Internal

Appraisal
Methods & Techniques

It is the way of avoiding external threats to protect the organization.

Organisational Resources [(Tangible like building & intangible like knowledge)] + Organisational Behaviour [(helps in using the resources like leadership, philosophy of Management)] Strength & Weakness (Orgn. Resources & behavior help determine these) Synergistic Effects (combination of 2 or more elements for a better result) Competencies (unique advantage, with this it Jights the competition in the market.) Organisational Capability (determined by the sum of all factors mentioned above) Strategic Advantage (determined by the above factors)

Internal Environment

Factors affecting Organisational Capabilities.

These are factors relating to the strategic strengths & weakness of the organization.
Financial
Source of funds Their usage How they are managed?

Marketing
Variety, mix, quality of product. Pricing Sales promotion, advertising, PR.

Operational Personnel
The layout, location, capacity etc. Cost & quality control, inventory Patent, technology, R&D Planning & selction Working condition, corporate image. Safety, welfare

Information
Source, quantity & quality of data Management of data. The use of data

General Management Strategy implementati on. Values goals of manager Relationship with outsiders. Organisation structure Culture and values

Organisational Appraisal
Also called company analysis, determines the capability of an organisation on the basis of strengths and weaknesses in various areas of organisation such as Jinace, marketing etc.

FACTORS AFFECTING COMPANY ANALYSIS- o Ability of strategist to understand the internal environment. o Size of the organisation. Easier to analyse small organisations. o If politics is involved within the organisation then it makes the analysis/ appraisal difJicult.

Methods & Techniques of Appraisal-1

Technique
Internal Analysis Value chain analysis Quantitative Qualitative Comparitive Analysis Historical Industry Benchmarking Balanced Scorecard

Brief explaination
Analysis of companys strength & weakness Looking at business like a chain, beginning with inputs of raw materials to Jinal output, meeting customer needs. *Financial use of ratio analysis, Economic Value added analysis (PAT Cost of Capital), Activity Based Cost analysis (cost in different functional areas) Analysing those factors that cant be measured in monetary terms. Analysis of company through comparison. Past Jigures used to compare and analyse. Comparison made with the industry. Setting benchmarks and standards and matching up to it.

Comprehensive Analysis Techniques used are balanced scorecard & key factor rating
Analysis which gives managers a quick view of decisions already taken. Includes viewpoint of customers, need and scope to improve further etc.

Methods & Techniques of Appraisal-2

Technique
Key factors rating Critical Success Factors

Brief explaination
Strength & weakness analysed on basis of key factors, which is based on a series of questions. This analyses critical areas of the business in which if results are satisfactory will ensure successful performance.

Structuring Organisational Appraisal

Organisational Capability ProJile Strategic Advantage ProJile

Evaluates companys strengths & weaknesses in dealing with its opportunities & threats. The various departments & sub- departments are rated on a scale from -5 to +5 & analysis is made.

Suggested by Glueck & it is a summarised form of company analysis. Arrows are used to indicate strengths & weaknesses of the comapny

Environmen tal Appraisal

Process that helps monitor the external factors like, economy, technology, govt. policies used in the current market setting to determine the threats company is facing. Internal Scanning
Environmental Scanning Strategic Issues & opportunities

Environmental Appraisal

External Scanning

Environmental appraisal is required for growth of the company, to generate innovative ideas & to develop new management techniques. It reJlects the threats to the organisation, factors favorable to the company etc. The objectives are to ascertain the social, economic, political & technological factors affecting business. To identify opportunities & threats. Helps in future planning. SigniJicance of Environment at three different levels: Factors affecting at National level ConJlict with neighboring countries. Factors affecting at Industry level Export-import policy Factors affecting at Individual level Construction of roads enabling better transportation.

Components of Environment
Economic
Saving & investment rate. GDP Rate Per capita income Money supply

Social
population Values and attitudes lifestyle

Legal
Tax laws Environment al laws

Technological Political Up to date with the latest technology or not. Low cost of production. Foreign policies. Govt. stability.

Market
Study competition Image of the company Distribution channels available.

Environmental Scanning Techniques

Techniques ETOP Analysis Brief explaination Environmental threat & opportunity Analysis(ETOP) evaluates variables like, Economic, Govt., Supplier etc. & its impact on Opportunity & threats separately. A 4 step process that observes trends, consider issues arising from these trends, forms a report & thus implement the strategy. Considers both internal factors of strength & weakness & external factors of opportunities & threats.

QUEST Analysis

SWOT Analysis

Barriers to environmental appraisal

The three main reasons are: A successful organisation gets over-conJident & therefore neglects environmental appraisal. Environment scanning may have been done but planning is done in the company as a routine & not strategically. So the analysis isnt as effective. As organisations grow the analysis becomes more difJicult.

It draws upon to derive Jive forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry proJitability.

Porters Five Forces Model