Chapter 3 - Internal Analysis

8/4/2019 Chapter 3 - Internal Analysis

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PART II

INTERNAL ANALYSIS



Why internal analysis?

•Providing the management with a detailunderstanding of the organization

•How effective current strategies

•How effective resources have been deployed.



Why internal analysis?

•Identify resources, competences, and corecompetences to be developed & exploited

•Evaluate how effectively value added activities

are organized•Indentify areas of weakness to be address bythe formulation of future strategies andsuccessful implementation

•Evaluate the performance of products

•Evaluate financial performance.



Components of internal analysis

•Resources analysis

•Competences identification and analysis

•Analysis of internal activities using Porter’svalue chain analysis

•Financial resources and financial performance

•Products and position in the market.



Chapter 3

COMPETENCES – RESOURCES – COMPETITIVEADVANTAGES



Learning objectives

• Explain the concept of core competences,competences, resource and the relationship betweenthem

• Explain the concept of the value chain and value chainframework

• Explain the relationship between core competencesand core activities

• Explain how the value chain framework ‘work’ • Explain how the configuration of value adding activities

can improve business performance• Identify the potential benefits of collaboration with

suppliers, distributors and customers

By the end of this chapter, students should be able to:



Competences

•A competence is an attribute or collection of

attributes possessed by all or most of the

organizations in a sector of industry

•Competences develop from•Resources,

•Embody skills,

•Technology or•Know-how.



Example of competences

•Distributing, marketing and selling the hotelproducts (accommodation, F&B…)

•Licenses of the hotel operation

•STAR-level certification

•Wedding banquet technology.



Core competences

•A core competence or distinctive capability is anattribute, or collection of attributes, specific to aparticular organization, which enables it toproduce performance above the average for the

industry• It arises from the way in which the organization

has used its competences and resources moreeffectively than its competitors

•The result of a core competence is an outputwhich customers value more highly than those ofcompetitors.



Example of core competences

•Hotel service standards

•Cooperation and coordination betweendepartments

•Communication and team-work.



Resources

•A resource is an input employed in the activities of the business. Success rests in large part upon theefficiency by which the business converts itsresources into outputs

•Resources fall into five broad categories•Human,

•Financial,

•Physical,•Operational and

• Intangible.



Competences vs. Core Competences

•Organizations are•Producing above average performance core

competences•Producing average or below average performance

competences•Core Competences (distinctive capability) =

Superior deployment resources + superiorapplication of general competences create

value for•Customers•Represent as competitive advantages.



Competitive advantages

RESOURCES

COMPETENCES

CORECOMPETENCES

COMPETITIVEADVANTAGE



RESOURCE ANALYSIS



Tangible & intangible resources

• Obtained from outside

• Stocks

• Materials

• Facilities and equipments

• Buildings

• Human resources

• Finance

• …

• Developed within anorganization

• Skills

• Knowledge• Brand names

• Goodwill

• Ambience

• Enthusiasm• Warm welcome

• Guest relations

• Customer care.

TANGIBLE ASSETS INTANGIBLE ASSETS



Tourisms industry & Free resources

•Vital part of the product

•Available in such abundance naturally

•Air

•Sea

•Climate

•Culture

•…



Features of tourism resources

•Resource immobility

•Resource substitution

•Resource conflict & competitive

•Resource ownership and control

•Seasonality

•

Low rewards•Capacity constraints

•Time.



Analyzing resource

•By category

•By specificity

•By performance

• benchmark the organization’s performance



COMPETENCES



Attributes

•Skills, knowledge, technology and relationship•Less tangible than resources

•Developed:•

Internal organization•Acquired external

•Collaboration with suppliers, distributors orcustomers

•Essentials for survival in a particular line ofbusiness

•Potential to be develop into core competences.



CORE COMPETENCES



Core competences• Superior performance to the industry average•

Unique to the company• More complex then competences• Difficult to emulate• Fulfill customer needs• Great value add•

Base on• Distinctive relationship

• Upon superior organization skills & knowledge

• Arise from building, developing, integrating and deployingorganization’s resources & competences

•Core competences can be evaluated for• Customer focus

• Uniqueness

• Flexibility

• Contribution to value

•Sustainability.



Distinctive capability

•Kay (1993) distinctive capability can developfrom:• Architecture – A network of relationship within or

around the organization•Reputation – The important contributor to

consumer choice of product/service

•Strategic assets – The strength of market position

or dominance of a market• Innovation – capability to provide a distinctive

product/service or cut-cost.



Outcome of the analysis

•Aims of the analysis

•From distinctive capability to competitiveadvantage



Analysis of value adding activities

•What is value adding?•Changing customer perception of the product

•Reducing unit costs of production

•The value adding process

•The value chain

•Analysis the value chain

•

Core activities, non-core activities andoutsourcing

•The service profit chain.



Organization product value chain

Infrastructure

Human source management

Product & service development

Technology & systems development

T r a n s p o r t a t i o n

O n - s i t e s e r v

i c e s

W h o l e s a l e /

p a c k a g i n

g

M a r k e t i n g &

s a l e s

P r of i t m ar g

i n

S u p p o r t a c t i v i t i e s

P r i m a r y a c t i v

i t i e s

Procurement

R e t a i l d i s t r i b u t i o n

C u s t o m e r s e r v i c e



The service profit chain

Workplace designJob design/decision making

latitudeSelection & development

Reward & recognitionInformation & communication

Adequate tool to service

customer

Quality &productivity

improvementyield higher

servicequality &

lower cost

Attractive valueService designed &delivered to meet

target’s customer’sneeds

Lifetime valueRetention

Repeat businessReferral

Documents

Chapter 3 - Internal Analysis