Strategic Management

Concepts & Cases

Fred R. David
Chapter 4:
The Internal Assessment
PowerPoint Slides By:
Anthony F. Chelte
Western New England College

Ch. 4-1
© 2001 Prentice Hall
 Comprehensive Strategic Management Model

External
Audit

Chapter 3

Vision Generate, Implement

Long-Term Evaluate, Implement Measure &
& Strategies:
Objectives Select Strategies: Evaluate
Mission Marketing, Performance
Strategies Mgmt Issues
Statements Fin/Acct,
R&D, CIS
Chapter 5 Chapter 6 Chapter 7 Chapter 9
Chapter 2 Chapter 8

Internal
Audit

Chapter 4

Ch. 4-2
© 2001 Prentice Hall
 Internal Assessment

“Like a product or service, the planning

process itself must be managed and
shaped, if it is to serve executives as a
vehicle for strategic decision-making”

—Robert Lenz—

Ch. 4-3
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 Internal Assessment (Cont’d)

“Weak leadership can wreck (crash) the

soundest strategy.”

—Sun Zi—

Ch. 4-4
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 Internal Assessment (Cont’d)

Internal Strategic Management Audit

• Functional areas of the business

Strengths
Weaknesses

Ch. 4-5
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 Internal Assessment (Cont’d)

Internal Audit:

Focuses on developing objectives

and strategies to capitalize on
internal strengths and overcome
weaknesses
Ch. 4-6
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Internal Assessment (Cont’d)
Distinctive Competencies

Afirm’s strengths that cannot be easily

matched or imitated by competitors

 Building
competitive advantage involves
taking advantage of distinctive competencies

 Strategies
designed in part to improve on a
firm’s weaknesses and turn to strengths

Ch. 4-7
© 2001 Prentice Hall
 Internal Assessment (Cont’d)

Internal Audit
Gather & assimilate information from:
• Management
• Marketing
• Finance/accounting
• Production/operations
• Research & development
• Management information systems

Ch. 4-8
© 2001 Prentice Hall
Internal Assessment (Cont’d)

Internal Audit

Involvement in performing an internal

strategic-management audit provides
vehicle for understanding nature and
effect of decisions in other functional
business areas of the firm

Ch. 4-9
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 Internal Assessment (Cont’d)
Integrating Strategy and Culture

Organizational Culture –
Pattern of behavior developed by an
organization as it learns to cope with
its problem of external adaptation and
internal integration…is considered
valid and taught to new members

Ch. 4-10
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Organizational Culture

• Resistant to change
• May represent a strength or weakness of firm

• Cultural products include:

Values, beliefs, rites (Money), rituals
(customs), ceremonies, myths, stories,
legends, sagas (tales), language, symbols,
heroes
Ch. 4-11
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Organizational Culture

Can inhibit strategic management:

• Miss changes in external environment because

they are blinded by strongly held beliefs

• When a culture has been effective in the past,

natural tendency to stick with it in future, even
during times of major strategic change
Ch. 4-12
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 Internal Assessment (Cont’d)
Management

• Planning
• Organizing
• Motivating
• Staffing
• Controlling

Ch. 4-13
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Stage of Strategic-
Function Management Process
When Most Important
Planning Strategy Formulation

Organizing Strategy Implementation

Motivating Strategy Implementation

Staffing Strategy Implementation

Controlling Strategy Evaluation

Ch. 4-14
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 Internal Assessment (Cont’d)

Management

Forecasting

Establishing objectives
Planning Devising strategies

Developing policies

Setting goals

Ch. 4-15
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 Internal Assessment (Cont’d)

Management Organizational design

Job specialization
Job descriptions
Job specifications
Organizing Span of control
Unity of command
Coordination
Job design
Job analysis

Ch. 4-16
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 Internal Assessment (Cont’d)

Management Leadership
Communication
Work groups
Job enrichment
Motivating
Job satisfaction
Needs fulfillment
Organizational change
Morale

Ch. 4-17
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 Internal Assessment (Cont’d)

Wage & salary admin

Management Employee benefits
Interviewing
Hiring
Firing
Training
Staffing Management development
Safety
Affirmative action
EEO
Labor relations
Career development
Discipline procedures
Ch. 4-18
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 Internal Assessment (Cont’d)

Management Quality control

Financial control
Sales control
Inventory control
Expense control
Controlling Analysis of variances
Rewards
Sanctions

Ch. 4-19
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 Internal Assessment (Cont’d)
Management Audit Checklist

• Does the firm use strategic-management

concepts?
• Are company objectives and goals measurable
and well communicated?
• Do managers at all hierarchical levels plan
effectively?
• Do managers delegate authority well?
• Is the organization’s structure appropriate?

Ch. 4-20
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Management Audit Checklist (Cont’d)

• Are job descriptions and job specifications

clear?
• Is employee morale high?
• Are employee turnover and absenteeism low?
• Are organizational reward and control
mechanisms effective?

Ch. 4-21
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Marketing

• Customer analysis
• Selling products/services
• Product and service planning
• Pricing
• Distribution
• Marketing research
• Opportunity analysis
Ch. 4-22
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 Internal Assessment (Cont’d)

Marketing Customer surveys

Consumer information

Market positioning
strategies
Customer analysis
Customer profiles

Market segmentation
strategies

Ch. 4-23
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 Internal Assessment (Cont’d)
Advertising
Marketing
Sales

Promotion

Publicity
Selling
Products/services
Sales force
management

Customer relations

Dealer relations
Ch. 4-24
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Test marketing
Marketing
Brand positioning

Devising warrantees

Packaging
Product/service
planning
Product
features/options

Product style

Quality
Ch. 4-25
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 Internal Assessment (Cont’d)
Forward integration
Marketing
Discounts

Credit terms

Condition of sale
Pricing
Markups

Costs

Unit pricing

Ch. 4-26
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 Internal Assessment (Cont’d)
Warehousing
Marketing
Channels

Coverage

Retail site locations

Distribution
Sales territories

Inventory levels

Transportation

Ch. 4-27
© 2001 Prentice Hall
 Internal Assessment (Cont’d)

Marketing
Data collection

Data input

Data analysis
Marketing research
Support all business
functions

Ch. 4-28
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 Internal Assessment (Cont’d)

Marketing
Assessing costs

Assessing benefits

Opportunity Assessing risks

analysis
Cost/benefit/risk
analysis

Ch. 4-29
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Marketing Audit Checklist

• Are markets segmented effectively?

• Is the organization positioned well among
competitors?
• Has the firm’s market share been increasing?
• Are present channels of distribution reliable
and cost effective?
• Does the firm have an effective sales force?

Ch. 4-30
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Marketing Audit Checklist (Cont’d)

• Does the firm conduct market research?

• Are product quality and customer service
good?
• Are the firm's products/services priced
appropriately?
• Does the firm have an effective promotion,
advertising, and publicity strategy?

Ch. 4-31
© 2001 Prentice Hall
 Internal Assessment (Cont’d)
Marketing Audit Checklist (Cont’d)

• Are marketing planning and budgeting

effective?
• Do the firm’s marketing mangers have
adequate experience and training?

Ch. 4-32
© 2001 Prentice Hall