Internal Analysis

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Strategic Business Planning for Commercial Producers

What Tools Are Useful in Assessing Strengths and Weaknesses? Resources, Capabilities, and Core Competencies

Strategic Business Planning for Commercial Producers

Strengths and Weaknesses
• Goal: objective assessment of your strengths and weaknesses – relative to competitors – important to customers

Note: This is difficult to do well.

Strategic Business Planning for Commercial Producers

Challenge of Internal Analysis
• Identifying, developing, protecting, and deploying resources, capabilities, and core competencies

Strategic Business Planning for Commercial Producers

Resources
• Inputs into a firm’s production process such as capital equipment, skill of individual employees, patents, finance, and talented managers – Tangible Resources – Assets that can be seen and quantified – Intangible Resources – Family commitment, networks, organizational culture, reputation, intellectual property rights, trademarks, copyrights

• By themselves, resources do not create a strategic advantage for the firm.

Strategic Business Planning for Commercial Producers

Capabilities
• Capacity to deploy resources that have been purposely integrated to achieve a desired end state. • Primary base for the firm’s capabilities is the skills and knowledge of its employees. • Just because the firm has a strong capacity for deploying resources does not mean it has a competitive advantage.

Strategic Business Planning for Commercial Producers

Core Competencies
• Resources and capabilities serve as a source of competitive advantage for a firm over its rival. • Not all resources and capabilities are core competencies. • Many suggest that firms should identify and concentrate on only 3 or 4 core competencies.

Strategic Business Planning for Commercial Producers

Identifying and Building Core Competencies
• Core competencies must be distinctive.
– Capabilities that are done better than competitors

• Identifying core competencies is key to development of sound strategy. • We use the value chain to help identify core competencies.

Strategic Business Planning for Commercial Producers

The Value Chain
• A framework for identifying core competencies
– Inside the firm – In the supply chain

• Can be used to
– Identify strengths and weaknesses – Identify sources of competitive advantage – Identify market opportunities

Strategic Business Planning for Commercial Producers

The Value Chain
Firm Infrastructure

Supporting Activities

Human Resource Management Technological Development Procurement

Inbound Operations Logistics

Outbound Marketing Service Logistics & Sales

Relationship with Suppliers

Relationship with Buyers

Elapsed Time - Value added time cost

Strategic Business Planning for Commercial Producers

• Inbound Logistics

Primary Activities in the Value Chain
– Materials handling, warehousing, inventory control used to receive, store and disseminate inputs to a product – Fertilizer and chemical storage, delivery of inputs, application of inputs

• Operations
– Take inputs from inbound logistics and convert to final products – Plowing, planting, spraying, harvesting, feeding, medicating, weighing,etc.

• Outbound Logistics
– Collecting, Storing, and physical distribution of the final product. – Crop storage, finished hog handling, Processing and determining delivery dates, delivery to the packer or elevator etc. Procurement Technology Firm Infrastructure Human Resource management Service Inbound Logistics Operations Outbound Logistics Marketing and Sales

Strategic Business Planning for Commercial Producers

• Marketing and Sales

Primary Activities in the Value Chain
– Provide means through which customers can purchase products and to induce them to do so – Advertising, communicating with buyers, developing customer relationships, pricing products (futures, hedging, forward contracting, etc.),...
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