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Chapter 4 The Internal Assessment Strategic Management: Concepts Cases 11th Edition Fred David 1 Copyright 2023 Prentice Hall Chapter Outline The Nature of an Internal Audit The ResourceBased View (RBV)/VRIO Integrating Strategy Culture 2 Copyright 2023 Prentice Hall Chapter Outline (cont’d) Management Marketing Opportunity Analysis 3 Copyright 2023 Prentice Hall Chapter Outline (cont’d) Finance/Accounting Production/Operations Research Development 4 Copyright 2023 Prentice Hall Chapter Outline (cont’d) Management Information Systems The Value Chian Analysis (VCA) 5 Copyright 2023 Prentice Hall The biggest levers you’ve got to change a pany are strategy, structure, and culture. If I could pick two, I’d pick strategy and culture. – Wayne Leonard, CEO, Entergy Internal Assessment Weak leadership can wreck the soundest strategy. – Sun Zi 6 Copyright 2023 Prentice Hall Nature of an Internal Audit Strengths Weaknesses Functional Areas of Business 7 Copyright 2023 Prentice Hall ? Internal strengths/weaknesses ? External opportunities/threats ? Clear statement of mission Nature of an Internal Audit Basis for Objectives Strategies 8 Copyright 2023 Prentice Hall Key Internal Forces Functional Business Areas: ?Vary by anization ?Divisions have differing strengths weaknesses 9 Copyright 2023 Prentice Hall Key Internal Forces Distinctive Competencies: ?Firm’s strengths that cannot be easily matched or imitated by petitors 10 Copyright 2023 Prentice Hall Key Internal Forces Distinctive Competencies: ?Building petitive advantage involves taking advantage of distinctive petencies 11 Copyright 2023 Prentice Hall Key Internal Forces Distinctive Competencies: ?Strategies designed to improve on a firm’s weaknesses and turn to strengths 12 Copyright 2023 Prentice Hall Internal Audit ?Information from: ?Management ?Marketing ?Finance/accounting ?Production/operations ?Research Development ?Management information Systems Parallels process of external audit 13 Copyright 2023 Prentice Hall Internal Audit Involvement in performing an internal strategicmanagement audit provides vehicle for understanding nature and effect of decisions in other functional business areas of the firm 14 Copyright 2023 Prentice Hall Internal Audit Coordination understanding among managers from all functional areas Key to Organizational Success 15 Copyright 2023 Prentice Hall Internal Audit Number and plexity increases relative to anization size Functional Relationships 16 Copyright 2023 Prentice Hall Internal Audit Exemplifies plexity of relationships among functional areas of the business Financial Ratio Analysis 17 Copyright 2023 Prentice Hall Resource Based View (RBV)/ VRIO framework Approach to Competitive Advantage Internal resources are more important than external factors 18 Copyright 2023 Prentice Hall VRIO Framework 1. Value 2. Rarity 3. Inimitability 4. Organization 19 Copyright 2023 Prentice Hall 20 Applying the VRIO Framework Valuable? Rare? Costly to imitate? Exploited by anisation? Competitive implications no no Competitive disadvantage yes no Competitive parity yes yes No Temporary petitive advantage yes yes yes yes Sustained petitive advantage 20 Copyright 2023 Prentice Hall 21 Applying the VRIO Framework and anisational strengths and weaknesses Valuable? Rare? Costly to imitate? Exploited by anisation? Competitive implications no no weakness yes no strength yes yes No Strength and distinctive petence yes yes yes yes Strength and sustainable distinctive petence Source: Barney and Hesterly 2023, Strategic Management and Competitive Advantage Concepts, Pearson, New Jersey. 21 Copyright 2023 Prentice Hall Resource Based View (RBV) Empirical Indicators ? Rare ? Hard to imitate ? Not easily substitutable 22 Copyright 2023 Prentice Hall Integrating Strategy Culture Pattern of behavior deve