine total
score of the organization.
Internal Factor Evaluation (IFE) Matrix
SWOT Analysis
• Strength, is resource advantage relative to competitors and the
need of the market a firm serve or expect to serve.
• Weaknesses, is limitation or deficiency in one or more resources or
competencies relative to competitors that impedes a firm’s effective
performance.
• Opportunities, is a major favorable situation in a firm’s
environment
• Threats, is a major unfavorable situation in a firm’s environment
 SWOT Analysis Diagram
Numerous
environmental
opportunities

Cell 3 : Support a turn around Cell 1 : Support an aggressive

oriented Strategy strategy
Critical internal Substantial internal
weaknesses strength

Cell 4 : Support a defensive strategy Cell 2 : Support a diversification

strategy

Major
environmental
threat
Tugas-4
1. Pelajari case perusahaan anda masing2 kelompok
2. Identifikasi sumber daya yang menjadi unggulan perusahaan tsb
3. Identifikasi sumber daya pada setiap fungsional : Marketing, Finance,
Operation / Production, Management, IS/IT dan R&D
4. Buatlah SAP untuk case tersebut
5. Buatlah matrif IFE untuk perusahaan anda
6. Tugas dikerjakan mulai sekarang dan dikumpulkan hari ini paling lambat pukul
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