Develop an Internal Factors Analysis Summary (IFAS) for Amazon

Internal Factors

Weight:

Rating:

Weighted

Score

Comments

Strengths:

S1: Competent Senior Leadership

.15

4.5

.675

This SF was chosen because of its significant positive impact on corporate performance in sales, costs, and industry leadership. Affect on the top line future sales revenue is estimated at 25% ($100M-$150M/YR). Top management adds significant benefit to OPC’s profit posture and stockholder satisfaction. Senior leadership is considered a core competency. This SF is weighted very high at .15 as leadership is very important to survival in the world economy. OPC is rated very high at 4.5 as an industry leader with a highly competent management team.

S2: Supplier Relationships

.10

4.5

.45

This SF was selected because it is a core competency and directly impacts OPC’s low raw material cost structure and high quality product. Suppliers work seamlessly with OPC Operations to deliver quality raw materials in a highly efficient just-in-time logistics system. Resource and production costs are maintained at a level about 20% below the industry average; saving OPC about $20-$40M/YR in the future. Weight is relatively high as this core competency is important to OPC’s survival and competitive position. Rating is 4.5 as OPC is performing at a level high above the industry norm.

S3: Product Quality and Uniqueness

.05

4.0

.20

This SF was added because of the olallieberry’s uniqueness and quality as it is formed into a quality consumer product by OPC. No other pie company can match OPC for its olallieberry pies. OPC pies can command a 10% premium price point over other brands because of proven and consistent quality and uniqueness. Potential impact on future sales revenue is positive at $5-$10M/YR. This SF is weighted low at .05 as not very important to firm’s survival. Rating is high at 4.0 since OPC’s pies are above industry quality.

S4: Employee Relations

.05

4.6

.23

I selected this SF because OPC has a very strong and supportive employee management, training, and development program which results in a very highly motivated, efficient and effective workforce. This restrains production and operating costs as 60% of COGS vice industry standard of 75%. Future savings projected in range of $10M - $15M/YR. This impacts very favorably on the overall cost structure and ensures that OPC can be competitive. Weight is low as costs are important to competitive position but SF is less important to survival than other SF. Rating is high at 4.6 as OPC sets the standard.

S5:Corporate Culture

.20

5.0

1.0

This SF is important because it is a distinctive competence that reverberates throughout the entire organization and provides a 20-30% cost and productivity advantage for OPC over its competitors. Future advantage is estimated at $125M - $200M/YR in cost savings. Maintaining the positive corporate culture is essential to survival in the increasingly competitive environment. Weight is high at .20 because of the importance of culture to the future survival of OPC. Rating is highest at 5.0 because OPC is the indisputable industry leader.

Weaknesses:

W1: Management Information System (MIS)

.20

2.0

.40

This SF is important because OPC’s MIS is outdated and behind times since they have not invested in a new enterprise resource planning (ERP) system. This weakness could have a very negative impact on future revenues and costs, 30-40% of sales ($120M - $160M/YR), since a modern MIS is not in use. Competitors have invested in modern ERP systems. Weight is high at .20 as this is very important to corporate survival. Rating is low at 2.0 since OPC has fallen behind its competition.

W2: Corporate Marketing

.05

1.5

.075

I selected this SF because Marketing is a weakness since OPC has not expanded its capabilities or strategic reach. OPC marketing is focused only on current market geographical and market share segments. Expanding sales/revenues is impossible with the current marketing orientation. Poor marketing is estimated to result in future lower sales by $15m - $30M/YR. Weight is low as this SF is important to drive future sales increases and attract new customers but not as important to corporate survival as other SF. Rating is low at 1.5 as OPC is lagging behind other competitors.

W3: Distribution Channels / Economies of Scale

.10

2.5

.25

I selected SF because OPC’s product distribution channels are focused only on the western states. It lacks all structure to expand domestically and internationally. OPC’s economies of scale are sufficient for current sales/revenues but woefully inadequate for expansion. Poor distribution may result in loss of $100M/YR in future sales. This SF is vitally important for the future survival of OPC since it needs to grow to remain competitive against other domestic and international pie producers. Weight is high at .10 as firm survival depends on improving capabilities. Rating is below industry standard at 2.5 since OPC has not taken the necessary strategic planning steps to prepare for future competition.

W4: Financial Position

.05

2.0

.10

This SF is important because OPC’s financial position has deteriorated over the recent past year as its ROI has fallen from 15% to 7% and the debt to asset ratio has ballooned. Stockholders are concerned. This recent poor financial position is a very important SF for OPC’s future as such a position may put OPC in a non-competitive position in the marketplace, stock market and bond market. Future costs to OPC may include higher borrowing costs of $10-$30M/YR and/or reduction in sales of $20M - $30M/YR. Weight is low at .05 since financial integrity and balance is important to survival but not as important as other SF. Rating is low at 2.0 as OPC is not executing up to industry standard.

W5: R&D System

.05

2.0

.10

I selected this SF because OPC’s R&D function is very poor. Developing new products has not been on the firm’s radar. Some market share may be lost to new products from competitors potentially losing OPC about $15-$20M/YR in sales. Weight is low at .05 as R&D competitiveness is important to survival but not as important as other SF. Rating is low at 2.0 as OPC’s R&D performance is below industry standard.

Total Scores:

1.00

3.48