Costs Relative To Firm example essay topic

EXTERNAL ANALYSIS 1. Industry Analysis - Walmart Porter's theories can be used to formulate survival strategies for your current business, as well as to evaluate the attractiveness of other industries for expansion. Entry Barriers- Economies of scale (forces potential entrants to come in at large scale or accept cost disadvantage- Product differentiation - (forces potential entrants to spend heavily to overcome customer loyalty) - advertising, customer service, being first in the industry) - Capital Requirements - fixed facilities, inventories- Cost disadvantage independent of size - learning curve, proprietary technology, assets purchased at p reinflation prices- Access to distribution channels - own distribution channels Powerful Suppliers (NOT) - Not concentrated- Importance of volume to supplier- Obliged to contend with other products for sale in the industry Jockeying for Position Mature industry - as an industry matures, its growth rate changes, resulting in declining profits and often a shakeout. - Tactics like price competition, product introduction, advertising- Competitors are numerous and not equal in size- Industry growth is slow, precipitating fights for market share- The product or service lacks differentiation or switching costs- Fixed costs are high- Exit barriers are high Powerful Buyers- Buyers not concentrated - not purchase in large volumes- Buyer switching costs relative to firm switching costs- Substitute products- Product differences- Price sensitivity Substitute Products- Relative price performance of substitutes- Switching costs- Buyer propensity to substitute 2. PESTLE INTERNAL ANALYSIS 1. Organisational Capabilities Marketing- Breadth of product line- Ability to gather needed information about new markets- Market share- Product service mix- Channels of distribution, number, coverage, control- Knowledge of customer needs- Product service image, reputation and quality- Effectiveness of sales promotion and advertising- Pricing strategy and price flexibility- After sales service Financial and Accounting- Corporate level resources - multi-business firm- Effective control, ability to reduce cost Production / Operational- Inventory control systems- Location of facilities, layout and utilization- Economies of scale- Effectiveness of operational control: design, scheduling, purchasing, quality Personnel- Employee skills and morale- Efficiency and effectiveness of personnel policies- Effective incentives used to motivate employees- Employee turnover and absenteeism Quality Management- Relationship with suppliers and customers- Internal practices to enhance quality of products and service- Procedures for monitoring quality Information Systems- Timeliness & accuracy of information about sales, operations, cash & suppliers- Relevance of information for tactical decisions- Information to manage quality issues - customer service- Linkages to suppliers and customers Organization and General Management- Organizational structure- Firm's image and prestige- Organization of communication system- Organizational climate, culture- Top management skill, capabilities and interests- Intra-organizational synergy (multi-business firms) 2.

SWOT Analysis Strengths- A strength is a resource advantage relative to competitors, and the needs of the market a firm serves or expects to serve- Is a distinctive competence when it gives a firm a comparative advantage- Arise from the resources and competencies available to the firm Weaknesses- Is a limitation or deficiency in one or more resources or competencies relative to competitors that impedes a firms effective performance Opportunities- A favorable situation in the firms environment- Key trends are one source of opportunity e.g. identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technological changes, improved buyer or supplier relationships Threats- A major unfavorable situation in the firms environment e.g. entrance of new competitors, slow market growth, increased bargaining power of key buyers and suppliers, technological changes, new or revised regulations 3. TOWS Matrix - Transitional tool between analysis and choice - You have identified your strengths and weaknesses and can now link them to specific opportunities and threats - Allows you to pursue identified opportunities and to counter potential threats 4. The Value Chain General Administration- Capability to identify new product market opportunities and potential environmental threats- Quality of the strategic planning system to achieve corporate objectives- Level of information systems support in making strategic and routine decisions- Timely and accurate information on general and competitive environments- Relationship with public policy makers and interest groups- Public image and corporate citizenship Human Resources- Effectiveness of procedures for recruiting, training and promoting all levels of employees- Appropriateness of reward systems for motivating and challenging employees- A work environment that minimizes absenteeism and keeps turnover at desirable levels- Levels of employee motivation and job satisfaction Technology- Ability of the work environment to encourage creativity and innovation- Timeliness of technology development activities in meeting critical deadlines Procurement- Good, long-term relationships with reliable suppliers- Criteria for lease vs. purchase decisions- Procedure for procurement of plant, machinery and building Inbound Logistics- Soundness of material and inventory control systems- Efficiency of warehousing activities Operations- Efficiency of plant layout and workflow design- Appropriate automation of store procedures Outbound Logistics- Efficiency of delivery systems- Efficiency of finished goods warehousing Marketing and Sales- Efficiency of market research to identify customer segments and needs- Innovation in sales promotion and advertising- Evaluation of alternative distribution channels- Development of an image of quality and favorable reputation- Extent of market dominance within a market segment or overall market Service- Promptness of attention to customer complaints- Appropriateness of warranty and guarantee policy- Quality of customer education and training 5. Stakeholder Analysis (PG 40) - All persons / groups have legitimate interests in the performance of the firm - Stakeholders may have different expectations of the firm, at different times - Stakeholders have interests and power - Power exercised by stakeholders - need to identify the key players - Identification - identify the various stakeholders and to weight their relative ability to affect the firm - Understanding - must understand the demands of each group - Reconciliation and priorities Stockholders Participation in distribution of profits, additional stock offerings, assets on liquidation, vote on stock, inspection of company books, transfer of stock, election of the board, other rights as per contract with the organisation Creditors Employees Customers Suppliers Governments Competitors Local Communities The General public 6. Cultural Web (299) CHOICE (Acceptability, Suitability & Feasibility) 1.

Ans off Matrix IMPLEMENTATION 1. Generic Strategies Overall Cost Leadership Differentiation Focus Striving for overall cost leadership in an industry- Low cost leaders depend on some fairly unique capabilities to achieve and sustain their low cost position. Commonly required skills and resources- Sustained capital investment and access to capital- Process engineering skills- Intensive supervision of labor- Low-cost distribution system Common Organizational requirements- Tight cost control- Frequent, detailed control reports- Structured organization and responsibilities- Incentives based on meeting strict quantitative targets Striving to create and market unique products for a varied group of customers through dirrefentiationCommonly required skills and resources- Strong marketing abilities- Creative flare- Strong capability in basic research- Corporate reputation for 2. Change Management 3. Balanced Score Card 4.7 S Checklist.