Functional Approach to Internal Analysis

Topics: Management, Strategic management, Porter five forces analysis Pages: 53 (14927 words) Published: September 13, 2011

The purpose of the internal analysis is to evaluate how the company is doing, so that its efforts can be directed in the most effective and efficient way. It s a Decision making approach in which a problem is broken down into its component functions (accounting, marketing, manufacturing, etc.). These functions are further divided into sub-functions and sub-sub functions ... until the function level suitable for solving the problem is reached.

Every organization of a given type must perform certain jobs in order do its work. For example, key functions of a manufacturing company include production, purchasing, marketing, accounting, and personnel. The functions of a hospital include surgery, psychiatry, nursing, housekeeping, and billing. Using such functions as the basis for structuring the organization may, in some instances, have the advantage of efficiency. Grouping jobs that require the same knowledge, skills, and resources allows them to be done efficiently and promotes the development of greater expertise.

Functional analysis is a tool used to express the needs of a client/user in terms of functions and performances expected, instead of focusing on a solution. In other words, the problem is presented without thinking about the solution. To accomplish this, the buyer must identify, sort, characterize and prioritize the needs of a client (internal customer).

Functional analysis is the basic tool for Value Management. Value is the ratio between the level of client satisfaction and the relative cost of a product or service. Value Management is a method to increase value to clients.

Functional analysis is a support to better identify clients needs in order to increase their satisfaction at the lowest cost. The Functional Specification of Requirements is the end product of the Functional Analysis. It is the document that formalizes the client’s needs. It is a technique used to identify the labour competencies inherent in a productive function. Such function may be defined at the level of an occupational sector, an enterprise, a group of enterprises or a whole sector of production or services. Functional analysis may be developed with different initial levels: an occupational sector (hotel); mainstream occupations at various sectors (occupational safety and health); or an occupation (PC repairman). It is thus evident the flexibility of functional analysis. Although it was designed as a wide-scale analysis tool, it may also be useful to analyse occupations in certain subsectors or even at specific organisations.(1) Functional analysis is not an exact method whatsoever. It is a working approach to the required competencies by means of a deductive strategy. It begins by establishing the main purpose of the productive function or service under study and then questions are asked to find out what functions need to be performed in order for the previous function to be achieved. Ideally, this is carried out on a group of workers who are familiar with the function object of the analysis. Its worth as a tool comes directly from its representative quality. Certain rules are followed during its preparation in order to keep uniform criteria. The main purpose, key purpose or key function of the enterprise is usually described by following this structure: [pic]

Henri Fayol was the first person to identify elements or functions of management in his classic 1916 book Administration Industrielle et Generale. Fayol was the managing director of a large French coal-mining firm and based his book largely on his experiences as a practitioner of management. Fayol defined five functions, or elements of management: planning, organizing, commanding, coordinating, and controlling. Fayol argued that these functions were universal, in the sense that all managers performed them in the course of their jobs, whether the managers worked...

References: Michael A. Hitt, Robert E. Hoskisson & R. Duane Ireland, Management of Strategy Concepts and Cases. Seventh Edition, 2007.
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