Session 4 Highlights5 Sets of ToolsResource-Based View of the FirmCriteria for Sustainable Competitive Advantages and Strategic ImplicationsStrategic Goals Analysis: Key is Coherence Among Different Levels of GoalsCoherence in Strategic DirectionSlide 7Slide 8CohesionThe Value ChainValue Chain in Service IndustryTwo Key Concepts in Value Added AnalysisInterrelationships & IntegrationEvaluating Firm PerformanceFinancial Ratio AnalysisThe Balance ScorecardSomething to Think AboutSession 4 HighlightsAnalyzing the Internal Environment of the OrganizationMGT 6705 Sets of Tools1. Resource View of the Firm2. Strategic Goals3. The Value Chain4. Financial Ratio Analysis5. The Balanced Scorecard2-2Resource-Based View of the Firm1-301/14/193MGT 670 SJC Dr. Coty KellerCriteria for Sustainable Competitive Advantages and Strategic Implications1-401/14/194MGT 670 SJC Dr. Coty KellerStrategic Goals Analysis: Key is Coherence Among Different Levels of GoalsCompany vision–Massively inspiring–Overarching–Long-term–Driven by and evokes passion–Fundamental statement of the organization’s•Values•Aspiration•GoalsHierarchy of GoalsCompany visionCompany vision3-5Coherence in Strategic DirectionMission statements–Purpose of the company–Basis of competition and competitive advantages–More specific than vision–Focused on the means by which the firm will competeHierarchy of GoalsCompany visionCompany visionMission statementsMission statements3-6Coherence in Strategic DirectionStrategic objectives–Operationalize the mission statement–Provide guidance on how the organization can fulfill or move toward the “higher goals”–More specific–Cover a more well-defined time frameHierarchy of GoalsCompany visionCompany visionMission statementsMission statementsStrategic objectivesStrategic objectives3-7Coherence in Strategic DirectionStrategic objectives–Measurable–Specific–Appropriate–Realistic–Timely –Challenging–Resolve conflicts that arise–Yardstick for rewards and incentivesHierarchy of GoalsCompany visionCompany visionMission statementsMission statementsStrategic objectivesStrategic objectives3-8CohesionStrategic Goals analysis should include judgment on coherence among vision, mission and objectives. Are they consistent and mutually supportive? Strategic Goals Analysis should ask–Does mission support vision?–Do objectives support vision and mission?The Value Chain3-10Value Chain in Service Industry3-11Two Key Concepts in Value Added Analysis Interrelationships & Integration Importance of relationships among value-chain activities–Within the organization–Within the firm and with other organizations Integration of several value chain activities to create value for customers and suppliers. MarginIs the total revenue generated greater than the total costs involved in creating the products? As our authors say, “creating value for buyers that exceeds the costs of production (i.e. margin) is a key concept used in analyzing a firm’s competitive position.” (p. 58).We want to have a profitInterrelationships & Integration Importance of relationships among value-chain activities–Within the organization–Within the firm and with other organizations Integration of several value chain activities to create value for customers and suppliers.Evaluating Firm PerformanceTwo approaches for evaluating firm performanceFinancial ratio analysisBalance sheetIncome statementHistorical comparisonComparison with industry normsComparison with key competitorsBalanced scorecard (stakeholder perspective)EmployeesCustomersOwners3-14Financial Ratio AnalysisHelps determine the firm’s performance, and how well it is satisfying stakeholders •Customers, •employees, and •StockholdersFive types of financial ratios•Short-term solvency or liquidity•Long-term solvency measures•Asset management (or turnover)•Profitability•Market valueMeaningful ratio analysis must include•Analysis of how ratios change over time•How ratios are interrelated3-15The Balance ScorecardProvides a meaningful integration of many issues that come into evaluating a firm’s performanceFour key perspectives1.Customer2.Internal3.Innovation & Learning4.Financial3-16Something to Think About Possible exam questions: Evaluate your organization’s strategic goals in terms of vision, mission and strategic objectives. Propose improvements. Use words and pictures to analyze your organization’s Value Chain and its Resource Profile Evaluate your organization’s performance with financial ratio analysis.Source: