PBA Internal Analysis II Essay

Submitted By Ailie-Tang
Words: 1487
Pages: 6

INTERNAL ANALYSIS

Strategic case method
1. Prepare strategic profile
2. Strategic analysis
Internal
External
Value chain
Industry profile
VRIO
Porter’s five forces
Core competencies
Strategic groups
Financial analysis
Competitor profiles
3. Identify strategic issues
4. Craft & evaluate strategic options
5. Prepare action plans for recommended

strategy
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The Key Points
0 value-creation inside an organisation
1 Resource-based View: tangible and intangible resources, capabilities, and how capabilities are developed the VRIN criteria used to determine whether resources and capabilities are core competencies

2 The Value Chain Analysis to identify and

evaluate resources and capabilities

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Tools for Internal Analysis
Value Chain (Porter, 1985)
VRIO (Resource Based View of Firm) (J.

Barney, 1995)
Core Competencies approach (Hamel &
Prahalad, 1990)
Financial Analysis

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Competitive advantage and value creation Competitive advantage is a firm’s ability to

outperform its competitors
The source of competitive advantage is

superior value creation
To create superior value a company must

lower its costs and/or differentiate its product so it can charge a higher price.

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Value creation per unit: cost advantage /differentiation

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The roots of competitive advantage

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Generic building blocks of competitive advantage
Superior efficiency – allows a company to

lower its costs
Superior quality – allows it to both charge a

higher price and lower its costs
Superior customer service – allows it to

charge a higher price
Superior innovation – can lead to higher

prices (e.g. product innovations) or lead to lower unit costs (e.g. process innovations).
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The value-chain

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VALUE CHAIN ACTIVITIES

not?

Primary activities
Inbound
Support activities logistics 
Procurement
Operations

Technology
Outbound
development logistics 
HR
Marketing/sales management Service

General admin
The critical question to ask is:
Where is value being added – or

The value-creating potential of primary activities
Inbound logistics
activities, such as materials handling,

warehousing and inventory control, used to receive, store and disseminate inputs to a product. Operations
activities necessary to convert the inputs

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provided by inbound logistics into final product form machining, packaging, assembly and equipment maintenance are examples of operations activities.

The value-creating potential of primary activities (cont.)
Outbound logistics
activities involved with collecting, storing and

physically distributing the final product to customers examples of these activities include finishedgoods warehousing, materials handling and order processing.

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The value-creating potential of primary activities
(cont.)
Marketing and sales
activities completed to provide means

through which customers can purchase products and to induce them to do so
to market and sell products effectively, firms develop advertising and promotional campaigns, select appropriate distribution channels, and select, develop and support their sales force.

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The value-creating potential of primary activities
(cont.)
Service
activities designed to enhance or maintain a

product’s value
firms engage in a range of service-related activities, including installation, repair, training and adjustment.
Each activity should be examined

relative to competitors’ abilities.
Accordingly, firms rate each activity as superior, equivalent or inferior.
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Examining the value-creating potential of support activities
Procurement
activities needed to purchase the inputs to

produce a firm’s products.
Technological development
activities performed to improve a firm’s

product and the processes
technological development takes many forms, such as process equipment, basic research and product design, and servicing procedures.
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The value-creating potential of support activities Human resource management
activities involved with…