CHAPTER 4 The Internal Assessment

Organizational culture

Emphasizes the importance of matching external with internal factors in making strategic decisions.

Good leaders

Establish rapport with subordinates, empathize with their needs and concerns, set a good example, and are trustworthy and fair.

Financial Ratio Analysis

Exemplifies the complexity of relationships among the functional areas of business.

Synergy

Exists when everyone pulls together as a team that knows what it wants to achieve; synergy is the 2 + 2 = 5 effect

Motivation

Explains why some people work hard and others do not

Value Chain of Rival Firms

Firms should determine where cost advantages and disadvantages in their value chain occur relative to the ________.

Empirical indicators

For a resource to be valuable, it must be either (1) rare, (2) hard to imitate, or (3) not easily substitutable.

Internal Audit

Gathering and assimilating information about the firm's management, marketing, finance/accounting, production/operations, R&D, and MIS operations.

Liquidity ratios

Measure a firm's ability to meet maturing short-term obligations.

Leverage ratios

Measure how effectively a firm is using its resources.

Profitability ratios

Measure management's overall effectiveness as shown by the returns generated on sales and investment.

Leverage ratios

Measure the extent to which a firm has been financed by debt

Growth ratios

Measure the firm's ability to maintain its economic position in the growth of the economy and industry.

Test marketing

One of the most effective product and service planning techniques.

Culture

Provides an explanation for the insuperable difficulties a firm encounters when it attempts to shift its strategic direction.

Internal Audit

Provides more opportunity for participants to understand how their jobs, departments, and divisionsfit into the whole organization

Management Information System (MIS)

Receives raw material from both the external and internal evaluation of an organization.

Controlling

Refers to all those managerial activities directed toward ensuring that actual results are consistent with planned results.

Rare resources

Resources that other competing firms do not possess

Personnel management or Human resource

Staffing is Also called as "______"

Internal Factor Evaluation (IFE) Matrix

Summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas.

Planning

The essential bridge between the present and the future that increases the likelihood of achieving desired results

Customer analysis

The examination and evaluation of consumer needs, desires, and wants—involves administering customer surveys, analyzing consumer information, evaluating market positioning strategies, developing customer profiles, and determining optimal market segmentation strategies.

Leadership

The lifting of a person's vision to higher sights, the raising of a person's performance to a higher standard, the building of a person's personality beyond its normal limitations.

Communication

The most important word in management.

Marketing

The process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services.

Motivating

The process of influencing people to accomplish specific objec

Value chain analysis (VCA)

The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products.

Cost/Benefit analysis

The seventh function of marketing that involves assessing the costs, benefits, and risks associated with marketing decisions

Marketing research

The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.

controlling

This function of management includes all of those activities undertaken to ensure that actual operations conform to planned operations.

Information

Ties all business functions together and provides the basis for all managerial decisions. It is the cornerstone of all organizations.

Value Chain

Total revenues minus total costs of all activities undertaken to develop and market a product or service yields value.

Organizing

Determining who does what and who reports to whom.

RBV theory

Asserts that resources are actually what helps a firm exploit opportunities and neutralize threats.

Distinctive Competence.

A core competence that evolves into a major competitive advantage

Distinctive Competencies

A firm's strengths that cannot be easily matched or imitated by competitors

Organizational culture

A pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think, and feel.

Internal Factor Evaluation (IFE) Matrix

A summary step in conducting an internal strategic-management audit.

Core Competence

A value chain activity that a firm performs especially well.

Staffing

Activities are centered on personnel or human resource management.

Investment decision

Also called as capital budgeting It is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization.

Benchmarking

An analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals and thus conducive to winning in the marketplace.

Planning

An up-front investment in success

Human resources

Include all employees, training, experience, intelligence, knowledge, skills, abilities

Physical resources

Include all plant and equipment, location, technology, raw materials, machines.

Organizational resources

Include firm structure, planning processes, information systems, patents, trademarks, copyrights, databases, and so on

Resource-Based View (RBV)

Internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage

Motivating

Involves efforts directed toward shaping human behavior.

Test markets

It allow an organization to test alternative marketing plans and to forecast future sales of new products.

Data

It become information only when they are evaluated, filtered, condensed, analyzed, and organized for a specific purpose, problem, individual, or time.

Dividend decisions

It concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock.

Production/Operation function

It consists of all those activities that transform inputs into goods and services.

Financing Decision

It determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital

Outputs

It include computer printouts, written reports, tables, charts, graphs, checks, purchase orders, invoices, inventory records, payroll accounts, and a variety of other documents.

Cultural products

It include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, heroes, and heroines.

Product and Service planning

It includes activities such as test marketing; product and brand positioning; devising warranties; packaging; determining product options, features, style, and quality; deleting old products; and providing for customer service.

Organizing

It includes all those managerial activities that result in a structure of task and authority relationships.

Selling

It includes many marketing activities, such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations

Distribution

It includes warehousing, distribution channels, distribution coverage, retail site locations, sales territories, inventory levels and location, transportation carriers, wholesaling, and retailing.

Pricing decisions

It is affected by five major stakeholders (consumers, governments, suppliers, distributors, and competitors)

Functions of management

It is consist of five basic activities: planning, organizing, motivating, staffing, and controlling.

Planning

It is consists of all those managerial activities related to preparing for the future.

Financial condition

It is often considered the single best measure of a firm's competitive position and overall attractiveness to investors.

Financial Ratio Analysis

It is the most widely used method for determining an organization's strengths and weaknesses in the investment, financing, and dividend areas.

Finance/Accounting

Its functions comprise three decisions: the investment decision, the financing decision, and the dividend decision.

Organizing

Its purpose is to achieve coordinated effort by defining task and authority relationships.

Information

Lifeblood of the company.