organisational appraisal

Organisational Appraisal

Dynamics Of Internal Environment

Organisational ResourcesOrganisational BehaviourStrength & Weaknesses

CompetenciesOrganisational Capability

Strategic competitive Advantage

Organisational Capability Factors

Organisational capability factors are the strategic strengths and

weaknesses existing in different functional areas within an

organisation ,which are of crucial importance to strategy formulation

and implementation.

Functional/Capability Areas Include

Finacial CapabilityMarketing CapabilityOperations CapabilityPersonnel Capability

Information Management CapabilityGeneral Management Capability

Financial Capability

Relates to the availability ,usages and management of funds and all allied aspects that have a bearing on Organisation’s capacity and

ability to implement its strategies.

Factors influencing Financial Capability

Related to sources of Funds: Capital Structure , Procurement of capital,

Working capital etc.Related to usage of Funds:

Capital investment,current assets,relationship with shareholders etc.

Related to Management of funds:Financial Accounting and Budgeting

systems,management control,Tax olanning etc.

Marketing Capability

Relates to the pricing, promotion & distribution of products &

services,and all allied aspects that have a bearing on Organisation’s

capacity and ability to implement its strategies.

Factors influencing Marketing Capability

Product related factors:Variety,differentiation, mix quality,

positioning,packaging etc.Price related factors:

Pricing objectives,policies,changes.etcPlace related factors:

Distribution,logistics & transportation etc.Promotion related factors:

Promotional tools,sales promotion,advertising etc.

Operations Capability

Relate to the production of products,use of material resources

and all allied aspects that have a bearing on Organisation’s capacity

and ability to implement its strategies.

Factors influencing Operations Capability

Related to the Production system:Capacity,location,layout,product design

etc.Related to operations & control:

Aggregate production planning,material supply etc.

Related to R&D system:Personnel facilities,product

development,patent rights etc.

Personnel Capability

Relate to the existence & use of human resources & skills, and all

allied aspects that have a bearing on Organisation’s capacity and ability to

implement its strategies.

Factors influencing Personnel Capability

Related to Personnel system:System for manpower

planning,selection,development,compensation etc.

Related to Organisational & Employee characterstics:

Corporate image,quality of managers,working conditions etc.

Related to Industrial Relations:Collective bargaining,Safety,welfare & security

Information Management Capability

Related to design & management of flow of information from outside

into,and within an organisation for the purpose of decision making and all allied aspects that have a bearing

on Organisation’s capacity and ability to implement its strategies.

Factors influencing IM CapabilityFactors related to acquistion & retention of

Information:Sources,quantity,quality & timeliness of

information.Factors related to processing of information:Database management,computer system &

software capability.Factors related to retreival & usage of

Information:Availability & appropriateness of

information formats.

Considerations in Organisational Appraisal

Factors affecting Organisational Appraisal

The Size of the organisation affects the quality of appraisal.

If the internal environment of an organisation is vitiated owing to opposing political forces &

power games,the quality of appraisal is likely to suffer.

Approaches

Systematic ApproachAdhoc Approach

Sources of Information

VerbalWrittenInternalExternal

Method & techniques for OA

Internal AnalysisVRIO framework

QuantitativeQualitative

Internal Analysis

Internal analysis of an organisation deal with an investigation into its

strengths and weaknesses by focusing on factors that are specific

to it

1. VRIO FRAMEWORK

VRIO stands for-

V- ValuableR- RareI- InimitableO- Organised For Usage

QUANTITATIVE ANALYSIS

• Quantiative analysis are the financial figures which are most often used for performance evaluation, as well as assessment of strengths and weaknesses.

• Financial Analysis

• Non-Financial Analysis

QUALITATIVE ANALYSIS

A quantitative analysis has to be tempered with qualitative analysis. Such a analysis is based on information opinion, judgement, intuition or hunch

COMPARATIVE ANALYSIS

HISTORICAL ANALYSIS: Historical analysis is to compare own performance and identify strengths and weaknesses over the period of time.

INDUSTRY NORMS:• The industry to which the business belongs is

the most obvious choice for comparison with regard to a wide range of parameters.

BENCHMARKING:The process of benchmarking is aimed at finding

the best practices within and outside the industry to which an organization belongs.

When one is interested in finding out what is to be compared then there are three types of benchmarking:

a) Performance benchmarkingb) Process benchmarkingc) Strategic benchmarking When one is interested in finding out against

whom to compare oneself then there are four types of benchmarking

a) Internal benchmarkingb) Competitive benchmarking c) Functional benchmarkingd) Generic benchmarking

COMPREHENSIVE ANALYSIS

Two Popular Methods:-

1. Balance Scorecard

2. Key Factor Rating

1. BALANCE SCORECARD

Proposed By Robert S Kaplan & David P NortonThe balanced scorecard is a strategic planning

and management system that is used extensively in business and industry, government, and non-profit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

The balance scorecard identifies four key performance measures

2. KEY FACTOR RATING Many systems have been evolved to assess

organisational strengths and weaknesses. These systems are based on rating, depending on a number of key factors, each of which is analysed on the basis of a series of thoughtful questions. A detailed study of the areas covered by these questions leads to a reliable appraisal of an organisation.

If we consider different factors under various headings of functional capability, the questions that can be asked with regard to these different areas are:-

• For Financial Capability Factors:1.Question related to sources of funds.2.Question related to usage of funds.3.Question related to management of funds

For Marketing Capability Factors:

1. Questions related to product or services.2. Questions related to price.3. Question related to promotion

For Operations Capability Factors:1. Questions related to the personnel system.2. Questions related to organisational and

employee characterstics3. Questions related to industrial relations.

• For Information Management Capability Factors:

1. Question related to acquisition and retention of information.

2. Questions related to processing and synthesis of information.

3. Question related to retrieval and usage of information.

4. Question related to transmission and dissemination.

• For General Management Capability

1. Questions related to the general management system.

2. Questions related to general managers.3. Questions related to external relationships.4. Questions related to organisational climate Once the strategists answers the questions

above, they are in position to pinpoint the strategic strengths and weaknesses in each of the functional area. On this basis, organisational capability can be judged.