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Develop a solid mission and vision, conduct situational analysis, focus on product leadership, set clear objectives, and craft effective strategies for sustainable success. Ensure feedback loops, value customer intimacy, and operational excellence. Involve assess value creation and provide feedback to refine strategies for optimal outcomes. Utilize the internal audit process to assess performance, analyze value chain activities, determine strengths and weaknesses, and leverage core competencies for strategic choices. Evaluate financial and non-financial measures, core competencies, value chain infrastructure, human resources, technology and development, procurement, profit margins, marketing and sales, and more. Apply competitive advantage principles and barriers to entry strategies for sustained growth and competitiveness.
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Strategic Management Framework Develop Mission & Vision Perform Situational Analysis Product Leadership Set Objectives & Craft Strategies Feedback Value Customer Operational Implement Strategy Intimacy Excellence Assess Value Creation & Provide Feedback
The Internal Audit Process Step 1- Assessment of Performance Financial & Non-financial measure Step 2- Analysis of value chain activities Step 4- Determine Strength & Weaknesses Evaluate activities In the Value chain Evaluate linkage between organization and Supply chain partners Apply test of Competitive relevance Use strength/weaknesses To inform strategic choice Step 3- Understanding Core Competencies Identify special skills or capabilities
Assessment Tools for Stage 1 • Revenue analysis Growth rate, source of revenues • Earnings analysis Growth rate of profits, source of profits • Return on Equity After tax profit for each $ of stockholder investment • Change in market share Cause-effect for changes • Employee turnover Ability to retain talent • Employee & customer Degree of satisfaction, commitment, surveys loyalty
The Value Chain Infrastructure Human Resources Secondary Technology & Development Procurement Profit Margin Marketing & Sales Inbound Logistics Outbound Logistics Operations Service Primary M.E. Porter-Competitive Advantage Wheelen/Hunger p. 86 Figure 4-3
Barriers to Entry • Economies of Scale Cost due to larger size • Product differentiation Customer loyalty to brand • Capital requirements Too expensive to enter • Disadvantages other than size Learning and experience curve • Distribution channels Access to sales channels • Regulation and/or licensing Special approvals needed Source: M.E. Poter The Competitive Advantage of Nations
Areas of Distinctive Competence Commonly Found • Quality • Service • Location • Filling a special niche • Flexibility and adaptability • Strong consumer orientation • Reputation and image • Personnel
Resource Allocation • Helpful metrics to assess resource allocation; FOM = Margin $’s over three years Development cost ($) Assessment can be done by organizational area, i.e. for some products/services, marketing may be the dominant expense.
Culture • Are the company values practiced? -Employee surveys • Are we organized efficiently for the task at hand? – There are tradeoffs to all org structures, prioritize the issue matrix. • Are we setting aggressive yet realistic expectations? Analog metrics can provide insight.
