need report on chapter 3 and chapter 4 only
Suresh-
CHAPTER3.pptxASSESSING THE INTERNAL ENVIRONMENT OF THE FIRM
CHAPTER 3
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FLOW OF PRESENTATION
THE PRIMARY ACTIVITIES OF A FIRM’S VALUE CHAIN
THE RESOURCE-BASED VIEW OF THE FIRM AND THE DIFFERENT TYPES OF
Tangible, intangible resources and organizational capabilities
EVALUATING FIRM PERFORMANCE
Balanced scorecard
Financial ratio analysis
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LEARNING OBJECTIVES
After reading this chapter, you should have a good understanding of:
The primary activities of a firm’s value chain.
The resource-based view of the firm and the different types of
Tangible and intangible resources
Organizational capabilities.
The usefulness of financial ratio analysis, its inherent limitations, and how to make meaningful comparisons of performance across firms.
The value of the “balanced scorecard” in recognizing how the interests of a variety of stakeholders can be interrelated.
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DISCUSSION QUESTION 1
Why did Twitter go from an exciting, growing firm to a firm with a flat user base so quickly? First, for firms to develop a sustainable advantage, they need to develop a unique set of resources that are difficult to imitate.
The firm did not have the resources and capabilities needed to see and grab on innovative service offerings (resource limitation).
Facebook users could use a similar group chat function on Facebook.
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DISCUSSION QUESTION
Discussion Question 2: What could the firm have done to avoid this situation? (THINK)
Discussion Question 3: What options does the firm have to get back on a path to success? (THINK)
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INTERNAL ENVIRONMENT OF BUSINESS
The internal environment of business refers to all the factors or forces that have a more direct impact on the daily activities of the company.
The main factors in the internal environment are:
Financial resources like funding, investment opportunities and sources of income.
Physical resources like company's location, equipment, and facilities.
Human resources like employees, target audiences, and volunteers.
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The Importance of the Internal Environment
Which activities must a firm effectively manage and integrate in order to attain competitive advantages in the marketplace?
Which resources and capabilities must a firm create and nurture in order to sustain a competitive advantage?
An internal analysis provides the means to identify the strengths to build on and the weaknesses to overcome when formulating strategies.
It is important to recognize potential opportunities and threats outside company operations (External analysis)
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VALUE-CHAIN ANALYSIS
Value-chain analysis views the organization as a sequential process of value-creating activities. Value is the amount that buyers are willing to pay for what a firm provides for them.
And, a firm is profitable to the extent that the value that it receives exceeds the total costs involved in creating the product or service.
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VALUE-CHAIN ANALYSIS PRIMARY ACTIVITIES
Primary activities contribute to the physical creation of the product or service; the sale & transfer to the buyer; and service after the sale.
Inbound logistics
Operations
Outbound logistics
Marketing & sales
Service
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ROLE OF LOGISTICS IN SUPPLY CHAIN
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PRIMARY ACTIVITY: INBOUND LOGISTICS
Inbound logistics are primarily associated with receiving, storing & distributing inputs to the product.
Material handling
Warehousing
Inventory control
Vehicle scheduling
Returns to suppliers
Discussion Question 4: How does this JIT system help Toyota to enhance its competitive advantages?
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PRIMARY ACTIVITY: OPERATIONS
Operations include all activities associated with transforming inputs into the final product form.
Machining
Packaging & Assembly
Testing or quality control
Printing
Facility operations
EXAMPLE: Shaw Industries (now part of Berkshire Hathaway), the world’s largest carpet manufacturer, became known for its strong concern about the natural environment. They have received numerous awards for their recycling efforts.
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PRIMARY ACTIVITY: OPERATIONS
What automobile firms do you feel have been most successful in sustaining a “green” strategy? Why?
Toyota, GM and Volkswagen
Read The Research Paper: “On Green Strategy: Effect on Automotive Industry of Pakistan”
Chipotle’s unique approach to improving its operational efficiency.
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PRIMARY ACTIVITY: OUTBOUND LOGISTICS
Outbound logistics includes collecting, storing, & distributing the product or service to buyers.
Finished goods & warehousing
Material handling
Delivery vehicle operation
Order processing, scheduling & distribution
DISCUSSION QUESTION 5: How does the use of EDI (electronic data interchange) help Campbell Soup to enhance its competitive advantages in the marketplace?
CEO Mark Clouse Campbell's CEO, effective January 22, 2019 ( continuous-replenishment)
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PRIMARY ACTIVITY: MARKETING & SALES
Marketing & sales activities involve purchases of products & services by end users and includes how to induce buyers to make those purchases.
Advertising & promotion
Sales force management
Pricing & price quoting
Channel selection & channel relations
Mercedes Benz’s effective use of product placement in the film Spectre and numerous other blockbuster movies.
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PRIMARY ACTIVITY: SERVICE
Service includes all actions associated with providing service to enhance or maintain the value of the product.
Installation & repair
Training
Parts supply
Product adjustment
Sephora.com - Launched in the U.S. in 1999 and Canada in 2003, the foremost prestige beauty site on the Internet
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TYPES OF TANGIBLE FIRM RESOURCES
Tangible resources are assets that are relatively easy to identify.
Physical assets: plant & facilities, location, machinery & equipment
Financial assets: cash & cash equivalents, borrowing capacity, capacity to raise equity
Technological resources: trade secrets, patents, copyrights, trademarks, innovative production processes
Organizational resources: effective planning processes, evaluation & control systems
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TYPES OF INTANGIBLE FIRM RESOURCES
Intangible resources are difficult for competitors to account for or imitate. They are embedded in unique routines & practices.
Human resources: trust, experience & capabilities of employees; managerial skills & effectiveness of work teams, firm specific practices & procedures
Innovation resources: technical & scientific expertise & ideas; innovation capabilities
Reputation resources: brand names, reputation for fairness with suppliers, non-zero sum relationships; reputation for reliability & product quality with customers
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TYPES OF FIRM RESOURCES: ORGANIZATIONAL CAPABILITIES
Organizational capabilities are competencies or skills that a firm employs to transform inputs into outputs. It is the capacity to combine tangible & intangible resources to attain desired ends.
Outstanding customer service
Excellent product development capabilities
Superb innovation processes & flexibility in manufacturing processes
Ability to hire, motivate, & retain human capital
Gillette's new razor adds heating instead of more blades
Yes, the experience of a hot-towel(ish) shave is steeper than your garden variety razor -- $160 will get you the five-blade heated razor when it eventually gets to stores.
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EVALUATING FIRM PERFORMANCE BALANCED SCORECARD ANALYSIS
The balanced scorecard enables managers to consider their business from four key perspectives:
How do customers see us? (customer perspective)
What must we excel at? (internal perspective)
Can we continue to improve and create value? (innovation and learning perspective)
How do we look to our shareholders? (financial perspective)
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EVALUATING FIRM PERFORMANCE FINANCIAL RATIO ANALYSIS
Balance sheet
Income statement
Market valuation
Historical comparison
Comparison with industry norms
Comparison with key competitors
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FINANCIAL RATIO ANALYSIS https://www.youtube.com/watch?v=TZZFBkbC2lA
Three types of financial ratios:
LIQUIDITY RATOIS
PROFITABILTY RATIOS
LEVERAGE RATIOS
Meaningful ratio analysis must include:
Analysis of how ratios change over time
Comparison with industry norms
Comparison with key competitors
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DISCUSSION QUESTION : 6
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Think of COMPANY which added value in firm’s value chain?
Whole Foods high-quality organic food that is GMO-free.
SUMMARY
*What is “value”? Why is this mapping called “value chain”?
Value, in competitive terms, means the amount the buyers are willing to pay for a firm’s products or services. Value is measured by total revenue. A firm is profitable when the value it receives exceeds its costs of production.
The mapping is called a “value chain” because, in this analysis, the organization is viewed as a sequential process of “value-creating activities.”
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SUMMARY
Primary activities:
Inbound logistics: Activities associated with receiving, storing and distributing inputs to the product. These are activities such as material handling, warehousing, inventory control, vehicle scheduling and returns to the suppliers.
Operations: Activities connected with transforming inputs into outputs. These are machining, assembly, packaging, testing etc.
Outbound logistics: Activities associated with collecting, storing and distributing the product or service to buyers. Includes finished goods warehousing, material handling, order processing etc.
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SUMMARY
Marketing and sales: Activities associated with purchases of products and services by the buyers including activities to induce them to purchase. Advertising, promotion, channel selection, channel relations, pricing, etc., come under this category.
Service: Includes all activities associated with providing service to enhance or maintain the value of the product, such as installation, repair, training, parts supply and product adjustment.
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DISCUSSION OF THE DAY
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The Value Chain: Consider the most important linkages between the activities you perform in your organization with other activities both within your firm, as well as between your firm and its suppliers, customers and alliance partners. Understanding and strengthening these linkages can contribute greatly to your career advancement within your current organization.
Resource-Based View : Are your skills and talents rare, valuable, difficult to imitate, and do they have few substitutes? How can your skills and talents be enhanced to help satisfy these criteria to a greater extent? More training? Change positions within the firm? Consider career options at other organizations?
REFERENCES
Chipotle 2014 Annual Report: http://ir.chipotle.com/phoenix.zhtml?c=194775&p=irol-reportsAnnual
Chipotle Press Release: http://ir.chipotle.com/phoenix.zhtml?c=194775&p=RssLanding&cat=news&id=2081437
Fast Company: http://www.fastcompany.com/3027647/lessons-learned/how-chipotle-changed-american-fast-food-forever
Restaurant Business Online: http://www.restaurantbusinessonline.com/ideas/50-great-ideas/chipotles-pillars-throughput
Entrepreneur: http://www.entrepreneur.com/article/226997
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REFERENCES
Rutsch, Edward S; Fischer, Robert A; Historic Conservation & Interpretation (Firm : Patterson, N.J.); Cooper's Ferry Development Association (1987). Documentary research and photographic recording, Campbell Soup Company Plant No. 2, Camden, New Jersey. Newton, N.J.: Historic Conservation and Interpretation, Inc. OCLC 24632144.
"Campbell Soup end of era". Newspapers.com. Retrieved April 28, 2019.
"Campbell Soup announces four plant closings". UPI. Retrieved April 28, 2019.
"Campbell Shutdown Leaves Town in the Soup". Los Angeles Times. March 2, 1990. ISSN 0458-3035. Retrieved April 28, 2019.
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THANK YOU
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