lec (3)- strategic capabilities (csm)

8/2/2019 Lec (3)- Strategic Capabilities (CSM)

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STRATEGIC CAPABILITIES(Lec:3)

Asst. Professor Mngt. Science (USA),

IMRAN HUSSAIN


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Objectives

Value Chain Process.

Benchmarking.

SWOT Analysis.


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Value Chain Process

Point No. 1


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Michael Porters Value Chain

Model

Firm Infrastructure (General Management)

Human Resource Management

Technology Development

Procurement

InboundLogistics

Ops. OutboundLogistics

Sales &Marketing

Service andSupport

PRIMARY ACTIVITIES

SUPPORTACTIVITIES


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Continued

Developed in 1985 by Michael E. Porter in

Competitive Advantage

Highlights cost advantages anddistinctive capabilities--the value

processes.

4-5


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Value Chain and the QCT Triangle

VC allows alignment of processes with

customers. This generates a quality

advantage.

VC focuses costmanagement efforts.

VC provides for efficient processes which

improves the timeliness of operations.

4-6


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Value Chain Benefits

Identifies value processes

Identifies areas for cost improvement

4-7


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Value Chain Elements

Customer value added

Margin orientation

Primary activities

Inbound logistics Operations

Outbound logistics

Sales and marketing

Service and support

Support Activities

Human resources

(general and admin.)

Tech. development

Procurement

4-8


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Goals For Value Chain

Driven by customer perceptions

Increase margins

Focus on value processess

Distinctive capabilities

Cost advantages

Some examples

Southwest Airlines Intel Corporation

4-9


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Value Chain Analysis

Document the activities

Understand the cost and margins at each step.

Use Activity Based Costing

Map the value chain to the industry value

chain

Look for core competencies

Map the cost structure

Note that external values drive cost advantages

4-10


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Discovering Your Own Value

Processes

Distribute a summaryof the value chain model.

Create functionalprocess lists.

Transfer lists to color-coded labels.

Pin the processon a large VC diagram.

Identifyappropriate processes as: $ (cost advantage) CC (core competency)

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Using the Value Chain

Helps you to stay out of the No Profit Zone

Presents opportunities for integration

Aligns spending with value processes Provides for reconfiguration of the value chain

outsourcing

off-shoring

co-location with customers or suppliers redesign for efficiency

Involves chain partners: customers & suppliers

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Value Chain and the TBC Triangle

Technical: Increases knowledge of no profit zones

Increases knowledge of forward and/or backward integration opportunities

Identifies value processes

Identifies win-win alliance opportunities

Behavioral: Focus shifts to the customer

Focus shifts from conflict to partnering with customers & suppliers

Cultural Creates externally focused mindset

Generates information sharing environment with respect for confidentiality

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Benchmarking

Point No. 2


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Benchmarking

Definitions of Benchmarking.

Types of Benchmarking.

Steps of Benchmarking.

Benefits of Benchmarking.

Limitations of Benchmarking.


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Definition of Benchmarking


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Definitions

The term benchmark also commonly applies to

specially-designed programs used in benchmarking A benchmark should:

be domain specific (the more general the benchmark, the lessuseful it is for anything in particular)

be a distillation of the essential attributes of a workload

avoid using single metric to express the overall performance Computational benchmark kinds

synthetic: specially-created programs that impose the load on thespecific component in the system

application: derived from a real-world application program

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Benchmark: a standardized problem or test that serves as a basis for evaluation or

comparison (as of computer system performance)[Merriam-Webster]


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Continued...

Benchmarking is an improvement process that

is used to identify best practice within a peer

group and facilitate its incorporation into your

organization.

Benchmarking is a systematic tools that allows

a company to determine whether its

performance of organization processes andactivities represent the best practices.


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Purpose of Benchmarking

To define the playing field

To provide a tool enabling quantitative comparisons

Acceleration of progress

enable better engineering by defining measurable andrepeatable objectives

Establishing of performance agenda

measure release-to-release or version-to-version progress

set goals to meet be understandable and useful also to the people not

having the expertise in the field (managers, etc.)

19


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Properties of a Good

Benchmark

Relevance: meaningful within the target domain

Understandability

Good metric(s): linear, orthogonal, monotonic

Scalability: applicable to a broad spectrum ofhardware/architecture

Coverage: does not over-constrain the typicalenvironment

Acceptance: embraced by users and vendors Has to enable comparative evaluation

Limited lifetime: there is a point when additionalcode modifications or optimizations becomecounterproductive. 20

Adapted from: Standard Benchmarks for Database Systemsby Charles Levine, SIGMOD 97


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Why best practice

Best practice refers to techniques, methods or

processes that are more effective at delivering

a desired outcome.

Incorporating best practice into your

organization can lead to greater efficiency and

effectiveness and a happier customer.


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Problems with Benchmarking

Problems with benchmarking occur where:

Data is not obtained for the process beingmeasured and analysis becomes subjective.

No peer group/best practice identified (includingdata available).

The gap between current state and best practice iscaptured but nothing is done about it.

Assumed best practice isn't best practice.

Benchmarking happens as a one off event and notreviewed periodically.


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Importance of Data

In order to measure the gap between themeasuring organization and best practicequantifiable measures need to be taken.

This requires data. Unless this method is followed results can be

subjective and inaccurate.

Follow on improvement activity can havenegligible impact.


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Using your Peer-group

Benchmarking relies on a partner organization

or peers which will be measured against.

Peers could be a different group in the same

organization (e.g. two purchasing

departments in a multinational organization)

or a completely separate company.

The importance is measuring your

performance against another peer with a

different standard.


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Types of Benchmarking


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Internal Benchmarking

Benchmark within a corporation.

(for example: Between Business Units)


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Competitive Benchmarking

Benchmark performance or processes with

competitors.


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Financial Benchmarking

Benchmark similar processes within an

industry.


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Generic Benchmarking

Comparing operations between unrelated

industries.


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Collaborative Benchmarking

Carried out collaboratively by groups of

companies.

(for example: Subsidiaries of multinational in

different countries or an industry

organization.)


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Steps of Benchmarking


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Steps of Benchmarking

Scope of definition.

Choose benchmark partner(s).

Determine measurement methods, units

indicators and data collection method. Analysis of the discrepancies.

Present the result and discuss implications/improvement areas and goals.

Make improvement plans or new procedures.

Monitor progress and plan ongoing benchmark.


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Benefits of Benchmarking


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Benefits of Benchmarking

Benchmarking helps identify the gapsbetween the organization that is undertakingthe benchmarking assessment and bestpractice.

Undertaking benchmarking can lead toimprovements being incorporated intoprocesses and systems delivering gains inefficiency and effectiveness.

Benchmarking can help align improvementactivity with strategic goals and objectives.


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Continued...

In outsouring projects.

Budgetary reason.

Improving communication.

Professionalizing the organization/processes.


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5- Limitations of Benchmarking


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Limitations of Benchmarking

Benchmarking should be viewed as a

continuous improvement method.

Regular reviews of performance should be

taken especially if improvement activity is

underway to transition to best practice.

Regular reviews of the peer group should be

taken to cater for any changes/improvementmade.


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Continued...

Benchmarking is a tough process that needs a

lot of commitment to succeed.

Time consuming and expensive.

Comparing performance and processes with

best in class is important and should ideally

be done on a continuous basis.

What are the downsides of adopting a

practice.


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SWOT Analysis

Point No. 3


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SWOT Analysis

Internal and external factors.

Major benefits of SWOT analyses.

Creating a SWOT analysis using post harvest

losses as a case study.


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SWOT

A widely used framework for organizing and

using data and information gained from

situation analysis.

Encompasses both internal and external

environments.

One of the most effective tools in the analysis

of environmental data and information.


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SWOT description

A SWOT analysis generates information that ishelpful in matching an organizations or agroups goals, programs, and capacities to the

social environment in which they operate. It is an instrument within strategic planning.

When combined with a dialogue, it is aparticipatory process.


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SWOT

Factors affecting an organization can usuallybe classified as:

Internal factors

Strengths (S) Weaknesses (W)

External factors

Opportunities (O) Threats (T)

Strengths

Opportunities

Weaknesses

Threats


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SWOT: internal factors

Strengths:

Positive tangible and intangible attributes,

internal to an organization. They are within

the organizations control.

Weaknesses:

Factors that are within an organizations

control that detract from its ability to attain

the core goal. In which areas might the

organization improve?


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SWOT: external factors

Opportunities External attractive factors that represent the

reason for an organization to exist and develop.What opportunities exist in the environmentwhich will propel the organization?

Identify them by their time frames.

Threats

External factors, beyond an organizations control,which could place the organizations mission oroperation at risk. The organization may benefit byhaving contingency plans to address them shouldthey occur

Classify them by their seriousness and

probability of occurrence.


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Create a plan of action

What steps can you take to:

Capitalize on your strengths.

Overcome or minimize your weaknesses.

Take advantage of some new opportunities.

Respond to the threats.

Set goals and objectives, like with any otherplan.


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Major Benefits of SWOT Analyses

Simplicity.

Flexibility.

Integration and synthesis. Collaboration.

Lower costs.


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For a Productive SWOT analysis

Stay focused. Be specific and avoid grey areas.

Keep your swot short and simple. Avoid

complexity and over analysis.

Collaborate with other functional areas.

Examine issues from the customers/

stakeholders perspective.

Look for causes, not characteristics.

Separate internal issues from external issues.


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1- Stay focused

It can be a mistake to complete just one

generic SWOT analysis for the entire

organization.

When we say SWOT analysis, we mean SWOT

analyses.

2 C ll b t ith


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2- Collaborate with

other functional areas

Information generated from the SWOTanalysis can be shared across functional areas.

SWOT analysis can generate communicationbetween managers that ordinarily would notcommunicate.

Creates and environment for creativity andinnovation.

3 Examine issues from


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3- Examine issues from

stakeholders perspectives

To do this, the analyst should ask:

What do stakeholders (and non-stakeholders) believeabout us as an organization?

What do stakeholders (and non-stakeholders) think ofour product quality, service quality, customer service,price, overall value, convenience, and promotionalmessages in comparison to our competitors?

What is the relative importance of these issues asstakeholders see them?

Taking the stakeholders perspective is the cornerstone ofa well done SWOT analysis.

4- Look for Causes not


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4 Look for Causes not

Characteristics

Causes for each issue in a SWOT analysis can often befound in the organizations and competitorsresources.

Major types of resources:

Financial Organizational

Intellectual

Informational

Legal Relational

Human

Reputation

5 Separate internal


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5- Separate internal

and external issues

Failure to understand the difference between

internal and external issues is one of the

major reasons for a poorly conducted SWOT

analysis.

Know yourself.

Know your customer/stakeholder. Know your competitors.

Know your environment.


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The elements of a SWOT analysis

Strengths and weaknesses:

Scale and cost economies.

Size and financial resources.

Intellectual, legal, and value of reputation.

Opportunities and threats:

Trends in the competitive environment.

Trends in the technological environment.

Trends in the socio-cultural environment.


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SWOT-driven planning

1. The assessment of strengths and weaknesses should lookbeyond products, services and resources to examineprocesses that meet customers or stakeholders needs.

2. Achieving goals and objectives depends on transforming

strengths into capabilities by matching them withopportunities.

3. Weaknesses can be converted into strengths with strategicinvestment. Threats can be converted into opportunitieswith the right resources.

4. Weaknesses that cannot be converted become limitationswhich must be minimized if obvious or meaningful tocustomers or stakeholders.


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The SWOT matrix


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Caution

SWOT analysis can be very subjective. Do not

rely too much on it. Two people rarely come

up with the same final version of a SWOT.

Use it as a guide and not as a prescription.


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Example - Post Harvest losses

Strengths:

- Sri Lanka possesses strong institutional capacity

that can contribute to changes in the current

situation.- There is increasing governmental interest in the

fisheries sector.

-

Many fishermen co-operatives are wellorganized and capable to support developmentsto reduce PHL.


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Weaknesses (1): Little political pressure from fishermen and

boat owners.

Lack of infrastructure. Inferior design of multi-day boats andfishery harbours.

Lack of awareness.

Acceptance of low quality fish and lowpurchasing power of consumers in thedomestic market.



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Weaknesses (2):

Rapid policy changes due to frequent changes inpolitically elected authorities within thegovernmental sector.

Limited knowledge of financial accounting amongfishermen.

Tropical weather conditions.

High volume harvests of cultivated fish when

seasonal tanks are being emptied. Excess governmental subsidies to increase

fishermen recruitment without them havingproper training or fishing equipment.

Example - Post Harvest Losses


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Opportunities:- Possibilities to increase nutritional and

economical value of fish products.

- Possibilities for fishermen- and vessel owners to

increase their revenue and income by reducingPHL.

- Possibilities to increase export volume and valueof fish products by reducing PHL.

- Possibilities to strengthen financial resources ofcostal fisheries communities.

- Vessel owners have recently formed anassociation at the national level that is likely to

support developments to reduce PHL.

Example - post harvest losses


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Threats:

PHL reduce the chances of fishermen and vessel

owners to maintain profitable and sustainable

livelihood. PHL reduces the nutritional value of fish products.

Insufficient availability of clean water, improper

sewage management, poor hygiene practices on

boats and lack of facilities at landing sites and in

harbours increases the likelihood of PHL.



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THANK YOU

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