The Internal Environment

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Module 3 – The Internal Environment
1. Identify Key Stakeholders & assess influence on organisations strategy
a. Step 1 – Identify key stakeholders
b. Step 2 – Alignment of stakeholder needs – understand gaps between current strategy & stakeholder needs
c. Step 3 – Assess stakeholder groups – stakeholder power / interest grid. Greater the power & interest, the more influence on strategy development
d. Step 4 – Understand impact & influence of stakeholder groups

2. Assess current performance
3. Evaluation the alternatives for measuring performance
4 Identify & describe competitive advantage
We need to understand current performance in order to drive future strategic opportunities. An organisation needs to analyse its achievements and challenges to create the case and need for change. The driving forces of an organisation can be categorised in 3 groups:
i. Strategic performance – the business ii. Operation performance – the processes iii. People & Organisational performance – the decision makers

(i) Strategic Performance / drivers / differentiators:
a. Industries & markets – which industry & markets are we in?
b. Customers – who are our customers?
c. Products / services – what do we sell?
d. Channels (direct & indirect) – how do we get it to the market?
i. Sales, product services channels
e. Competitive advantage – what advantages do we have:
i. Low cost advantage
a. No frills product
b. Simple product design
c. Inexpensive locations
d. Process innovation
e. Purchase low price assets ii. Differentiation
a. Product quality
b. Product reliability
c. Product innovation
d. Product range
e. Service levels
f. Features
g. Brand name
h. Image. Eg. Prompt
i. Distribution channels
j. Operational excellence
k. Customer intimacy
l. Production flexibility iii. Focus (niche)
a. Narrow product line
b. Narrow customer segment
c. Narrow geographical territory
d. Focused service capabilities. Eg. Green products

(ii) Operational Performance Shareholder View : ROI is primary measure Stakeholder View : output / activity measures o Need to try to align these 2 groups objectives o Sharemarket is subjective so can be difficult

` Performance measures can vary between industry & organisation but may include:
• Input measure (time / cost / resources / materials)
• Activity measures – how often something occurs
• Out measures (goods produced / revenue booked)
• Efficiency measures (operating ratios)
• Impact measures – eg. Cheaper market price, safety
• Analytical measures – quality / waste stats
• Org specific measures – win against competition, product research time

Whatever the performance measures adopted, they should:
• Help mgt develop strategy
• Support decision making
• Motivate mgers . wmployees
• Communicate with or signal stakeholders

Once decided on the appropriate performance measures (drivers), and how to calculate & measure, those measures need to be collected in the context of the industry and the competition. Ways to gather that information include:
• Market / customer research
• Talk to customers and suppliers (surveys)
• Purchase competitor products
• Talking to / hiring competitor employees
Once benchmarking data has been collected, it needs to be assembled in a meaning way. And to show both quantitative and qualitative measures / data. The following different methods will show different insights into strategy direction:
1. Revenue & Profit (by product / service / segment / territory)
2. Cost analysis – CGS / opex / wastage, etc
3. The balanced scorecard o Stakeholder approach o Both quantitative & qualitative o Must be in context of competitor environment o Balances (reviews) long & short term, internal & external, financial & non-financial o The 4 perspectives to consider are:
1. Customer – expectations & satisfaction
2. Internal Process – that deliver customer satisfaction / product quality
3. Learning &