Internal Analysis for Competitive Performance
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Questions and Answers

What is one way a firm can ensure individuals place their skills at the service of the organization?

  • By mandating overtime work
  • By offering performance-based bonuses only
  • By providing unlimited vacation time
  • Through the arrangement of contracts of employment (correct)

    • How does an individual's negotiating power relate to their contribution to the firm's success?

  • It increases as their skills become integrated in collective capabilities
  • It increases with the visibility of their contributions (correct)
  • It remains constant regardless of their contribution
  • It decreases when they have a broader range of skills

    • What is the primary goal of managing resources and capabilities within a firm?

  • To ensure all employees receive equal pay
  • To increase the workforce's negotiating power
  • To minimize the integration of individual skills
  • To diagnose strong and weak points for strategy formulation (correct)

    • Which activity is part of improving the provision of resources and capabilities?

    <p>Developing new internal resources</p> Signup and view all the answers

    What is a consequence of high individual negotiating power?

    <p>Lower firm appropriated rents</p> Signup and view all the answers

    What does a strategic leadership approach aim to achieve within an organization?

    <p>Higher commitment among employees</p> Signup and view all the answers

    What must firms manage to effectively define their strategy?

    <p>Both resources and capabilities</p> Signup and view all the answers

    How can a firm align individual interests with its objectives?

    <p>Through employment contracts linked to performance</p> Signup and view all the answers

    What is a potential issue when using a strategic profile without a benchmark?

    <p>It may lead to overestimating the firm's performance.</p> Signup and view all the answers

    What can excessive self-complacency in management lead to?

    <p>Inability to prepare for future challenges effectively.</p> Signup and view all the answers

    What limitation is associated with a strategic profile being static?

    <p>It can misrepresent the firm's real-time status.</p> Signup and view all the answers

    In analyzing a firm's value chain, what is the primary goal?

    <p>To identify sources of competitive advantage.</p> Signup and view all the answers

    Which of the following is NOT considered a primary activity in the value chain?

    <p>Financial reporting.</p> Signup and view all the answers

    What does the value system include in reference to a firm's value chain?

    <p>Relationships with both suppliers and customers.</p> Signup and view all the answers

    Which activity is included in the inbound logistics of the value chain?

    <p>Stockpiling raw materials.</p> Signup and view all the answers

    What is the focus of operations within the value chain?

    <p>Transforming factors into finished products.</p> Signup and view all the answers

    What are resources considered in the context of a firm's strategy?

    <p>The sum of factors or assets a firm possesses or controls</p> Signup and view all the answers

    How do capabilities differ from resources in a business context?

    <p>Capabilities involve an organization's collective skills at undertaking specific activities.</p> Signup and view all the answers

    Which type of resources typically includes physical assets such as machinery and tools?

    <p>Tangible resources</p> Signup and view all the answers

    What is a significant challenge in the valuation of tangible resources?

    <p>Their valuation has limited relevance in strategic terms.</p> Signup and view all the answers

    Why is inventorying a firm's resources important in strategy formulation?

    <p>It provides insights into the firm's strengths and opportunities for efficient use.</p> Signup and view all the answers

    What is the main objective of efficiently utilizing resources within a firm?

    <p>To achieve a competitive advantage and optimize financial returns</p> Signup and view all the answers

    How often must organizational policies typically be reviewed and possibly changed?

    <p>Every 3 to 4 months</p> Signup and view all the answers

    Which of the following best describes intangible resources?

    <p>Resources based on knowledge and information that do not have a physical presence</p> Signup and view all the answers

    What is a key benefit of managing interrelations between a firm and its suppliers/customers?

    <p>It reduces costs and benefits both parties.</p> Signup and view all the answers

    What role does the information system play in a firm's operations?

    <p>It is essential for optimizing and coordinating activities.</p> Signup and view all the answers

    What does the Resource-Based View emphasize about firms?

    <p>Firms are characterized by their unique resources and capabilities.</p> Signup and view all the answers

    What is the first stage in analyzing a firm's resources and capabilities?

    <p>Identify and measure own resources and capabilities.</p> Signup and view all the answers

    Why should firms focus on internal aspects rather than external ones in turbulent environments?

    <p>Internal resources and capabilities provide a stable foundation for strategy.</p> Signup and view all the answers

    What characterizes the resources and capabilities of a firm according to the Resource-Based View?

    <p>They include various unique and heterogeneous elements.</p> Signup and view all the answers

    What does 'imperfect mobility' refer to in the context of resources and capabilities?

    <p>Not all resources are available to every firm under the same conditions.</p> Signup and view all the answers

    What is the purpose of itemizing a firm's value chain activities?

    <p>To identify potential competitive advantages in specific areas.</p> Signup and view all the answers

    What characterizes a multi-plant firm?

    <p>It has several facilities that may be dispersed or concentrated.</p> Signup and view all the answers

    Which type of legal structure allows for liability protection for its owners?

    <p>Limited liability company</p> Signup and view all the answers

    How does functional analysis aid a firm?

    <p>It analyzes various specialized activities within the firm.</p> Signup and view all the answers

    What is the purpose of a firm's strategic profile?

    <p>To identify the firm's internal strengths and weaknesses.</p> Signup and view all the answers

    What approach is used to evaluate a firm's variables in its strategic profile?

    <p>A Likert scale scoring from 1 to 5.</p> Signup and view all the answers

    What does a systematic medium in functional analysis involve?

    <p>Diagnosing internal performance through key variable identification.</p> Signup and view all the answers

    Which of the following is not a type of company structure mentioned?

    <p>Non-profit organization</p> Signup and view all the answers

    What is one of the main uses for the results of a firm's functional analysis?

    <p>To diagnose the situation based on the internal performance.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of intangible assets?

    <p>Their value normally decreases over time.</p> Signup and view all the answers

    What is included in the definition of human capital?

    <p>People's knowledge, experience, and motivation.</p> Signup and view all the answers

    What is the primary difference between resources and capabilities?

    <p>Resources are possessed independently; capabilities depend on collaboration.</p> Signup and view all the answers

    Which of the following is an example of a non-human intangible asset?

    <p>Patents and technological know-how.</p> Signup and view all the answers

    Why does the absence of intangible assets on financial statements affect the value assessment of a firm?

    <p>It creates a gap between book value and market value.</p> Signup and view all the answers

    What distinguishes core competences from other types of capabilities?

    <p>Core competences allow a firm to perform activities better than competitors.</p> Signup and view all the answers

    Which statement best describes the nature of capabilities?

    <p>Capabilities represent the flow of activities performed collaboratively.</p> Signup and view all the answers

    How do intangible assets impact the overall valuation of a firm?

    <p>They increase the differentiation between book value and market value.</p> Signup and view all the answers

    Study Notes

    Internal Analysis

    • A firm's internal diagnosis is linked to internal aspects, e.g., efficient plants, technologies, and distribution networks, rather than external factors.
    • Internal analysis aims to identify strengths and weaknesses for competitive performance.
    • Key steps in competitive analysis include determining a firm's nature, identifying relevant variables, and analyzing metrics like customer experience metrics (NPs), number of clients, and revenue.
    • A firm's identity is fundamental to understanding its characteristics in order to improve its competitive analysis.
    • Defining traits for firms, like age, size, and scope, are helpful for analysis.
      • Age: start-up, adolescent, developed, balanced, mature, or adult-anaemic or old.
      • Size: small, medium, large, measured by factors like turnover, total assets, and headcount.
      • Scope: combination of activities, dedicated functions, and target customer groups.

    A Firm's Functional Analysis and Strategic Profile

    • Functional analysis examines specialized firm activities (production, marketing, finance, HR).
    • Strategic profiling uses the functional areas to identify strengths and weaknesses.
    • Variable lists are essential for in-depth diagnosis.
    • The number of variables depends on factors such as firm type, industry, and competitive methods.
    • Variable evaluation uses a Likert scale (1-5) to rate performance (very negative, negative, neutral, positive, very positive).

    The Value Chain

    • The value chain breaks down a firm's operations to understand value creation.
    • Each activity contributes to the end product's final price.
    • Value chain analysis identifies sources of competitive advantage.
    • Primary activities are directly involved in product creation/service delivery (inbound/outbound logistics, operations/production, marketing/sales, and after-sales service).
    • Support activities support primary activities (procurement, technological development, HR management, firm infrastructure).

    Value Chain Interrelations

    • Activities and value systems interact (i.e., links, between firm and suppliers and/or customers).
    • Optimization and coordination are achieved when activities work together effectively.
    • Horizontal links: between 2+ primary or support activities.
    • Vertical links: between a firm and its customer or supplier value chains.

    Analysis of Resources and Capabilities

    • Resource-based views focus on a firm's internal resources and capabilities for development.
    • Capabilities are the combined abilities of a firm.
    • Resources include tangible and intangible elements (financial, physical, technological, human elements), all impacting strategic choices.
    • Dynamic capabilities adjust to environmental changes, and integrate external, and/or internal resources to maintain competitive advantages.

    Identifying Resources and Capabilities

    • Determining resources and capabilities evaluates a firm's potential, and supports the development of its strategy.
    • Tangible resources (e.g., financial assets, property) are physical assets easily recognized.
    • Intangible resources include information, knowledge, and networks.
    • Capabilities include skills, routines, and organizational structures.

    Identifying Capabilities

    • Capabilities are developed based on the combination of available resources in a firm.
    • Core capabilities are essential and competitive, and may be intangible (or difficult to imitate).
    • Functional capabilities solve technical or management issues (e.g., production, management).
    • Cultural capabilities concern workplace attitudes and values (e.g., teamwork, change management).

    Dynamic Capabilities

    • Dynamic capabilities adapt firms to environmental changes.
    • These capabilities help integrate, reconfigure, and renew resources for competitive advantage.

    Strategically Evaluating Resources and Capabilities

    • Identifying valuable resources/capabilities is essential.
    • Evaluate capabilities based on being distinct from competitors, sustainable over time, difficult to imitate, and relevant to the firm's industry.

    Criteria for Competitive Advantage

    • Scarcity: a resource isn't easily available to all competitors.
    • Relevance and durability: resources' applicability and sustained usefulness in the market.
    • Complementarilty: resources working well with each other to create value.
    • Appropriability: rights over resources/capabilities that offer a competitive advantage.

    Managing Resources and Capabilities

    • Managing existing resources and capabilities is essential to generate competitive advantage.
    • Activities can lead to developing new internal resources, and the improved provision of resources/capabilities.
    • External strategies to improve acquisition (if there's a market), strategic alliances, or benchmarking, may be considered by firms.

    SWOT Analysis

    • SWOT analysis determines the internal and external factors (strengths, weaknesses, opportunities, threats) facing an organization.

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    Internal Analysis Of A Firm's Strengths And Weaknesses PDF

    Description

    This quiz covers the internal analysis of a firm's strengths and weaknesses essential for achieving competitive performance. It highlights key steps, metrics, and defining traits such as age, size, and scope necessary for effective internal diagnosis. Test your understanding of how internal factors influence a firm's strategic profile.

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