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Internal Analysis

Chapter Six. Internal Analysis. How do we define the business?. How do we define the business?. Hawaii Western U.S. U.S. North America Global. How do we define the business?. Packaged Fountain. How do we define the business?. Cans Bottles 6 pack 12 pack 24 pack.

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Internal Analysis

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  1. Chapter Six Internal Analysis

  2. How do we define the business?

  3. How do we define the business? • Hawaii • Western U.S. • U.S. • North America • Global

  4. How do we define the business? • Packaged • Fountain

  5. How do we define the business? • Cans • Bottles • 6 pack • 12 pack • 24 pack

  6. How do we define the business? • Restaurants • C-stores • Movies • Others

  7. How do we define the business? • Coke • Diet Coke • Sprite • Fanta • Mr. Pibb • Other

  8. Market Share Total Sales Total Market Sales

  9. Market Share Total Sales Total Market Sales

  10. Profitability • Profit • Profit Margin • Asset Turnover • R.O.A. (return on assets)

  11. Profit • Bottom line on the P&L

  12. Profit Margin • Profit divided by sales

  13. Asset Turnover • Sales divided by average total assets

  14. R.O.A. • Profit margin times asset turnover

  15. Homework: Calculate • Profit Margin • Asset turnover • Return on Assets

  16. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  17. Apple

  18. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Current Performance Product/Service Quality Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  19. Rolls Royce

  20. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  21. More Expensive Inferior Superior Less Expensive Relative Cost vs. Relative Performance - Strategic Implications • Change • Design • Manufacturing/Systems • Ignore • Value Analysis • Raise prices • Promote • Cost Reduction Our Component is • Value Analysis • De-emphasize • Upgrade • Value Analysis • Emphasize/promote • Leave it alone Chapter 6 - Internal Analysis Figure 6.2

  22. More Expensive Inferior Superior Less Expensive Relative Cost vs. Relative Performance - Strategic Implications • Change • Design • Manufacturing/Systems • Ignore • Value Analysis • Raise prices • Promote • Cost Reduction Our Component is • Value Analysis • De-emphasize • Upgrade • Value Analysis • Emphasize/promote • Leave it alone Chapter 6 - Internal Analysis Figure 6.2

  23. More Expensive Inferior Superior Less Expensive Relative Cost vs. Relative Performance - Strategic Implications • Change • Design • Manufacturing/Systems • Ignore • Value Analysis • Raise prices • Promote • Cost Reduction Our Component is • Value Analysis • De-emphasize • Upgrade • Value Analysis • Emphasize/promote • Leave it alone Chapter 6 - Internal Analysis Figure 6.2

  24. More Expensive Inferior Superior Less Expensive Relative Cost vs. Relative Performance - Strategic Implications • Change • Design • Manufacturing/Systems • Ignore • Value Analysis • Raise prices • Promote • Cost Reduction Our Component is • Value Analysis • De-emphasize • Upgrade • Value Analysis • Emphasize/promote • Leave it alone Chapter 6 - Internal Analysis Figure 6.2

  25. More Expensive Inferior Superior Less Expensive Relative Cost vs. Relative Performance - Strategic Implications • Change • Design • Manufacturing/Systems • Ignore • Value Analysis • Raise prices • Promote • Cost Reduction Our Component is • Value Analysis • De-emphasize • Upgrade • Value Analysis • Emphasize/promote • Leave it alone Chapter 6 - Internal Analysis Figure 6.2

  26. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  27. Gillette

  28. Gillette

  29. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  30. G.E.

  31. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  32. Netflix

  33. Chapter Six Internal Analysis See Netlix Values PDF

  34. Performance Measures ReflectingLong-Term Profitability Customer Satisfaction/ Brand Loyalty Long Term Profits Product/Service Quality Current Performance Brand/Firm Associations Relative Cost New Product Activity Manager/Employee Capability/Performance Heritage and Values Chapter 6 - Internal Analysis Figure 6.1

  35. Benchmarking Defined “Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.”

  36. Benchmarking exercise: Benchmarking Products

  37. Walmart (all numbers in thousands)

  38. Walmart (all numbers in thousands)

  39. Costco (all numbers in thousands)

  40. Costco (all numbers in thousands)

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