BUSINESS STRATEGY V

Organisational Appraisal
 CRITICAL SUCCESS FACTORS
• CSFs are the factors which make attainment of
success
• Every Organisation has its peculiar CSFs-a shoe
company will have manufacturing quality,
sophisticated retailing, a flexible product mix,
creation of a product image etc as its CSFs- a
toothpaste maker is in a very personalised
product line and hence brand loyalty is critical
apart from form, flavour, foam and freshness
• A courier service will depend on speed ,
despatch, reliability and price
 CSFs (CONTD)
• Three step procedure of Rockart for
identifying a company’s CSFs- generate
the factors, factors refined into objectives,
identifying measures of performance
• Ohmae suggests that allocation of
resources in a concentrated form in the
areas of the CSFs, set objectives for these
factors
 ORGANISATIONAL APPRAISAL
• Strengths & Weaknesses already
discussed
• Synergistic Effects- when product, pricing,
distribution and promotion support each
other it creates marketing synergy- at a
higher level when production and
marketing support each other there is
operating synergy
 ORGANISATIONAL APPRAISAL
(CONTD)
• Competencies: when a specific ability is
possessed by an organisation exclusively or
relatively in large measure it is a distinctive
competence
• Examples: a two wheeler which is superior in
fuel efficiency to its competitors, occupation of a
marketing niche through a highly specialised
product, superior R &D Skills not availale or
possessed by the competitors, access to a low
cost financial source like equity holders not
available to competitors
 ORGANISATIONAL APPRAISAL
(CONTD)
• Only hairline difference between distinctive
competence and core competence
• They are virtually synonymous- Prahalad &
Hamel have made the latter more popular
• A core competence is often a double edged
sword- a core competence leads to a strategic
commitment and the organisation may become
a prisoner as it cannot respond to new
competition which requires a break with that
commitment- insight of Pankaj Ghemawat
 ORGANISATIONAL CAPABILITY
• It is the inherent capacity or the potential
to use its strengths and to overcome its
weaknesses to exploit the opportunities
and face/neutralise the threats
• Capabilities are the outcomes of the
knowledge and Skills base of an
organisation
• Concept of the learning organisation
 STRATEGIC & COMPETITIVE
ADVANTAGES
• Strategic advantages are the outcome of
its capabilities
• Competitive Advantage is a special case
of the above when there is/are one or two
identified rivals against whom rewards and
penalties can be measured
• With growing competition the latter term is
frequently used
 FINANCIAL CAPABILITY
• Access to financial resources
• Amicable relations with Financial Institutions
• High level of credit worthiness
• Efficient Capital budgeting system
• Low cost of capital as compared to competitors
• High Shareholder confidence
• Effective Management Control System
• Tax benefits from Government polices
 MARKETING CAPABILITY
• Wide range of products
• Better quality of products
• Sharply focused positioning
• Low prices as compared to those of similar products in the market
• Price protection due to Government policy
• High Quality Customer Service
• Effective Sales Promotion
• High profile advertising
• Favourable Company & product image
• Effective Marketing Information System
 OPERATIONS CAPABILITY
• High Capacity Utilization
• Favourable Plant Location
• High degree of vertical integration
• Reliable sources of supply
• Effective control of operations cost
• Good Inventory Control System
• High calibre R&D people and facilities
• Technical collaboration with reputed foreign
companies
 HR CAPABILITY
• Genuine concern and commitment to
HRM & HRD
• Efficient and effective personnel systems
• Organisation seen as a fair and moel
employer
• Excellent training opportunities and
facilities
• Highly satisfied and committed workforce
 HR CAPABILITY (CONTD)
• Congenial working environment
• Culture of excellence
• Safe working conditions
 IT CAPABILITY
• Ease and convenience of access to information
sources
• Widespread use of computerised infrmatio system
• Availability and operability of hi-tech equipment
• Positive attitude to sharing and dissemination of
information
 IT CAPABILTY (CONTD)
• Wide coverage and networking of
computer systems
• Presence of foolproof information security
systems
• Presence of buyer and suppliers
conversnt with IT applications
• Top Management understanding of and
support to IT applications
 GENERAL MANAGEMENT
CAPABILITY
• Effective Corporate Planning
• Control, reward and incentive sytem for
top managers geared to achevement of
objectives
• Entrepreneurial orientation among the top
and the middle
• Good rapport with government and
bureaucracy
 GEN MGT CAPABILITY (CONTD)
• Favourable Corporate image
• Commonly perceived as a good organisation
• Development oriented Organisation culture
• Political processes for consensus building in
organisation interest
• Management of Organisational change