CHP 4: The Internal Assessment

employee engagement for participants to understand how their jobs, departments, and divisions fit into the whole organization. Helps people perform better when they know how they fit into the firm

Compared to an external audit, internal audits provide more opportunity for

Legends

Handed-down narratives of some wonderful event, usually not supported by facts

Sagas

Historical narratives describing the unique accomplishments of a group and its leaders

formulate, implement, and evaluate strategies to enable it to gain and sustain competitive advantages.

However, strategic planning must include a detailed assessment of how the firm is doing in all internal areas. A complete internal assessment is vital to help a firm

international companies.

Human resource management is particularly challenging for

ineffective or even counterproductive.

If strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, then management often can swiftly and easily implement changes. However, if the firm's culture is not supportive, strategic changes may be

Heroes/Heroines

Individuals greatly respected

weaknesses to strengths to distinctive competencies to competitive advantage

The process of Gaining a Competitive advantage in a firm

cultural products

include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, folktales, and heroes and heroines. these products or dimensions are levers that strategists can use to influence and direct strategy formulation, implementation, and evaluation activities.

brick-and-mortar sales

online sales are more expensive for companies than _____, after factoring in the cost of shipping, handling, and the higher rates of returns.21

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

organizational resources include

employees, training, experience, intelligence, knowledge, skills, and abilities

human resources include all

Robinson-Patman Act

prohibits manufacturers and wholesalers from discriminating in price among channel member purchasers (suppliers and distributors) if competition is injured.

physical resources, human resources, and organizational resources

proponents of the RBV view/theory contend that organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories:

planning, organizing, motivating, staffing, and controlling.

the functions of management consist of five basic activities:

Language

the manner in which members of a group communicate

functional, divisional, strategic business unit, and matrix.

the most common types of structure are

leadership, group dynamics, communication, and organizational change.

the motivating function of management includes at least four major components:

breaking down tasks into jobs (work specialization), combining jobs to form departments (departmentalization), and delegating authority.

the organizing function of management can be viewed as consisting of three sequential activities:

motivating

the process of influencing people to accomplish specific objectives.9

culture.

the strategic-management process takes place largely within a particular organization's

(1) customer analysis, (2) selling products and services, (3) product and service planning, (4) pricing, (5) distribution, (6) marketing research, and (7) cost/benefit analysis.15

there are seven basic functions of marketing:

(1) compute the total costs associated with a decision, (2) estimate the total benefits from the decision, and (3) compare the total costs with the total benefits.

three steps are required to perform a cost/benefit analysis:

decreasing

tv ads are

cost/benefit analysis

which involves assessing the costs, benefits, and risks associated with marketing decisions.

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.

extended period of time. SO MAKE A GOOD DECISION

Once a marketing channel is chosen, an organization usually must adhere to it for an

test marketing

One of the most effective product and service planning techniques is ________ _______ allow an organization to test alternative marketing plans and to forecast future sales of new products. In conducting a test market project, an organization must decide how many cities to include, which cities to include, how long to run the test, what information to collect during the test, and what action to take after the test has been completed.

consumer goods companies.

Personal selling is most important for industrial goods companies, whereas advertising is most important for

plant and equipment, location, technology, raw materials, and machines

Physical resources include all

Rites

Planned sets of activities that consolidate various forms of cultural expressions into one event

neglect most.

Planning is the cornerstone of effective strategy formulation, and even though it is considered the foundation of management, it is commonly the task that managers

(1) determines whether to attempt a task, (2) works out the most effective way of reaching desired objectives, and (3) prepares to overcome unexpected difficulties with adequate resources.

Planning is the process by which a person

company website (50%), Facebook and/or other social media sites such as twitter (27%), and yellow pages and other (23%)

Recent research reveals that the most effective marketing methods for firms with fewer than 500 employees is the .17

internal strengths and weaknesses.

Regardless of the type or size of firm, effective strategic planning hinges on identification and prioritization of

strength or weakness for any firm

Remarkably resistant to change, culture can represent a major .

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."4

Myths

Narratives of imagined events, usually not supported by facts

Stories

Narratives usually based on true events

tangible or intangible

A firm's resources can be

internal audit

A periodic assessment of a company's own planning, organizing, leading, and controlling processes.

(1) rare, (2) hard to imitate, or (3) not easily substitutable.

A resource can be considered valuable to the extent that it is

synergy

An organization can develop ____ through planning. _____ exists when everyone pulls together as a team that knows what it wants to achieve; results in comp adv

enduring and can be warm, aggressive, friendly, open, innovative, conservative, liberal, harsh, or likable.

An organization's culture compares to an individual's personality in the sense that no two organizations have the same culture and no two individuals have the same personality. Both culture and personality are

Symbols

Any object, act, event, quality, or relation used to convey meaning

distinctive competencies.

Building competitive advantages involves taking advantage of

1. Establishing performance standards 2. Measuring individual and organizational performance 3. Comparing actual performance to planned performance standards 4. taking corrective actions

Controlling consists of four basic steps:

Folktales

Fictional stories

consumers, governments, suppliers, distributors, and competitors.

Five major stakeholders affect pricing decisions:

business areas differ.

For different types of organizations, such as hospitals, universities, and government agencies, the functional

profit margins to bare minimum levels for most companies.

Intense price competition, coupled with Internet price-comparative shopping, has reduced

objectives and strategies.

Internal strengths and weaknesses, coupled with external opportunities and threats and clear vision and mission statements, provide the basis for establishing

Values

Life-directing attitudes that serve as behavioral guidelines

First, managers frequently miss the significance of changing external conditions because they are blinded by strongly held beliefs. Second, when a particular culture has been effective in the past, the natural response is to stick with it in the future, even during times of major strategic change.5

Lorsch found that executives in successful companies are emotionally committed to the firm's culture, but he concluded that culture can inhibit strategic management in two basic ways.

1. Does the firm use strategic-management concepts? 2. Are company objectives and goals measurable and well communicated? 3. Do managers at all hierarchical levels plan effectively? 4. Do managers delegate authority well? 5. Is the organization's structure appropriate? 6. Are job descriptions and job specifications clear? 7. Is employee morale high? 8. Are employee turnover and absenteeism low? 9. Are organizational reward and control mechanisms effective?

Management Audit Checklist of Questions

greater returns

Manufacturers who could afford to sell directly to the public often can gain _____ by expanding and improving their manufacturing operations. Successful organizations identify and evaluate

evaluations can create confrontations that most managers prefer to avoid, can take more time than most managers are willing to give, and can require skills that many managers lack.

Measuring individual performance is often conducted ineffectively or not at all in organizations. Some reasons for this shortcoming are that

wholesalers, retailers, brokers, facilitators, agents, vendors—or simply distributors.

Most producers today do not sell their goods directly to consumers. Various marketing entities act as intermediaries; they bear a variety of names such as

strengths and most severe weaknesses.

Representative managers and employees from throughout the firm need to be involved in determining a firm's strengths and weaknesses. the internal audit requires gathering, assimilating, and prioritizing information about the firm's management, marketing, finance and accounting, production and operations, R&D, and MIS operations to reveal the firm's most important

autocratic behavior.

Research suggests that democratic behavior on the part of leaders results in more positive attitudes toward change and higher productivity than does

opportunities and neutralize threats.

Resource-based view theory asserts that resources are actually what helps a firm exploit

Ceremonies

Several rites connected together

Metaphors

Shorthand of words used to capture a vision or to reinforce old or new values

gaining and sustaining competitive advantage.

Since tangible resources can more easily be bought and sold, intangible resources are often more important for

Rituals

Standardized sets of behaviors used to manage anxieties

work together to provide ideas and information.

Strategic planning is most successful when managers and employees from all functional areas

the firms competitive adv

The better the empirical indicators as far as uniqueness, the stronger

Beliefs

Understanding of particular phenomena

good leaders.

When managers and employees of a firm strive to achieve high levels of productivity, this indicates that the firm's strategists are

the resource-based view (RBV)

approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage.

Marketing

can be described as the process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services.

Planning

consists of all those managerial activities related to preparing for the future, such as forecasting, establishing objectives, devising strategies, and developing policies. most important in Strategy Formulation stage

Product and service planning

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. Product and service planning is particularly important when a company is pursuing product development or diversification.

Organizing

includes all those managerial activities that result in a structure of task and authority relationships, such as organizational design, job specialization, job descriptions, span of control, coordination, job design, and job analysis. most important in Strategy implementation stage

Selling

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

Distribution

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

empirical indicators

indicators, these three characteristics (rare, hard to imitate, or not easy to substitute) of resources enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage.

Motivating

involves efforts directed toward shaping human behavior. Specific topics include leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale. most important in strategy implementation

Delegating authority

is an important organizing activity, as evidenced in the old saying, "You can tell how good a manager is by observing how his or her department functions when he or she isn't there." Employees today are more educated and more capable of participating in organizational decision making than ever before. In most cases, they expect to be delegated authority and responsibility and to be held accountable for results. Delegation of authority is embedded in the strategic-management process. Motivating Motivating is the process of influencing people

planning

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

Marketing research

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

Controlling

refers to all those managerial activities directed toward ensuring that actual results are consistent with planned results. Key areas of concern include quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions. most important in strategy implementation

Staffing

refers to human resource (HR) activities, such as wage and salary administration, employee benefits, interviewing, hiring, firing, training, management development, employee safety, equal employment opportunity, and union relations. most important in strategy implementation

Breaking down tasks into jobs

requires the development of job descriptions and job specifications. these tools clarify for both managers and employees what particular jobs entail.

Combining jobs to form departments

results in an organizational structure, span of control, and a chain of command.

distinctive competencies

strengths that cannot be easily matched or imitated by competitors

intangible

such as culture, knowledge, brand equity, reputation, and intellectual property.

not currently being implemented by any competing firm.

the RBV theory asserts that it is advantageous for a firm to pursue a strategy that is

mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage.

the basic premise of the RBV is that the

Management Audit Checklist of Questions

the following checklist of questions can help determine specific strengths and weaknesses in the functional area of business. An answer of no to any question could indicate a potential weakness, although the strategic significance and implications of negative answers, of course, will vary by organization, industry, and severity of the weakness. Positive or yes answers to the checklist questions suggest potential areas of strength.