ORGANIZATIONAL ANALYSIS

Concept of organizational analysis/ Corporate Appraisal

Organizational Analysis:

Process through which an organization evaluates its capability so as to have competitive advantage at the market place

Process of Organizational Analysis

Identification of key factors for analysis Assessing Importance of Key factors on historical as well as future requirements Assessing strengths & Weaknesses of key factors in the light of competitors & likely future scenarios

Preparing organizational capability profile

Relating organizational capability to strategy

Strategic Factors in Organizational Analysis

Two approaches for identifying Strategic factors A) Value Chain Approach B) Functional Approach

Functional approach

Production/Operations Marketing Finance Human Resources General Management

Production/Operations

Allocation & use of Resources Locational Pattern Production capacity and its use Cost structure Cost-volume-profit relationship Operation procedures Raw material availability Inventory control system Research & development

Marketing

Competitive competence Product mix Product life cycle Marketing research Channel of distribution Sales force Pricing Promotional efforts

Finance

Capital cost Financial planning Tax benefits Pattern of shareholding Relationship with shareholders & financers Accounting procedures

Human resources

Quality of personal Personal turnover & absenteeism Industrial relations

General management

Leadership Top management philosophy Organizational image & prestige Organizational climate Organization structure Organizational external relationships

STRATEGIC AUDIT
Internal Analysis Comparative Analysis Comprehensive Analysis

Value Chain
Quantitative analysis Qualitative Analysis

Historical analysis

Key Factor Rating

Industry Norms Benchmarking Balanced Scorecard

Strategic Audit Analysis

Value chain Analysis

Internal

Margin Support Activities

Firm Infrastructure Human Resource Management

Technology Development Procurement

Inbound Outbound Marketing Operations Logistics Logistics & Sales Service

Margin

Primary Activities

Porter created the concept of Value Chain He identified 9 important activities in the chain PRIMARY ACTIVITIES 1. Inbound Logistics Involve physical movement of anything from one place to another It relates to receiving, storing, disseminating various inputs for the purpose to transform into output Activities involved are- transportation, material handling, warehousing, inventory ,management 2. OperationsManufacturing, assembling, testing, packaging

3. Outbound Logistics-

Are related to finished outputs that are in saleable form Collecting Storing, Preparing Delivery Schedules 4. Marketing & SalesInvolves introducing products to buyers Advertising , Sales Promotion, Channel Selection, Creating Sales force, Channel Selection, Fixing Price 5. Service Aim at creating value to customers Installation, After Sales Services, Supply of Parts, Training to customers

SUPPORT ACTIVITIES 6. Firm Infrastructure- general management accounting, finance, legal, secretarial, strategic Planning 7. Human Resource Management- Recruitment, selection, development, deployment of HR, retaining of HR 8. Technology Development- Not merely related to production process but covers the ways of creating & improving various activities in entire value chain 9. Procurement- involves purchasing inputs raw materials, services & machinery

Strategic Audit continued

Internal Analysis

2.
1. 2.

Quantitative Approach
Financial Analysis- ratios analysis etc. Non-Financial Analysis- market share, employee turnover etc.

3.

Qualitative Approach

Strategic Audit Comparative Analysis contd..

Historical Analysis: Compare performance & identify strengths & weaknesses is to start with the historical analysis of ones organization over a period of time.

Strategic Audit Comparative Analysis contd..

Industry Norms: The industry to which a business belongs is the most obvious choice for comparison with regard to wide range of parameters.

Strategic Audit Comparative Analysis contd..

Benchmarking: It is a reference point for the purpose of measuring. The purpose of the benchmarking is to find the best performers in an area so that one could match ones own performance with them.

Strategic Audit: Comprehensive Analysis

Balance score card: It is considered as a set of measures that gives top managers a fast but comprehensive view of business.

Strategic Audit Comprehensive Analysis contd..

Key factor rating: