Internal Analysis

Added 2015-06-23 T 093230 UTCDOI 1013140RG2133531048

Chapter 4Internal Analysis

Contemporary Corporate StoryLearning ObjectivesOrganization Analysis concept ofResource-Based ViewFunction ApproachValue Chain ApproachInternal Environmental AnalysisInternal Factor AnalysisKey internal forcesSWOT Analysis Critical Success Factor AnalysisInternal Factor Evaluation MatrixBest Practices A Companyrsquos ExperienceSummary and Key IdeasMind-Pricking QuestionsMultiple Choice QuestionsStudentsrsquo Short ProjectsKey TermsA Case for AnalysisNotes

Learning Objectives

The purpose and meaning of Internal Analysis

The Concept of Resource-Based View and its connection

to Internal Analysis

The process of and approaches to internal analysis

Function Approach and Value Chain Approach to Internal

Analysis

Process of Internal Environmental Analysis

The components of internal environment

Evaluation of Internal Factor Analysis

Identification of Strengths and Weaknesses

Critical Factor Analysis

The Technique of Internal Factor Evaluation Matrix

(IFEM)

Contemporary Corporate Story

Rasnarsquos Organizational Analysis That Preceded Its Decision to Be a Multinational

The brand which tasted the success in domestic market and international market as well through moderate exports now wants to become a multinational company for this to happenit is pursuing a new strategy - market expansion

Rasna a well-known fruit drink concentrate (SDC) brand owned by Ahmedabad-based Pioma Industries is scouting for joint venture partners to expand its trade to former Soviet (CIS) and African countries It collaboration options include licensing technology transfer joint venture and marketing partnership

Its vision is to be a global leader in processed foods Its mission is to bring to the global market high quality processed foods beverages and confectionaries through superior technology Its current focus is to give the global

consumers the true flavor of the Indian foods through its ethnic recipes

At present with an annual turnover of Rs291 crores (April2008) Rasna holds a market share of close to 97 of soft-drink concentrate market in India It currently exports its concentrate-11 products- to more than 40 countries in Europe Asia and Africa Before 1979 it was known as lsquoJaffersquo and marketed with the help of Voltas It has now eight manufacturing units in India

Besides expansion to CIS and African countries its significant strategic initiatives include consolidation of mass market segment for soft drink concentrates in sachets in India and expansion of its fast food chain Devilrsquos Work Shop They want to expand them from the present 4 outlets to100 by 2010

Its products include Rasna Instant Drink GoFrut InstantDrink Fruto Instant Drink Body Fuel Health Drink RasnaShake-Up Rasna Juc Up Rasna Soft Drink Concentrate RasnaFruit Jams Rasna Fruit Cordial Rasna 13 Sugar and RasnaFlavors Rasna has recently ( March 2008) launched RasnaFruitPlus a fat-free health drink concentrate containingfruit powder vitamins and calcium it will be sold in bothbottled packs and pouches This drink concentrate a raresoft drink of fruit-based concentrate and nutrients for theIndian consumers will compete with juice brands likeTropicana as well as the soft drinks like Frooti and Maaza

With the kind of background given in the foregoing Rasna isall set to embark on an expansion into foreign turf

Rasnarsquos internal analysis presumably preceded its strategyformulation involving expansion into foreign markets Thefactors which must have emerged from such exercise are asfollows (The information given on its website revealsRasnarsquos internal factors)1

(1) flexibility in developing SKUs as required by themarket (2) sourcing quality raw material at competitiveprices (3) quality assurance systems (4) state- of- arttechnology in manufacturing and packing (5) strong andactive RampD function (6) knowledge of markets (7) sharingof knowledge among the personnel (8) good cost controlsystems (9) right interface with the consumers (10) asystem to deliver natural fresh products all through theyear (11) highly motivated and committed managers and (12)pursuit of a plan for phased and focused expansion into newproducts and markets

The foregoing factors which have emerged out of an internalanalysis exercise drive and support its strategic moveinvolving expansion into foreign countries In the absenceof such an exercise any wishful moves will most likelyconfront a firm with unpleasant and expensive surprises

Internal Analysis

No plan- big or small strategic or tactical- can succeed ifit is made without reference to the context in which it isgoing to operate Context reveals the need to plan thefactors that help or harm a plan the factors that needmanipulation and the wherewithal required to operate itThe context which is specific to a firm and on which it hassome amount of control can be called lsquointernal contextrsquoThis internal context has to be first understood before onegoes about understanding the external context as shown inFigure 41 When internal context is understood the pointsthat emerge include its strengths weaknesses resourcesneeded and competencies that have to be built Understandinginternal context is lsquointernal analysisrsquo which is defined asfollows

Internal Analysis is an exercise to list a firmrsquos resourcesstrengths and weaknesses

Figure-41

Internal Analysis

Internal Analysis is an exercise to list a firmrsquos resourcesstrengths and weaknesses An understanding of a firmrsquosresources is a prerequisite to formulation of strategy thisprescription is an offshoot of a theory called lsquoResource-Based Viewrsquo

The view of Hitt Hoskisson and Ireland the Resource-BasedModel of above-average returns gives some idea of lsquoResource-Based Viewrsquo According to them it involves lsquoidentificationof firmrsquos resources and unique capabilities anddetermination of the potential of such resources andcapabilities in terms of competitive edge this is donebefore an attractive industry is chosen and a strategy isformulated to utilize its resources and capabilities vis-agrave-vis the opportunities presented by the externalenvironmentrsquo Essentially it is about determining theunique capabilities of a firm and pitting the same againstthe opportunities

Resource-Based View

Resource-based view (RBV) which is the opposite ofIndustrial Organization View lays emphasis on a companyrsquosresources and competitive capability for organizationalsuccess Jay Barney has proposed this view IndustrialOrganization view lays stress on a firmrsquos fit with theexternal environment

Concerning which factors are critical to a companyrsquossuccess in terms of profitability stability growth andsurvival scholars are divided into two groups The twogroups are 1 Industrial Organization View proponents and2Resource-based View proponents These schools are twosides of the same coin in that each view complements theother Simply stated an analysis on one view is a standard

What is outside a firm-

External Analysis

What is inside a firm-

Internal Analysis

to cross- check the outcome of the other analysisIndustrial Organization view which stresses on a firmrsquos fitwith the external environment has been discussed in detailin the previous chapter Resource-based view (RBV) which isthe opposite of the former lays emphasis on companyrsquosresources and competitive capability for organizationalsuccess Jay Barney has proposed this view Resource-basedview theory primarily divides the firmrsquos resources intothree categories (a) physical resources consisting ofplant land equipment technology and the like (b) humanresources consisting of the manpower their skills theirwork culture their training experience intelligenceabilities and so on and (c) organizational resourcesconsisting of softer aspects of an organization encompassingstructure systems processes patents trademarks brandvalue and so on Please see Figure 42

Figure 42

The Components of Resource-Based View

Physical Resources

IncludePlantLandEquipment

Human Resources

IncludeSkillsWork cultureTrainingExperience

Organizational Resources

IncludeStructureSystemsProcessesPatientsBrand Value

Protagonists of resource-based view pursueorganizational analysis devoutly They conductorganizational analysis to understand the pattern natureand size of the resources The unique combination ofresources their magnitude and nature not possessed by anyother firm constitute the competitive advantage of a firmFor this unique position to be obtained a firm has tothoughtfully develop and maintain the resources that noother firm has at least in the combination it does Forexample Infosys the Indian software giant developed thebest mix of highly motivated manpower client servicingapparatus brand image and an effective selling andexecution mechanism

RBV theory prescribes that since the objective of thestrategic management limb of a firm is sustainable growthwith the help of a sustainable competitive advantageunstinting focus on developing and keeping unmatched andvaluable resources is essential such resources which bestowcompetitive edge are rare hard to imitate and hard tosubstitute Please see Figure 43 They are hard to obtainthough most coveted and worthwhile These characteristicsalso called lsquoempirical indicatorsrsquo are the inspiring goalsof any assiduously- run firm they equip it with efficiencyeffectiveness and thus a sustainable competitiveadvantage

Figure-43

Characteristics of Resources That Have Potential ForCompetitive Advantage

Characteristic

It implies

1 Valuable They help a firm capitalize the opportunitiesand neutralize threats

2 Rare They are possessed by very few competitors3 Costly to

imitateThey can not be reproduced since they are either available in combination or its ownersbuilt them over a long period

4 Non-substitutable

They have no equivalents and their power can not be usurped

Continuing the example of Infosys one may easily figureout its three empirical indicators (1) its committedmanpower their training systems and effective execution canbe considered as rare since very few firms possess thiscombination (2) the committed and efficient manpower ofInfosys is hard to imitate or duplicate and (3) there is nosubstitute for its committed and efficient manpower in theimaginable near future

According to other analysts added to the foregoingindicators the fourth and the most important is beinglsquovaluablersquo It implies that it is a source of value in thatit has the potential to fulfill the needs of anorganization (A detailed discussion on these parameters ispresented in the next chapter) In other words Infosysenjoys a competitive advantage due to these rareinimitable non-substitutable and valuable human resourcesthis shows that Infosys has adopted Resource-based View tobuild a competitive advantage

It is important to note here that since resources areliable to get obsolete the useful and currently relevantresources have to be acquired built and maintained Therelevance of the candidate resources is judged to a largeextent by the external factors such as change inindividualsrsquo aspirations emerging technologies and so onIt means that the relevant resources that make forcompetitive advantage are identified after understandingexternal factors In other words the relationship betweenexternal factors and internal factors is as crucial as the

resources themselves and a proper match between them has tobe struck this conclusion takes us to the other view-Industrial Organization View which says that anorganization has to match its resources to the environmentin which it operates Let us now understand internalanalysis the sequel to subscription to RBV which is theprimary objective of this chapter

A purposeful attempt to list the strengths that facilitateorganizational success or the factors that inhibit growthprecedes any potentially successful business initiatives Itrequires a deliberate mental exercise the output of whichwill be subsequently documented in most of the cases if notall This exercise might take place at the level of a coregroup or the leader enjoined to put a firm on its trackEssentially an analysis in general implies anidentification of the reasons or factors that underlie thecurrent or future status with regard to a particularphenomenon Strategic analysis of which internal analysisis a part and parcel seeks to ferret out the reasons thatfacilitate or hinder long- term growth or survival of anorganization

The process of identifying and evaluating the organizationalfactors that underlie sustainable performance and long-termgrowth of an organization or those that hinder its growth isreferred as internal analysis This analysis is variouslyknown as internal analysis internal situation analysisorganizational analysis internal environmental analysisinternal appraisal of firm internal assessment and companyanalysis

The quintessence of strategy-making it should be noted isthat the success of an organization as reflected in itssurvival and long-term growth is not fortuitous nor is itguaranteed by a big-bang launch of it by its promotersthere are certain organizational factors- factors within theorganization- that facilitate the organizational successlikewise there are certain factors that either slow an

organizationrsquos performance or have the potential to finallykill it The process of identifying and evaluating theorganizational factors that underlie sustainable performanceand long-term growth of an organization or those that hinderits growth is referred as internal analysis Please Figure44 This analysis is variously known as internal analysisinternal situation analysis organizational analysisinternal environmental analysis internal appraisal of firminternal assessment and company analysis Internal auditwhich profiles component activities of each function andevaluates their efficiency also does the same function

This analysis or audit lsquocuts openrsquo the contours and thetaproots of an organization to help understand the essentiallinks that have the potential to determine its success Itbears repetition here that the entire gamut of strategicthought processes and strategic actions is concerned withoperationalizing a grand plan to survive and grow amidcompetition threats and weaknesses by thoughtfullyutilizing the opportunities and its strengths In theprevious two chapters wherein external analysis has beendealt with and which is also a part of strategic analysisthe strategic factors that lie outside the boundaries of anorganization have been identified It is needless to saythat strategic analysis comprises both external and internalanalyses This chapter covers the methods and approaches toanalyze and find out the strategic factors that lie insidean organization

Process of Internal Analysis

Organization Analysis implies developing a profile of anorganization along its lines of its activities-either alongits functions or around the component operations in themanufacturing of a product or producing service Thesefunctions or activities when identified and strungtogether give a broad picture about which activities of anorganization are contributing to either better sale of its

products and services or their production or improvement inthe firmrsquos profits or reduction in its costs or boostingthe firmrsquos goodwill For example design departmentcontributes to production and sale manufacturing departmentor its wings produce goods distribution system facilitatesmarketing advertising department pushes the salesmarketing department organizes outflow of goods andservices After identifying these activities or departmentsor functions those which are best contributing to the goalsof the firm are evaluated and ranked The outcome of such anevaluation is an identification of the most criticalfunctions of the organization Internal Analysis canbroadly be done under five approaches (1) Function Approach(2) Value Chain Approach (3) Internal Factor Analysis (4)Critical Success Factor Analysis and (5) SWOT analysis Anoverview of them is presented in Table 41This chapterdiscusses them in detail one after the otherTable-41Approaches to Internal Analysis

Functions ApproachResourcesStrengthsCompetenciesCapabilitiesWeaknessesGaps

Value Chain ApproachResourcesStrengthsCompetenciesCapabilitiesWeaknessesGaps

Internal Factor AnalysisSupport and Resistance from

Internal Setting

SuppliersCompetitorsIntermediariesCustomersInterest Groups

Critical Success Factor AnalysisResourcesCapabilitiesOperations

SWOT AnalysisStrengths in Operations amp ResourcesWeaknesses in Operations amp

Resources

Further these activities are studied to understand whatfactors have contributed to their current level of outputfor example while higher sales are analyzed for aparticular year or in a particular department they may beattributed to particular sales persons or particularoutlets or particular models of distribution or particularcampaigns Similarly for a perceptible rise in theproduction certain factors may be clearly found to beresponsible-new production incentive system or adding a newfactory or expansion of production capacity All suchanalyses lead to the identification of strengths andweaknesses of the factors engaged to contribute to the goalsof an organization Simply stated organizational analysisis the identification of factors responsible for achievementof organizational goals besides establishing the strengthsand weaknesses of the factors so identified It is worthy ofnote here that analysis in strategic management revolvesaround strengths and weaknesses of the organizationalfactors Further the distinct competencies or criticalstrengths are also referred to as lsquokey internal forcesrsquo It

is the function of internal analyst or organizationalanalyst or internal auditor to identify them

Internal Analysis Vs Organizational AnalysisOrganizational Analysis embodies lsquoorganizational appraisalrsquotoo in that the importance (criticality) of the factors-how strong those factors are in terms of contribution toorganizational goals- is determinedOrganizational Analysis embodies lsquoorganizational appraisalrsquotoo as already explained in the foregoing in that theimportance (criticality) of the factors- how strong thosefactors are in terms of contribution to organizationalgoals- is determined This is necessary because mere listingof factors either serves very little purpose or leaveseverything to the intuition or judgment of a reader Acomplete internal analysis or internal audit consists ofprofiling of strengths and weaknesses as well asdetermination of potency of a strength and gravity of aweakness In internal analysis or internal audit comparisonof a factorrsquos contribution with the target set or with thatof the other similar department or an industry standard ismade to facilitate determination of value of each factor oractivity

Figure-44

Internal Analysis Activity Chain

Challenges of Internal Analysis

The caveat here is that certain factors which weretraditionally of strategic importance cannot remain so inthis globalized scenario at least to some degree if not

Identify

Evaluate

Determine

absolutely For example availability of raw material orcheap labor or governmental protection against competitorsis no longer a strategic internal factor this is so becauseonce the borders between nations are erased resources andskills freely flow to reach where they are most needed fromwhere they are abundantly available This is a new challengeto strategic analysts operating in this globalized economicorder

A few of the challenges in internal analysis includeindustry variation and company variation To clarify thepreceding comment it has to be stated that what isconsidered as a strength in a particular industry may not beso in another industry For example availability of goodcotton may be critical to the success of a firm in textileindustry but in electronics industry raw material is not ascritical as that in textile industry Even in the sameindustry what is critical to one firm may not be so inanother firm for one hotel lower costs may be importantbut for another hotel costs donrsquot matter as much as servicedoes It implies that criticality varies by company alsoAnother example would be that location may be critical to abook retailer selling through a showroom located downtownbut for a book retailer of mail-order business formatlocation is not as important

Internal Analysis Approaches Internal audit or internal analysis is usually done ontraditional functions production marketing finance humanresources technology and so on This is referred to aslsquoFunction Approachrsquo

Internal audit or internal analysis is usually donearound traditional functions production marketingfinance human resources technology and so on This isreferred to as lsquoFunction Approachrsquo Each of these functionsis further broken down to identify critical sub-functionsand their strength is also determined in terms of theircontribution to organizational goals A general checklist of

functions or sub-functions is given in Table 42 The typesof functions vary by industry For example for auniversity curriculum development may be a function whilein a hospital patient care may be one For a consumer goodsfirm manufacturing is a vital function while for a largeretailing firm sourcingprocurement department represents avery critical function

These functions are each rated in regards to theirimportance to the firm with the help of a tool calledlsquoInternal Factor Evaluation Matrixrsquo the discussion of whichis presented a little later

The other alternative approach to Function Approach islsquoValue Chain Approachrsquo in which analysis and evaluation ofthe nine activities-five primary activities and foursubsidiary ones as identified by Michael Porter-is made todetermine where the organization has to improve furtherThese activities constitute a standard list of inboundlogistics operations outbound logistics marketingservice procurement technology development humanresources and firm infrastructure Regardless of the type oforganization value chain analysis goes solely along theseactivities in most of the cases if not all it is needlessto say that in this analysis the functions are fixed andstandard The description of this analysis is presentedafter lsquothe function approach to internal analysisrsquo isdiscussed

Function Approach

Function Approach concerns itself with the identification and evaluation of strengths and weaknesses of each function commonly known as functional department The functions that are commonly found include production marketing finance human resources RampD and general management as shown in Figure 45

Figure 45Function Approach

Review of performance history of a firm on the lines ofproducts markets departments regions functionaries keycustomers and so on lays bare who and which of them arecontributing or have contributed substantially orconversely underperforming noticeably this review revealsthe key internal factors that have to be focused on andmanaged This is referred to as lsquofunction approachrsquoPerformance of each of the factors is studied and evaluatedin terms of sales profitability goodwill and reduction ofcosts as shown in Figure 46

General

Manageme-nt

Researchamp Developmen

t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction

Figure-46The Performance Goal of a Function

A checklist of functions and sub-functions (the strengthsand weaknesses of which have to be determined) is presentedin the Table 42 A discussion on each of the key internalfactors- simply called lsquofunctions or departmentsrsquo ispresented in the following

Function Approach refers to analysis of each function of anorganization so its performance capabilities are understood

Table-42Functions and Sub-functions

Production

Factories that work up to full capacity with the least cost of productionSmooth and abundant availability of raw material and their costSuppliers who are reliable and committedDesigning talent and the pace and success of new product development function Inventory levels that provide continuity in production with low carriage costsOptimal utilization of facilitiesInformation systems that facilitate optimization of inventory at factory and outlet levels

Sales Profits

Goodwill

CostReduction

optimal work assignment to machines and other facilities and the likeLayout of facilities and systems of material handling and their efficiencyResearch and development activities and their productivityProduction processes that give high productivity and low wastage at low costThe desirable scale of production that returns economies of scaleThe production systems that give economies of scope and the resultant benefit of mass customizationThe desirability of sub-contracting and outsourcingThe necessity of integration-backward and forwardQuality control systems their contribution to the customer acceptance of production and the likeTechnological abilities consisting of cutting-edge processesor plant or systems

Marketing

Effectiveness of the segmentation targeting and positioningThe most profitable customer groups and marketsCustomer analysis that reveals to what extent the customersrsquoneeds are metThe product lines that sell well and those that yield high profitsThe distribution channels that perform well and to what extent they coverThe advertisement media and campaigns that are effectiveThe effectiveness of the sales organizationThe efficiency of marketing information systemsThe pricing policy and its reasonableness in terms of marketshare growth and profitabilityBrand loyalty brand image and the scope left to improve itfurtherThe level of post-sales service

Human Resources

Skills Knowledge and AbilitiesCommitment to the firm and the motivational level of the employeesSelection practicesCultural composition of employeesPay parity relative to industry standards incentive systemsand compensation methodsAttrition levels and absenteeismAggregate Personnel Experience Employee productivityRecruitment sources and their effectivenessSelection practices that sifts through the best talentTraining methods that keep its people ahead of competitionShared vision and attitude towards team workHuman resource productivity metrics amp Performance appraisalCareer management that leads each employee to grow in his careerInstitutionalization of knowledge-sharing Industrial relations characterized by harmony and commitmentQuality of work life

Finance

Efficiency in the usage of funds as reflected in the sales as a ratio of funds in useReputation with general public and small investorsAccess to financial markets for both long-term and short-term debtUse of debt in relation to equityDebt Servicing efficiencyEfficiency in the use of assetsAdequacy of working capital and avoidance of excess working capitalCash Management to strike a balance between unproductive excess and crippling shortage

Profitability in relation to sales capital employed or equityCost of capital relative to industry standardCost control mechanismsAccounting and reporting systems

General Management

Vision and missionOrganizational structure and its fit with the operationsLines of communication and distribution of powerAppropriateness of span of controlPlanning systems and monitoringOrganization of strategic managementCulture and leadershipCore values that were upheld through thick and thin

Research and Development

Importance of research and the managementrsquos current level of focus on itBudget allotment on research and development as a percent oftotal salesAppropriate mode of research - in-house or contractBenchmarking of RampD function with the competitorsResearch and development goals for both short and long termsRatio of new product launches to the total number of prototypes builtResearch on manufacturing process improvementsExperience of persons in research and their trainingBenefit-Cost Analysis of research done or the projects in progress

Production FunctionThe five basic functions of production management are process capacity inventory workforce and quality management

The specific ways in which a production function isorganized and managed has a lot to contribute to thecompetitive advantage of a firm It is the most criticalarea where a product that satisfies the customerrsquos needs atthe most reasonable cost is made and so it offers a lot ofscope to improve The most critical factors in a typicalproduction department include (a) the location layoutsize and design of the plant which facilitate reduction ofproduction cost (b) the process system which has thepotential on one hand to reduce the production lead timeinventory defectives raw material component its wastageand total cost and on the other to bring out the bestproduct more output improved quality quick or on-timeoutput and so on (c) quality control systems whichfacilitate quality output (d) productivity of workforceand (e) raw material procurement systems that are able tolocate and work with the most effective suppliers inadequate numbers just when the inputs are most neededSchoeder listed five basic functions of productionmanagement process capacity inventory workforce andquality as shown in Figure 47

Figure-47Basic Production functions

It is common with most of the sick industries that theircapacity utilization is either low or irregular or littlea measure of capacity utilization is a handy tool to checkthe health of a firm and hence makes a critical factorAnother similar metric that reveals a competitive strengthis the one related to production lead time - how much time aplant takes to roll out the production against a particularorder For example Honda Motors takes fifteen days toexecute a production order while Toyota takes only fivedays which is just one- third as long That is a clearindicator of Toyota Motorsrsquo production efficiency and it is

Process

Capacity Invent

oryWorkforce

Quality

needless to say that production efficiency is definedabsolutely in terms of how quickly the order is completed

The decisions taken in ProductionOperations area have a strategic and long-term impact Dilworth listed the strategic consequences of these production decisions A few of them are cited in the following

If a firm decides to compete as a low-cost producer itleads to a complete revamping of the production system -scale process and the like which in turn among otherthings discourages the competition and broadens the marketAlternatively if it decides to manufacture the best qualityproducts it leads to obtainment of profits from a smallerquantity of sales which in turn requires employing highlyskilled workers careful training of them strict qualitycontrol and precise equipment If a strategic decision istaken to stress on service to customers another newdecision in production area it requires ensuring ofemployment of highly trained service personnel precise andexpensive service equipment high inventory and a propersystem for the flow of information about changing customerneeds The foregoing are a few examples to show how theproduction decisions are very strategic and how they entailfurther changes In short this analysis is an attempt todemonstrate how critical and far-reaching the decisions inproduction area are

Marketing FunctionMarketing is the process of understanding customerrsquos needs creating goods and services to fulfill them and delivering them where and when the customer wantsMarketing is the process of understanding customerrsquos needscreating goods and services to fulfill them and deliveringthem where and when the customer wants To define it infewer terms marketing is concerned with creating anddelivering the best value to the customers The variousfunctions in marketing either make for growing the

organization or lead to its loss of competitiveness hencethese functions have to be identified and analyzed to judgehow effectively each of them is managed

Figure-48Marketing Function

Marketing encompasses five principal functions as shown inFigure 48 (1) ascertaining what customers want ndashmarketinginformation system (2) determining the product lines andproduct features ndash product management (3) pricing-determining the price in accordance with who buys for what(4) telling prospective customers how good the product theymake is where it is available and at what price ndashmarketing communications and (5) making theproductsservices available where they are in demand-

MarketingInformatio

nSystems

Distribution

Advertising

Pricing

ProductLines ampProductfeatures

Marketing

distribution These principal functions have several sub-functions the important of which are enumerated in thefollowing The effective conduct of these functions makesfor building of competitive advantages

1 Consumer research and analysis to ascertain what theyneed and at what price poor information results inwrong product offers and consequent rejection from thecustomers a system to get post-sale feedback fromcustomers has also to be put in place to correct whathas gone wrong and where to improve further

2 Choosing the right customer group which the firm canbest serve and determining how the offer of this firmis distinct from that of the competitors- a crediblereason why the customers should patronize this firmover others choosing a wrong customer group leads torejection of the products and services offered

3 Determining what product lines should be offered andwhat particular features each product should includeproducts have to be customized to different groups andimproved with the latest features or else it will bea mismatch and the competitor who offers what customersexactly need will be patronized by the customer groupslikewise the level and timing of service that has togo with product before and after sales has also to beput in place and monitored to see it is given asneeded else the patronage of the customers will bediscontinued

4 Determining price - how much markup for each consumergroup what kind of discounts and other terms ofpayment unjustified pricing will drive away thecustomers and in the same vein liberal discounts orlow markups will deprive the firm of the potentialrevenues low markups will also give an impression tothe customers that the product has relatively lowvalue pricing can promote a product or generaterevenue which approach one has to take in regards topricing is very critical

5 Deciding on advertisement budgets media appealsalternative communication approaches promotions and soon to get the sales-related message across andultimately to induce short-term and long-term salesresponse this function tells why customers should buytheir product at what price and from whereadvertisement campaigns casually designed or poorlyexecuted can not only be a drain on the revenues butcan also lower the brand image of the company

6 Controlling all marketing sub-functions to see ifeverything happens as planned there may be expectedand unexpected changes in the consumersrsquo needstechnology resource availability and agreed andexpected performance of the organizational members foran effective control performance metrics like marketshares product-wise sales ratios market-wise salesratios individual-wise productivity achievementmeasures and so on have to be devised measured andkept track of

Companies like ITC and Hindustan Unilever are verysuccessful particularly due to their marketing prowess Forexample in the recent past ITC the Indian hotels andtobacco major expanded its markets and diversified into awide range of product lines (chocolates biscuits incensesticks matches and so on) primarily on account of its wideoutlet network In short marketing function has severalactivities that are strategic inasmuch as their strength cantake a firm to newer heights on one hand and theirinfirmity on the other can be a source of fast downfall

Human Resources FunctionHuman Resources have the potential to give their best to thefirm if fostered well and led in a proper direction and thus constitute a competitive advantage Human Resources have to be planned acquired developed and retainedHuman resources are a distinct kind of asset that is verysensitive to feelings and emotions but has the potential togive their best to the firm if fostered well and led in a

proper direction and thus constitute a competitiveadvantage Human resources have to planned acquireddeveloped and retained A well-managed human resourcefunction is valuable rare inimitable and non-substitutable A growing realization of the importance ofhuman resource management is noticed all around the worldas evidenced by the ubiquity of this function and also itssecuring a slot in the boardroom and the strategy managementfunction A long list of firms beginning with MicrosoftInfosys and British Airways owe their success to the humanresources A serious audit of this function may reveal ahost of flaws which if corrected can be sources of greatcompetitive advantage A few of them are listed to give abroad idea of where this function can err

1 Per employee productivity in comparison to the industrystandard or that of a best-managed company

2 Different recruitment sources and the success of each of them

3 Different selection methods used and their effectiveness

4 Employee turnover (attrition rate)5 Morale and commitment among employees6 Remuneration packages7 Performance appraisal systems and training methods8 Quality of work life and employeesrsquo ratings of it9 Human resources planning including the succession of

senior level personnel

Finance FunctionThe main concerns of finance function center around three areas (1) where it gets money from and at what cost (2) where a company invests and how much and (3) how it uses ordistributes the profits it earns

Function-Figure-49Finance Function

The health of a firm is roundly reflected in its financialposition- profit and loss account and balance sheet Profitand Loss account is a statement of income and expenses for aparticular year it helps one figure out by how much thetotal income exceeds the total expenditure or vice versaIn other words it reflects the net positive (or negative)outcome of the operations of a firm for a period usually ayear A simple cursory way of financial analysis iscomparison of figures in the profit and loss account withthose of the previous years each of the amounts shown underdifferent heads like interest insurance travelingexpenses sales commission is compared with correspondingfigures of the previous years This simple analysis revealshow effectively the firm has been run for a given period-year in comparison to the years that have passed before

Balance Sheet is a statement of assets and the liabilitiesas shown in Figure 410 (share capital is also a liabilitysince the firm is viewed as an entity separate fromindividuals who contribute share capital) shown against eachother as on a particular day usually the end of a yearAssets represent the items where the funds are invested-plant buildings working capital and so on and how much oneach liabilities represent where the funds have come from(sources)- equity share capital or debt in their differentforms and how much from each For an analyst balance sheetlays bare on the one hand how and to what extent valuableresources are committed in productive and unproductiveassets and to what extent expensive or less expensive fundsare pooled up on the other Further the liabilities sideof balance sheet shows how much of the undistributed profitsis available as a reserve which can absorb future shocks of

Source amp Cost of funds

Where and How muchinvested

How profits are utilized

losses or which can be distributed to the shareholders asbonus shares Each figure in the balance sheet is an indexwhich can explain the effective and ineffective functioningof firm

Figure 410

Balance Sheet

=

Simply stated an analysis of the financial position asshown in profit and loss account and balance sheet willreveal if it can grow and survive and if it can how fastit can grow if it can not how soon it is likely to go outof business

The main concerns of finance function center around threeareas as shown Figure 49 They are (1) where it getsmoney from and at what cost (2) where a company invests andhow much and (3) how it uses or distributes the profits itearns These are referred to as (1) financing (2) investmentor capital budgeting and (3) dividend decisions respectivelyFinancing involving pooling up of funds primarily throughfour ways equity undistributed profits long-term debtand short-term debt A proper mix of these sources offinancing differentiates an effective finance function froman ineffective one Simply put that which can be financedby a less expensive debt should not be financed throughequity Conversely it is also not considered wise to

LIABILITIES

Share CapitalShort- Term LoansLong-Term LoansReservesProfits

ASSETS

Fixed AssetsWorking CapitalLoss

finance the operations through debt when the returns areless than the cost of debt The debt ndash equity mix andprofitability have to be analyzed to understand theefficiency of a firm in this aspect Debt-equity ratios andprofitability ratios can be calculated and the same can becompared with the industry ratios or the firmrsquos ratios ofthe previous years during which the has firm performed wellSee Table 43 for a detailed explanation on the ratios usedfor financial analysis

A firm invests its pooled-up funds- capital and debt in avariety of ways broadly consisting of projects productslong-term assets like plant and buildings short-term assetslike working capital and cash and debtors (arising fromcredit sales) Each investment is rated according to thereturn that comes from such an investment if the rate ofreturn from an investment exceeds its cost of acquisitionor at least is on par with the industry standard such anitem of investments is rated favorably An effective use ofassets or their profitability can also be found out bylooking at the relationship between the assets or capitalemployed and the sales or profits generated with the helpof the former Different profitability ratios explain thefirmrsquos current position or its efficiency in the effectiveuse of assets Another related point with regard toinvestment is that cash and working capital have to be keptat their optimal levels and a fine balance has to bestruck In other words keeping working capital and cash ata level more than the required will result in unnecessaryexpenditure on carrying it- interest storage andsafeguarding and reducing them to a level below therequired will entail stock-outs customer dissatisfactionmachine idle time and so on Keeping optimal working capitallevel calls for the establishment of effective informationsystems and identification of effective sources of supplyIdeally a firm should be able to work with the lowest levelof working capital which in turn requires cutting-edgemanagement information systems state-of-art technologygood planning systems and effective sales organization

Financial analysis has to check these aspects with the helpof ratios and other measures like cost of capital rate ofreturn liquidity and so on See the Table 43 tounderstand some important ratios for the aforementionedkinds of financial analysis

Payment of dividends is a clear sign of the effectiverunning of an enterprise Market value of a firm isdetermined by the earnings per share and the dividend givenper share Certain investors come forward to invest only individend-paying companies On the other hand distributingprofits fully as dividends leaves a company in a state ofunprepared- ness for the future uncertainty Besides in thedifficult finance market conditions like high demand forfunds but low availability of them it is not advisable tosubstitute undistributed profits with those from the marketDividend decisions reveal how the firm is run and where itis headed besides dividends represent a firmrsquos reputationamong the investing public

------------------------------------------------------------------------------------------------------------

Table 43

Liquidity

A firmrsquos ability to meet demands from its creditors forquick payment is referred to as liquidity Highly liquidfirms make payments on demand which helps the firm keep itspayment reputation This reputation makes it easy for a firmto develop sources of supply and buy the required inputs oncredit Regardless of this the outer limit for theliquidity has to be figured out and maintained to avoid lossof interest on idle funds Liquid assets keep the reputationbut earn very negligible income if they do at all Thefollowing ratios help the analyst find out if the firm isliquid

1 Current ratio = Current assets -------------------- Current liabilities

2 Acid-test ratio = Liquid assets-------------------Current liabilities

Operational efficiency

Does the firm invest the funds of the owners and creditors in the operations that generate sales and profits The questto find answers to this question unearth the profitability or otherwise of the activities of the firm- the ability to produce commercial results Hence the ratios used to find out this are called lsquoactivity ratiosrsquo The following are some important ratios capable of ferreting out the firmrsquos ability to effectively use the assets to produce sales and profits

3 Inventory turnover = Cost of goods sold----------------------------- Average inventory

4 Inventory turnover = Sales--------------Inventory

5 Debtors turnover = Credit sales --------------------

Average debtors

6 Fixed assets turnover = Sales ----------------- Net fixed assets

7 Total assets turnover = Sales ---------------------- Total assets

8 Capital employed turnover = Sales -----------------

Capital employed

Leverage Ratios

Leverage refers to the extent to which a company utilizesthe borrowed capital to finance its operations rather thanequity capital The recourse to borrowed capital isadvisable when the rate of return is high and the access toit is easy A firm depending heavily on equity has generallyless than optimal level of earnings per shareInterestingly earning per share can be maximized with thehelp of borrowed capital Besides shying away from borrowedcapital leads to an unwarranted pressure on the equityshareholders to bring more for the firmrsquos projects Simplyput leverage is a must Leverage ratios reveal theimportance given to borrowed capital to increase theearnings per share and to what extent earning fluctuationscan impact the firm

9 Debt-to-Total Assets Ratio = Total debt-------------------------

Total assets

10 Debt-to-Equity Ratio = Total debt -------------------------

----

Total stakeholdersrsquo equity

11 Long-term Debt-to-Equity Ratio = Long-term debt

----------------------------


12 Times-Interest-Earned Ratio = Profits before interests and taxes

-----------------------------------------------------

Total interest charges

Profitability Ratios

The primary goal of a firm and indicator of itseffectiveness is either profits or sales Profits resultfrom an effective use of assets or capital Profits intheir different forms-gross profit net profit profitbefore interest and tax profit available to theshareholders-have to be seen in their relation to assets orcapital employed or equity Such relationships explain theprofit-generating efficiency of firm with reference to theresources invested Besides to check profitabilitydifferent forms of profits are seen in relation to the salestoo The following are most commonly used profitabilityratios

13 Gross Profit-to-Turnover Ratio Sales minus cost of goodssold (Gross profit)(Gross Profit Margin) =

------------------------------------------------------- Sales (Total

Turnover)

Earning before interest and taxes14 Operating Profit Margin = ---------------------------------------------------------

Sales (Total Turnover)

Net income15 Net Profit Margin

--------------------------------------- Sales (Total Turnover)

Net Income (After-tax profits)16 Return on Equity

------------------------------Total stockholdersrsquo equity

Net Income (After-tax profits)

17 Return on Total Assets---------------------------------------

Total assets

Net income available to shareholders18 Earnings per share

----------------------------------------------Number of equity shares outstanding

Market price per share

19 Price-earnings ratio-------------------------------

Earnings per share

------------------------------------------------------------------------------------------------------------

Besides the ratios a firmrsquos year-on-year growth ( inpercentage terms) in terms of sales net income earningsper share and dividend per share reveals which direction afirm is headed Finance function analysis is usually madebefore making strategic decisions such as merger buyout orsale debt or equity routes and so on Similar analysis has to be done on Research and Developmentfunction which can feed a business that is always hungry ofnew products and processes necessitated by the changingconsumer tastes new technologies competition from acrossthe borders and so on Certain businesses like footwearelectronics chemicals and the like quickly drown intolosses or go out of business if the stream of new productsis too thin or too slack However in many cases whateveris invested in RampD is not giving the results of expectedlevel either due to ineffective leadership or inadequatefunding or something else Another problematic side of theRampD which always calls for resolution is whether to go infor internal RampD or contract RampD each having its set ofadvantages and disadvantages The analysis can reveal thestrengths and weaknesses of this function giving clues asto how to revamp it

It is also very apt here to mention about an analysisrequired to learn if a highly effective information systemwhich can facilitate effective managerial decisions is inplace or not The flow of information from operationswarehouses suppliers outlets sales personnel and so onhas to be harnessed and used to facilitate effective

decisions on production sales finance human resource andso on In many industries such as banking informationsystem is an essential part which is proved by the successof Citibank which has installed and maintains a robustinformation system to serve customers better than itscompetitors An analysis of managerial information systemswill reveal the necessity for a strategic decision orotherwise regarding the information system

Value Chain ApproachA firm has to concentrate on nine activities that make forthe maximization of value to the consumer Porter hasdivided the nine value activities into two groups fiveprimary and four support activitiesIn the previous approach functions are the basis tounderstand a firmrsquos strengths and weaknesses But usuallyfunctions are not common to all industries and also notcommon to all firms in an industry They vary But MichaelPorter a Harvard professor has proposed in his bookCompetitive Advantage another framework wherein theactivities to be analyzed are fixed they are nine Thestandpoint that Porter has taken is value which can begenerated by doing a particular activity Value refers to asingle benefit or a bundle of benefits to the consumerencompassing many aspects like the best features of theproduct best design easy availability easy to use andreorder economical best service and anything that acustomer needs A firm has to concentrate on those nineactivities that make for maximization of value to theconsumer Porter has divided the nine value activities intotwo groups five primary activities and four support activities See the Figure 411

Figure-411Value Chain

The five primary activities are (1) Inbound logistics (2)Operations (3) Outbound logistics (4) Sales and Marketingand (5) Service These primary activities directlycontribute to the creation of product or service and itsdelivery and after-sales service to the customer Eachprimary activity again consists of a number of activitiesfor example in-bound logistics consists of activities liketransport material handling warehousing material entryand so on

The four support activities are (1) Procurement (2)Technology Development (3) Human Resource Management and(4) Firm Infrastructure Each of these support activitieshelps in the effective execution of each of the primaryactivities For example effective human resource managementhelps in ensuring effective inbound supplies effectiveproduction operations effective distribution an efficientsales organization and customer-gratifying after-salesservice The following is a discussion on each of the ninevalue chain activities beginning with the primaryactivities

Inbound Logistics The supplies that are coming into aproduction facility of a firm called lsquoinbound logisticsrsquo haveto be correctly timed properly received correctly stored

InboundLogistics

Support Activities

1Procurment2HRM3Technology Development4Infrastructure

Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities


in a warehouse and correctly entered into data base Anywastage or delay or laxity in any of these activities willeither add to the cost or lower the value of product orservice Incorrect data entry management for example mayresult in denial of a request for transfer of the same to anindenting department though it is already there (because itis not properly entered) This entails wastage cost idletime and poor service Each of the numerous activities ininbound logistics has the potential to make or break thevalue of product and service An analyst has to focus onthese activities to examine how effectively they are carriedout

Operations Operations are the manufacturing activities thatturn raw material into products they are on the one handdoubtlessly the sources of wastage avoidable expenditurelow productivity fatigue to the workers and delay in thecompletion of the orders and have the widest scope tocreate value on the other hand The activities thatencompass facility layout and design process flow rawmaterial used production planning production technologyused machine scheduling and so on fall under the purview oflsquoOperationsrsquo The operations are there in service firms toofor example hospitals convert manpower infrastructure andtechnology into patient care service The scheduling ofdoctors and equipments are part of operations of a hospital

Outbound Logistics The activities involved in arrangingtimely transportation of the manufactured products to thepoints where they are consumed are referred to as lsquoOutboundlogisticsrsquo Outbound logistics are rated as effective to theextent the required merchandize is available on time withthe lowest possible transportation expenditure and transportdamages It means that avoiding unnecessary expenditure andensuring safe transportation in just as much quantity asrequired is considered a value worth pursuance It isneedless to say that excessive inventory at consumptionpoints is a cost and thus reduces value that can have beendelivered if correctly managed

Sales and Marketing All the activities that aid in theultimate sale of merchandize are marketing and the ultimatetransactions that mark the transfer of merchandize to thebuyer and the receipt of sales proceeds are sales Theconsumer should be aided by a firmrsquos sales and marketingactivities in such a way that the merchandize he needs isavailable at the points where he can reach conveniently atthe cost he considers to be fair and at the time which isconvenient to him Effective marketing activities andefficient sales organization differentiate the successfulfirms from the failures In India the efforts of privatebanks to make cash available any time through ATMs had beenconsidered to be a marketing activity that could give acompetitive edge much before other banks realized it andproved so it is now plain truth that ATMs are a source ofgreat value

Service Service keeps or enhances the value of the productProducts require its manufacturers to give its buyers therequired level of service before and after salesparticularly in respect of technical products like softwareor high-tech plant and machinery Installation repairtraining supply of parts and the like fall under serviceactivities Service is now an important criterion thatattracts the customers to the product and helps in theretention of them Of late what with the expectations fromthe customers and pursuing the goal of achieving acompetitive advantage a noticeable trend is that moreservice is increasingly given For example Citibank answersand acts on every query or request sooner than any otherfirm could Another example would be that the secret ofInfosysrsquo growth is its incomparable service to its buyers

Support activities

Each of the activities discussed in the foregoing arefurther facilitated by four support activities these areoften overlooked though they are sources of great valueEach of these support activities permeates all the fiveprimary activities of value chain They exert a decisiveinfluence on each of first five but not in an apparentmanner it requires a careful analysis to figure out theirinfluence

Procurement

The activities involved in the procurement of inputs for theoperations are referred to as procurement The inputsencompass raw materials supplies buildings machinery andthe like An effective system of procurement makes forquality output For example material procured fromsuppliers selected purely on the basis of best criteria ndashpurely on merit- can supply quality material on time whichin turn aids in the quality output at a reasonable priceSimilarly procurement of machinery or buildings atfictitious exorbitant prices will only add to fixed costswhich will in turn find their place in the price of everyunit of output This is a missed opportunity to add value

Technology Development

The activities involved in improving the technology and theprocess used in the manufacture of products and theirimprovement and the service procedures constituteTechnology Development Redesigning of processes basicresearch new product development process use ofinformation technology in service and distribution and thelike are the different forms of technology developmentTechnology a source of value affords the competitive edgea constant and successful pursuit of acquiring or developingtechnology differentiates a star performer from the also-rans

Human Resource Management

The human resources- with their and skills and motivation -are very crucial to the growth and survival of a firm Eachof the entire gamut of activities involved in theacquisition training motivating and compensating of thepersonnel has its absolute influence on how products aremade and distributed and how customers are given theexpected service so these activities require the bestattention of the managers and present the highest potentialto create value For example a good recruitment practice oran effective performance appraisal system helps indevelopment retention and motivation of a talentedemployee and a group of such employees are an inimitableand distinct value for a firm

Firm Infrastructure

The activities involved in how a firm is managed in all itsmanagerial functions - planning accounting finance andgeneral management and so on- that do not fall into any ofthe primary or supporting activities make the generalinfrastructure For example a flawed accounting system mayruin the firm as it happened in the case of Worldcom orEnron a good accounting system not only facilitates goodmanagement but also adds to the reputation of a firm Sothese activities are not to be overlooked when a firm isserious about creating value

Simply stated value chain analysis is an approach thatdirectly zeroes in on where a firm has to concentrate tocreate value that leads to sustainable competitive edge Butcare has to be taken to see that the factors that requiremore focus vary from industry to industry and firm to firmthough all the nine activity groups have the potential forgenerating value

Internal Environmental AnalysisInternal Environmental analysis essentially identifies theactors - individuals and institutions - that have some

influence on a firmrsquos functioning these can be shaped to afirmrsquos advantageThe internal environmental analysis gives an understandingof the factors responsible for the potential success orfailure of a firm This analysis essentially identifies theactors- individuals and institutions- that have someinfluence on a firmrsquos functioning these can be shaped to afirmrsquos advantage This is the layer next to the outer layera companyrsquos external environment - political economicsocial and technological forces external environment itis contrarily not subject to a firmrsquos control andpresents opportunities and threats

The internal environment which is close to the firm and onwhich a firm has relatively a higher degree of control(unlike in the case of forces in the external environment onwhich a firm has absolutely no control) consists of (1)companyrsquos internal setting-organizational structure itsmission relationship among its functions and the prevalentwork culture (2) suppliers (3) intermediaries (4)customers (5) competitors and (6) interest groups likegeneral public and employee groups as shown in Figure 412The following is a brief discussion on each of them

Figure-412

Internal Environmental Analysis

Internal setting

The organizational structure the relationships withinfunctionaries and departments the prevalent culture andthe companyrsquos vision mission and plans which the company iscurrently pursuing make the internal setting which isnothing but the company itself Such a setting has thepotential to determine its destiny- success or ruinConflicts among a firmrsquos functions and functionaries aswell short term pursuits conflicting goals culture thatdoes not advance the organizational goals and the like sendclear signals about its current and future health A firmbestowed with highly motivated staff workforce with shared

Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups

vision and mission well-laid systems and the like exhibitsthe signals of sure success

Suppliers

Suppliers who provide the inputs- raw materials and otherinputs-can determine firmrsquos success since suppliersrsquo inputsand their timely or delayed delivery can either decrease orincrease the quality and price of a firmrsquos products besidesmeeting or failing to meet the service standards promised tothe customers Simply put suppliersrsquo operations can eitherpromote or lower the efficiency reputation and the chancesof commercial success of a firm Indiarsquos personal carsmajor Maruthirsquos success is attributed to its suppliersrsquoefficiency

Intermediaries

The other commercial intermediaries besides suppliers suchas banks design consultancy firms advertisement firmshuman resource consultancy firms training specialistsmarketing infrastructure providers like distributors andretailers and so on facilitate the job of a firm Whileeffective intermediaries are highly essential to a firmrsquossuccess in certain economies of less developed countriesfor example the intermediaries may not be available at allIt is interesting to note that developed countries encourageadequate availability of intermediaries and theseadequately available intermediaries are one of factors thathave helped the developed countries reach the current levelof their development

Customers

Dependence on a few large customers leaves a firm in arisky precarious position although it is easy andeconomical to coordinate with the fewer such customers canhold a firm to ransom they can force a firm to cut prices

they can also scare it with a reduction of orderedquantities so that it toes their line in the worst casescustomers can force a firm to go out of business This hasbeen discussed while explaining five competitive forcesConversely a broad base of customers in large numbers cangive a firm stable performance since each of them can impacton the firmrsquos fortune very marginally but collectivelysuch a large base of customers can keep a firm in a goodstate

Competitors

The number of competitors as well as the intensity ofcompetition presents challenges to a firmrsquos stability andsurvival The capabilities of the current competitorsdetermine if a firm can stay in the business and if itdoes what kind of resources and efforts are required tostay afloat Besides competition is not only from the sameproducts but from substitute products also requiring thefirm to be vigilant to both the obvious dangers and thelatent ones too Conversely fewer competitors and lesssevere competition afford enviable opportunities of growthto a firm There was a detailed discussion on this in thechapter dealing with competitor analysis

Interest groups and employees

General public is interested in what a firm does and sokeeps track of its activities primarily to see if itbenefits the community at large Public expects a firmamong other things to provide employment opportunitiescontribute to social causes and cause no damage to thenatural resources and environment Highly aware publicgroups keep their watchful eyes on a firm and may react toits business initiatives if they consider them to be apotential hazard to their general interests The people inKerala for example were highly aware of and vigilant towhat multinational beverages companies would do to their

water resources and environment and brought them to courtsof law

The employee groups have interests some of which are inline with the purpose of a firm while some conflict It is achallenge to make the employees toe the line of a firmunruly and highly unionized employee groups bring a firmrsquosactivities to a halt as a form of their strong reaction Itis the discipline ethos and work ethic of the employeeswhich more than decides on where a firm is headed

The internal environmental analysis as presented in the foregoing reveals who the actors and forces which are close to a firm are and which are partly amenable to a firmrsquos attempts to turn them to its advantage

Internal Factor Analysis

The identification of internal factors- resources andcapabilities and particularly those which are critical tostrategic success of a firm is referred to as lsquoInternalFactor Analysisrsquo What we discussed under Functions Approachand Value Chain Analysis- for that matter even SWOTAnalysis- is nothing but internal factor analysis But thisanalysis can be considered to be complete only when all theidentified critical strengths are evaluated and the mostcritical of them are named Since we dealt enough with theidentification of factors what comes next to it is theevaluation of internal factors It is needless to say thatthe job of evaluation facilitates the next task ie thenaming of the most critical factors

Evaluation of Internal FactorsEvaluation of internal factors is concerned with weighingthe factors and handpicking only those which are rare non-substitutable inimitable and valuable factors- distinctcompetencies or competitive edgeInternal analysis is done with the intention of using itsoutcome as an input to build into strategy formulation

Internal analysis furnishes a list of all the strengths andweaknesses But a strategist typically narrows his searchfor a few strengths on which strategy can rest Those fewstrengths that a strategist looks for are the rare non-substitutable inimitable and valuable factors- distinctcompetencies or competitive edge It implies that theabsence of these constitute a weakness of a firm if itscompetitors have them at the same time These distinctcompetencies have to be sifted through the long list ofresources and capabilities For this the identifiedfactors-resources and capabilities- have to be evaluated

There are four basic approaches (others call them basicperspectives) that can be used for evaluation They are (1)comparison with the firmrsquos past capabilities andperformance (2) stage of product market in their lifecycle (3) comparison with competitors and (4) comparisonwith the industryrsquos key success factors Essentially allthese approaches aid in finding out which factors existingin a firm are strategically more important than others Abrief explanation on these four perspectives is as follows

Analysis of past performance leads to identifications of itscausative factors- the specific strengths The managers of afirm who have sufficiently long experience can easilyidentify the strengths of a firm They might intuitivelyanalyze and judge that the firmrsquos impressive performance incertain years in the past was due to certain strengths likefor example strong financial systems or highly motivatedsales personnel

The life cycle stage at which a product or a marketcurrently stands indicates what specific strengths areneeded Life cycle consists of (1) introduction (2) growth(3) maturity and (4) decline Each stage requires adifferent strength for the growth or survival of a firm Forexample in the introductory (nascent) stage strong RampDfunction is essential while in the growth stage financialresources to spend on marketing are a must In third stage

maturity stage efficient production capability isimportant In the fourth stage decline stage relationshipsand service to the customers make the difference Simplystated all strengths are not equally important and thecritical success factors vary from stage to stage in theirlife cycle

Benchmarking against the few successful rivals will revealwhat is critical to the success of a firm It implies ananalysis of the competitorsrsquo performance followed by acomparison of the same with that of the firm so as toidentify the strategic strengths that are either existing orlacking in the firm under analysis A strong salesorganization for example may be a strength in a particularfirm Going a little further it may be discovered that sucha firm lacks good financial management this relativeweakness should be driven out and a strength in this aspecthas to be built in the firm that is making this analysis andpreparing to formulate a strategy

The standards that have been established or identified forthe industry as a whole are useful to compare with thoseexisting in a firm Industry as a whole might determinecertain strengths as strategically critical Generic drugindustry may have arrived at a prescription that effectiveproduction system and research for patentable drugs areindispensable This will stand as a benchmark or a goalworth pursuit The industry prescribes threshold strengthsand anything over and above them becomes a basis ofcompetitive edge

SWOTAnother popular tool of internal analysis is SWOT analysisSWOT is an acronym for Strengths Weaknesses Opportunitiesand Threats This popular tool is used in the context ofunderstanding or addressing several issues such asidentification of internal factors identification ofopportunities and threats matching of internal factors withthe external ones to formulate at a grand strategy

understanding of an organization to help their managers makefar-reaching decisions like mergers and sell-outs ( ofcourse these are strategic decisions) and so on Forinternal analysis the SWOT analysis in its full form is notnecessary identification of strengths (S) and weaknesses(W)-only half of what SWOT is capable of accomplishing- isenough for internal analysis

Strengths

A lsquostrengthrsquo is a resource or a competency of theorganizational members or other advantage which helps firmbetter serve the customer relative to its competitors Theremay be many competencies which fall within the thresholdlimits meaning that they are just basic to the survival ofa firm but a strategist looks for those which can give afirm an edge over others It goes without saying that thelack of the basic competencies in a competing firm keeps astrategistrsquos firm at a disadvantage advantage and thus suchbasic competencies can be referred to as strengthsMotivated workforce for example is a minimum requirementbut most organizations lack it that is the reason whymotivated workforce of Infosys gives it a competitive edge

In the lsquoFunctions Approachrsquo an attempt was made to list all strengths and weaknesses It may be noted that lsquoFunction Approachrsquo serves as an analytical framework for the identification of strengths and weaknesses

Strengths enable a firmrsquos survival and growth whileweaknesses either slow or hinder the growth and threatenits survival Strong infrastructure good salesorganization good IT systems carefully selected suppliersloyal customers high reputation among investors and generalpublic good organization for customer service and so on aresome examples of strengths The lack of them in full or inpart is a weakness

Critical Success Factor Analysis

Critical Success Factor (CSF) Analysis is another tool toidentify the factors that are very critical to the successof a firm this is usually done at business unit level Thisanalysis helps an analyst understand either (1) whatspecific factors are responsible for the current success or(2) what specific factors have to be focused on in managinga firm to become successful These factors vary fromindustry to industry and from firm to firm For exampleplant and technology are very critical for steel-making butcommitted workforce is very crucial for a softwaredevelopment Similarly for a brick-mortar book-seller shoplocation and physical facilities are more critical than foran online book seller whose critical success factor might beuser-friendly website

To cite a specific case the critical success factors ofONGC among others are (1) highly qualified and well-trained manpower (2) best drilling technology (3)entrepreneurial leadership (4) availability of rich naturalresources and (5) sufficient autonomy

This analysis serves the same purpose as do others such asvalue chain analysis function analysis internal audit andso on Simply put it helps an analyst or a strategist knowwhat was very important to the firm and focus on what isimportant at the present

Internal Factor Evaluation (IFE) Matrix Internal Evaluation Factor Matrix is constructed todetermine which strength is more critical than others Thistool furnishes both an enumeration of strengths and and the

value (in numerical) of each of them so an aggregate scoreof strengths and weaknesses is calculatedTo evaluate the worth of each identified strength (todetermine which strength is more critical than others)Internal Evaluation Factor Matrix is constructed This toolfurnishes both an enumeration of strengths and weaknesses inthe functional areas of a firm and the value (in numerical)of each of them so an aggregate score (a vector sum) ofstrengths and weaknesses is calculated this can be comparedwith those of the rival firms or industry standard Thistool also facilitates the understanding of the relationshipamong their functional areas and the degree of suchrelationship But the caveat is that numerical value shouldnot be taken to mean that the tool is absolutely scientificso there is no chance for intuitive judgment Intuition isalso needed More specifically a thorough understanding ofthe factors included in the matrix is highly important sinceincorrect weights given on certain factors may distort thepicture

A five-step process to construct Internal Factor Evaluation Matrix is described in the following

The Procedure to Construct an IFE Matrix

1 List all the key internal factors- the strengths andweaknesses usually a total of 10 to 20 factors- asfound out from the internal audit process If aparticular factor is both a strength and weaknessinclude it in both in strengths and weaknesses

2 Weight should be given to each of the strengths andweaknesses but the total of all weights should be equalto 10 so the weights should range from 00 to 100representing the least and highest importance offactors respectively as found out from the internalaudit Simply put each of these weights represents theimportance of it to the success of the firm Note that

it is a valuation of the factors but not how a firmfared on these factors

3 Assign a rating to each factor depending on how thefirm fares on it the rating scale is usually 4-to-1with 4 indicating a major strength 3 a minor strength2 a minor weakness and 1 a major weakness To put itanother way strengths are given the ratings 4 and 3while weaknesses are given 2 and 1

4 Multiply each of the scores arrived at by Step 3 withthe corresponding weight assigned in Step 2 whichgives a weighted score

5 Add up all the weighted scores calculated in step 4 toarrive at the total score for the organization suchfinal score usually works out between 1 (at its low)and 4 (at its highest) A score of less than 25indicates a weak internal organization whereas thatabove 25 represents a stronger one

An example of the construction of IFE Matrix for ZSOFT an imaginary firm is furnished in the Table 44

Table 44A Sample Internal Factor Evaluation Matrix for ZSOFT Limited

Key Internal Factors Weight RatingWeighted Score

Internal Strengths1 Strong customer base 010 30 032 Highly motivated workforce 010 30 033 World-class infrastructure 005 40

024 Strong sales organization 005 40

025 Strong Ramp D 005 40 02

6 Robust execution system 005 30015

7 High reputation among investors 015 30045

8 Leadership 010 30 039 Organization for customer service 010 20

0210Training systems 005 30

015

Internal Weaknesses1 Sales expenditure 003 20

0062 Huge expenditure on land amp Buildings 002 10 0023 Lack of control over operations 010 20

002 4 Training expenditure 003 10 0035 Lack of collaborations 002

20 004Total 100 262

The sum of the weighted scores of ZSOFT Limited works out to262 which is above the average of 25 so it can be inferred that its internal factors are strong enough

In a Nutshell

Internal analysis is a preparatory exercise for strategyformulation Internal analysis is variously known asinternal analysis internal situation analysisorganizational analysis internal environmental analysisinternal appraisal of firm internal assessment internalaudit and company analysis It is an exercise to understandwhere a firm stands in terms of capabilities and resourcesResource-based view (RBV) which is the opposite ofIndustrial Organization View lays emphasis on a companyrsquosresources and competitive capability for organizationalsuccess Capabilities are understood by understanding itsfunctions This understanding process is internal analysis

Activities done to create value signal a firmrsquos capabilitiesand scope for improving its performance further A firm hasto understand and concentrate on nine activities that makefor the maximization of value to the consumer Porter hasdivided the nine value activities into two groups fiveprimary and four support activities

Internal Environmental analysis essentially identifies the actors - individuals and institutions - that have some influence on a firmrsquos functioning these can be shaped to a firmrsquos advantage Internal Evaluation Factor Matrix a numerical tool is constructed to determine which strength is more critical than others

A strategy formulated without considering its abilities andresources have the least chances of success The techniquespresented in this chapter help the reader understand theimportance and the process of internal analysis

Points to Remember

Internal Analysis is an exercise to list a firmrsquosresources strengths and weaknesses

Resource-based view (RBV) which is the opposite ofIndustrial Organization View lays emphasis on acompanyrsquos resources and competitive capability fororganizational success Jay Barney has proposed thisview

Industrial Organization view lays stress on a firmrsquosfit with the external environment

The process of identifying and evaluating theorganizational factors that underlie sustainableperformance and long-term growth of an organization orthose that hinder its growth is referred as internalanalysis

Internal analysis is variously known as internalanalysis internal situation analysis organizationalanalysis internal environmental analysis internalappraisal of firm internal assessment and companyanalysis

Organizational Analysis embodies lsquoorganizationalappraisalrsquo too in that the importance (criticality) ofthe factors- how strong those factors are in terms ofcontribution to organizational goals- is determined

Internal audit or internal analysis is usually done ontraditional functions production marketing financehuman resources technology and so on This is referredto as lsquoFunction Approachrsquo

The five basic functions of production management are process capacity inventory work force and quality management

Marketing is the process of understanding customerrsquos needs creating goods and services to fulfill them anddelivering them where and when the customer wants

Human Resources have the potential to give their best to the firm if fostered well and led in a proper direction and thus constitute a competitive advantageHuman Resources have to be planned acquired developedand retained

The main concerns of finance function center around three areas (1) where it gets money from and at what cost (2) where a company invests and how much and (3)how it uses or distributes the profits it earns

A firm has to concentrate on nine activities that makefor the maximization of value to the consumer Porterhas divided the nine value activities into two groupsfive primary and four support activities

Internal Environmental analysis essentially identifies the actors - individuals and institutions - that have some influence on a firmrsquos functioning these can be shaped to a firmrsquos advantage

Evaluation of internal factors is concerned withweighing the factors and handpicking only those whichare rare non-substitutable inimitable and valuablefactors- distinct competencies or competitive edge

Internal Evaluation Factor Matrix is constructed todetermine which strength is more critical than othersThis tool furnishes both an enumeration of strengthsand and the value (in numerical) of each of them so anaggregate score of strengths and weaknesses iscalculated

Mind Pricking QuestionsDescription Answers

1 ldquoResource-Based View is one-sided since it ignores external forcesrdquo Argue on this plank to substantiate it

2 What are the objectives of Organizational Appraisal and in which contexts is it made

3 Resource-Based View and Industrial Organization View are the two sides of the same coin from a strategistrsquos standpoint Can you substantiate this statement

4 List at least 20 internal factors of an institution youare employed or may be employed in by Functions Approach

5 Identify the most critical areas where the new governing body of a Municipal Corporation should focus on by adopting the Value Chain Approach

6 Construct an Internal Factor Evaluation Matrix for bothRanbaxy of India and Daiichi Sankyo of Japan which recently entered into a buy-out arrangement

Short Answers

7 What are the goals of Internal Analysis for a strategist

8 Key Internal Forces are the Key Success Factors What is your view on this and support your view with a proper logic

9 SWOT analysis is not an internal analysis Do you agreethis view If not why

10 How do you distinguish Internal Environmental Analysis from Internal Analysis

Multiple Choice Questions

1) Internal Analysis is a sequel to and necessitated by(a)Adoption of Industrial Organization View (b) Adoption of Resource-Based View (c)A new managers wish to understand a firm (d) mandate from the government

2) Resource-Based View does not embody this concern(a)Resources amp Capabilities (b) Vision and Mission (c) Competitive Advantage (d) Resource Match to opportunities

3) A resource in order to qualify for a competitive advantage need not be characterized by(a)Inimitability (b) Non-substitutability (c) Long-

lasting quality (d) Valuable

4) Internal Audit is done along the lines of (a)Value Chain activities (b) Parties that impact on the functioning of a firm (c)Opportunities and threats(d) Traditional functions

5) Functions Approach examines(a)Each of the value chain activities (b) each of the strengths and weaknesses (c) factors of internal environment (d) each functional department of a firm

6) Critical Success Factor is a(a)Resource (b) An activity (c)Department (d)

Environment

7) Physical Resources Human Resources and Organizational Resources are mentioned in(a)Value Chain Analysis (b) Critical Success Factor Analysis (c) SWOT analysis (d) Resource-Based View

8) Internal Factor Evaluation Matrix helps in the quantification of(a) Strengths (b) Strengths and Weaknesses (c) Opportunities (d) Critical Factors

9) In Value Chain Human Resource function is(a) Primary activity (b)Support activity (c)Internal factor (d)Success factor

10) Internal analysis does not refer to (a ) Weaknesses (b) Strengths (c) Opportunities (d)Capabilities

Studentsrsquo Short Projects

1 Look up in the newspapers for the items of news that were carried during the last six months on expansion

acquisition and merger of Indian companies and figure out the capabilities and resources that underlie such strategic exercises

2 Construct an imaginary Internal Factor Evaluation Matrix for at least two Indian companies which have recently either expanded their business or acquired other companies

Best Practices A Companyrsquos Experience

Internal Analysis in Bharti Enterprises

Bharti Enterprisesrsquo strategic intention is to lead build ampgrow in businesses that make a positive difference to the lives of people - telecom retail and wholesalecommunication and media devices insurance and financial services agricultural product-based businessand BPOsoftware Bharti Enterprises is the apex strategy-making body for the entire group which will provide overalldirection and umbrella strategy for the group as a whole

Bharti may acquire Big Apple a Delhi based supermarketchain having 65 stores and expanding itself by opening 100more stores in NCR Karnataka and Gujarat Its usualapproach is to acquire small companies and become a leaderTo become a big player in mobile phones it earlier acquiredJTM Hexacom and Skycell In retail business too it appearsto pursue the same strategy Such acquisitions took place inretail sector too-Birla Retail and Trinethra Spinach andSabka Bazar and Reliance and Adani Retail Big Apple has awell-established supply chain in Delhi and Panjab

Bharti has recently entered into retail business as BhartiRetail Pvt Ltd under an MoU with Wal-Mart for the cash ampcarry business It has successfully launched aninternational venture with EL Rothschild Group to exportfresh agricultural products exclusively to markets in Europeand USA

According to its website Bharti Airtel Limited is ldquotheIndiarsquos largest integrated and the first private telecomservices provider with a footprint in all the 23 telecomcircles Bharti Airtel since its inception has been at theforefront of technology and has steered the course of thetelecom sector in the country with its world class productsand servicesrdquo It has over 35016 kilometers of optic fiberon its national long distance network

Bharti has opened its first convenience store Easy Day atLudhiana in Panjab in April 2008 To ward off the wrath oflocal communities it is employing the local people womenphysically challenged persons rural peoples housewives andretirees For manpower training it started Bharti Academyof Retail Bharti which contemplates on investing US$ 25billion or around Rs 10000 crore in the next five yearshas plans to eventually occupy 10 million sq ft of retailspace and offer employment to 60000 people

Bharti Airtel wanted to leverage its brand value which isstrong enough by virtue of its robust customer servicesupport system Retailing success depends on reputation ofthe group Second its financial performance assures easymobilization of financial resources or sourcing of supplieson profitable credit terms Third it has the financialprowess to acquire the necessary real estate to start mallsFourth its experience in retail business and customerservice coupled with the required talent pool makes itsretailing venture easier Bharti Airtel is one of top 10mobile service providers in the world with the credit ofserving 40 million customers from a single-country

The foregoing paragraph reveals the internal analysis thathas been made by Bharti to diversify into retail business

Questions for Discussion

1 What factors can lead Bharti to success in retailing

2 What other verticals do you recommend for Bharti toventure into

3 What strengths of Bharti does Wal-Mart want toleverage Guess

Case Analysis

Expansion of Emami Group An Audacious Response toOpportunities

Emami group seems to be on a roll pursuing plans ofexpansion in its current businesses and diversification intomany new areas Let me throw some light on some of itsexpansion projects

Emami is a Rs1500-crore personal and healthcare majorand has now production units spread in West Bengal AssamOrissa Pondicherry Gujrath Uttarkhand and HimachalPradesh This company started in 1974 was initially amanufacturer of beauty products cosmetics and toiletries

Emami group of companies now plans to expand intoedible oils production by investing Rs250 crores in HaldiaWest Bengal It already invested Rs150 crores on a plantset up for the production of bio-diesel With this and theproposed investment Emami will produce and market 800 tonsof palm oil 600 tons of soy oil and 200 tons of rice branoil per day They will initially sell this production inbulk to industries manufacturing biscuits and chips Thismove to expand is traced to their realization that the bio-diesel plant is proving unviable After seeing the responseto its bulk-trading move it will start building the edibleoil band

Its other expansion moves (1)This company is planning to invest Rs2000 crores on

cement and power plant in Chattisgarh

(2) It is also planning to foray into retailing sectorby first opening 10 stores in eastern region in the next twoto three years

(3) Besides it is also engaged in expanding its market

for baby care health care and menrsquos grooming products Fairand Handsome fairness cream Sona Chanda chyawan prashNavratna oil Boroplus cream Boroplus Prickly HeatMenthoplus balm Fast Relief pain balm and Malai Kesar ColdCream are the well-known brands owned by Emami

(4) It just completed a Rs330-crore paper millsexpansion in 2007 involving the raising of its productioncapacity from 60000 tons to 145000 tons Moreover it plansto add a fresh capacity of 155000 tons in two to three yearsto come These plans are keyed to the fact that there is ahuge gap between demand and supply of newsprint The demandfor it which is growing at 10 percent may touch 1900 lakhtons by 2008 against the local production of 850 lakh tons

(5) Further with an investment of about Rs100 croresin pharmacy retailing in the next two years it wants togrow it to Rs100 crores from the current turnover ofRs2500 crores to realize this plan it will open 100 morepharmacy outlets either as stand-alones or within hospitals

(6) Emami has acquired 275 stake in the ZanduPharmaceuticals It wants to further invest Rs100 more onacquisition of regional national and international FMCGbrands

Financials of Emami Group (Rs in crores)

2006 2007 2008Net sales 30184 51826 58371Other income 266PBDIT 9868Net Profit 4927 6620 9275

Balance SheetItemsTotal ShareCapital

1243

Net Worth 28900Total Debt 3519Net Block 7782Investments 10297Net CurrentAssets

12994

Emami before implementing this high-voltage strategy of expansion it must have engaged itself in an internal analysis

(1) Drawing on other sources of information besides what is given in this case identify and enumerate all the important factors that must have emerged out of internal analysis

(2) What might have gone wrong in the internal analysis given that its bio-diesel investment is not proving unviable

(3) Think up all the issues that must have been left out of internal analysis while formulating this massiveexpansion

Key Words

Internal Analysis The process of understand the resources abilities and

inadequacies of a firm

Internal Audit The strength and weakness of each function or a department or

an activity of a firm is analyzed

Organizational Analysis It is a study of an organization tounderstand its strengths and

weaknesses

Resource-based View The theory as proposed by John Barney states that a firmrsquos

strategic planning and its success are keyed to the resources available with it

Function Approach It is a way of doing internal analysis each of the functions

commonly known as departments are studied to understand the capability of a firm

SWOT Analysis A firmrsquos strengths and weaknesses are studied before they are

matched with the opportunities and threats presented to it

Internal Factor Each internal factor is either a strength or a weakness

Value Chain It is list of activities grouped under five primary activities and 4 support activities

Critical Success Factors The particular resources or abilities which are pivotal to the

success of a firm

Notes

MAHitt REHoskisson amp RDIreland 2007 Management of Strategy Concepts and Cases New Delhi Thompson South-Western 71-85

MPorter 1985 Competitive Advantage Creating and Sustaining Superior Performance New York Free Press 34-67

JAPearce II amp RBRobinson JR 2003 Strategic Management Strategy Formulation and Management DelhiRichard DIrwin Inc202-240

FRDavid 2005 Strategic Management Concepts and Cases New Delhi Pearson Education Inc 144-179

AAThompson Jr amp AJ Strickland III 2003 Strategic Management Concepts and Cases New Delhi Tata Mcgraw-Hill114-143

2008 The Financial Express Rasna to Enter to ready-drink segment httpwwwfinancialexpresscomnewsRasna-to-enter-readytodrink-segment297889 April 17 2008

2008 Abut Us amp Future Plans Pioma Industrieshttpwwwrasnainternationalcom 2008

2007 Digital Inspiration Emami Group dirversifying too much too soon httpwwwlabnolorgindiacorporateemami-group-diversifying-too-much-too-soon410 June 13 2007

2008 About Emami amp Investor Relations httpwwwemamigroupcom 2008

2008 Bharti Media Center httpwwwbharticom1320htmlamptx_ttnews[tt_news]=218amptx_ttnews[backPid]=131ampcHash=2c3824ace2 2008

2007 About Bharti Airtel httpwwwbhartiairtelinindexphpid=14 2007

2008 The Hindu Business Top level changes at Bharti Enterprises httpwwwhinducom20080806stories2008080651901800htm August 06 2008

ASSETS

Internal Analysis

Approaches to Internal Analysis

Figure-44

Function Approach

Table-42

Functions and Sub-functions

Figure-47

Figure-48

Figure-49

Figure-411

Table 44

The components of internal environment

Evaluation of Internal Factor Analysis

Identification of Strengths and Weaknesses

Critical Factor Analysis

The Technique of Internal Factor Evaluation Matrix

(IFEM)

Contemporary Corporate Story

Rasnarsquos Organizational Analysis That Preceded Its Decision to Be a Multinational

The brand which tasted the success in domestic market and international market as well through moderate exports now wants to become a multinational company for this to happenit is pursuing a new strategy - market expansion

Rasna a well-known fruit drink concentrate (SDC) brand owned by Ahmedabad-based Pioma Industries is scouting for joint venture partners to expand its trade to former Soviet (CIS) and African countries It collaboration options include licensing technology transfer joint venture and marketing partnership

Its vision is to be a global leader in processed foods Its mission is to bring to the global market high quality processed foods beverages and confectionaries through superior technology Its current focus is to give the global









Internal Analysis



Figure-41

Internal Analysis



Resource-Based View




External Analysis


Internal Analysis


Figure 42


Physical Resources


Human Resources






Figure-43


Characteristic

It implies




4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44









Internal Analysis



Figure-41

Internal Analysis



Resource-Based View




External Analysis


Internal Analysis


Figure 42


Physical Resources


Human Resources






Figure-43


Characteristic

It implies




4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44

Internal Analysis



Resource-Based View




External Analysis


Internal Analysis


Figure 42


Physical Resources


Human Resources






Figure-43


Characteristic

It implies




4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Figure 42


Physical Resources


Human Resources






Figure-43


Characteristic

It implies




4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



Figure-43


Characteristic

It implies




4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



4 Non-substitutable

















Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44













Internal Setting




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44




Resources




Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



Figure-44




Identify

Evaluate

Determine








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44








Function Approach




General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



General

Manageme-nt


t

Human Resources

Finance

Marketing

Production

SalesProfit

GoodwillCost

Reduction





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44





Production


Sales Profits

Goodwill

CostReduction


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Marketing


Human Resources


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Finance



General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


General Management








Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44




Process

Capacity Invent

oryWorkforce

Quality








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44








MarketingInformatio

nSystems

Distribution

Advertising

Pricing


Marketing
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44
























Figure 410

Balance Sheet

=



LIABILITIES


ASSETS






------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44





------------------------------------------------------------------------------------------------------------

Table 43

Liquidity









Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44








Average debtors




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44




Capital employed

Leverage Ratios



Total assets


----



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



----------------------------



-----------------------------------------------------





------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


------------------------------------------------------- Sales (Total

Turnover)









Total assets





Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Earnings per share

------------------------------------------------------------------------------------------------------------









InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44







InboundLogistics

Support Activities


Operations

Support Activities


OutboundLogistics

Support Activities


Sales amp Marketing

Support Activities


CustomerService

Support Activities







Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44






Support activities


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Procurement






Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Firm Infrastructure






Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44



Figure-412


Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44

Internal setting


Internal

setting

Suppliers

Intermediaries

Customers

Competitors

Interest

Groups


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Suppliers


Intermediaries


Customers



Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


Competitors



















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44
















Strengths




























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44

























015




20 004Total 100 262


In a Nutshell





Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44




Points to Remember























Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44




















Short Answers













Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44






Environment






















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44
















Case Analysis
















1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44










1243


12994





Key Words






weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44


weaknesses










success of a firm

Notes













ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44












ASSETS

Internal Analysis


Figure-44

Function Approach

Table-42


Figure-47

Figure-48

Figure-49

Figure-411

Table 44

Internal Analysis

Documents

Transcript of Internal Analysis