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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.
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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.