Assessing Strengths and

diligentdeputyManagement

Nov 8, 2013 (3 years and 7 months ago)

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Strategic Business Planning for Commercial Producers

What Tools Are Useful in
Assessing Strengths and
Weaknesses?

Resources, Capabilities, and Core
Competencies

Strategic Business Planning for Commercial Producers

Strengths and Weaknesses


Goal: objective assessment of your


strengths and weaknesses


relative to competitors


important to customers


Note: This is difficult to do well.

Strategic Business Planning for Commercial Producers

Challenge of Internal Analysis


Identifying, developing, protecting,
and deploying resources, capabilities,
and core competencies

Strategic Business Planning for Commercial Producers

Resources


Inputs into a firm’s production process such as
capital equipment, skill of individual employees,
patents, finance, and talented managers


Tangible Resources


Assets that can be seen and
quantified


Intangible Resources


Family commitment, networks,
organizational culture, reputation, intellectual property
rights, trademarks, copyrights


By themselves, resources do not create a
strategic advantage for the firm.

Strategic Business Planning for Commercial Producers

Capabilities


Capacity to deploy resources that have
been purposely integrated to achieve a
desired end state.


Primary base for the firm’s capabilities
is the skills and knowledge of its
employees.


Just because the firm has a strong
capacity for deploying resources does
not mean it has a competitive
advantage.

Strategic Business Planning for Commercial Producers

Core Competencies


Resources and capabilities serve as a
source of competitive advantage for a
firm over its rival.


Not all resources and capabilities are
core competencies.


Many suggest that firms should
identify and concentrate on only 3 or
4 core competencies.

Strategic Business Planning for Commercial Producers

Identifying and Building Core
Competencies


Core competencies must be
distinctive
.


Capabilities that are done better than
competitors


Identifying core competencies is key
to development of sound strategy.


We use the
value chain

to help
identify core competencies.

Strategic Business Planning for Commercial Producers

The Value Chain


A framework for identifying core
competencies


Inside the firm


In the supply chain


Can be used to


Identify strengths and weaknesses


Identify sources of competitive advantage


Identify market opportunities

Strategic Business Planning for Commercial Producers

The

Value Chain

Firm Infrastructure

Human Resource Management

Technological Development

Procurement

Inbound

Logistics

Operations

Outbound


Logistics

Marketing

& Sales

Service

Supporting

Activities

Relationship with Suppliers

Relationship with Buyers

Elapsed Time
-

Value added time cost

Strategic Business Planning for Commercial Producers

Primary Activities in the Value
Chain


Inbound Logistics



Materials handling, warehousing, inventory control used to receive,
store and disseminate inputs to a product


Fertilizer and chemical storage, delivery of inputs, application of
inputs


Operations


Take inputs from inbound logistics and convert to final products


Plowing, planting, spraying, harvesting, feeding, medicating,
weighing,etc.


Outbound Logistics


Collecting, Storing, and physical distribution of the final product.


Crop storage, finished hog handling, Processing and determining
delivery dates, delivery to the packer or elevator etc.

Inbound

Logistics

Marketing

and Sales

Outbound

Logistics

Operations

Technology

Human Resource management

Procurement

Firm Infrastructure

Service

Strategic Business Planning for Commercial Producers

Primary Activities in the Value
Chain


Marketing and Sales


Provide means through which customers can purchase products
and to induce them to do so


Advertising, communicating with buyers, developing customer
relationships, pricing products (futures, hedging, forward
contracting, etc.), delivery scheduling


Service


Activities designed to enhance or maintain a product’s value


Timely delivery, identity preservation, ISO9000, certifying as
organic, etc.

Inbound

Logistics

Marketing

and Sales

Outbound

Logistics

Operations

Service

Human Resource management

Firm Infrastructure

Human Resources

Procurement

Strategic Business Planning for Commercial Producers

Supporting Activities in the

Value Chain


Procurement


Activities to purchase the inputs needed to produce products


Negotiating with suppliers, standard timing of replenishing parts and
tools, setting up buying groups, etc.


Technological Development


Activities that improve the firm’s products and/or processes


Volunteering for test plots, being a part of feeding trials, attending
technology seminars/field days, designing equipment to make specific
production tasks more efficient, etc.


Human Resources


Recruiting, hiring, training, developing, and compensating all
personnel

Inbound

Logistics

Marketing

and Sales

Outbound

Logistics

Operations

Human Resources

Technological Development

Procurement

Service

Firm Infrastructure

Strategic Business Planning for Commercial Producers

Supporting Activities in the

Value Chain


Firm Infrastructure


General Management, planning, finance, accounting, legal
support, governmental relations, etc.


Establishment of accounting practices, management information
systems, compliance with environmental regulations, tracking
and reporting for government programs, etc.


Where strategy development takes place identifying
opportunities and threats, resources and capabilities, and
support of core competencies

Inbound

Logistics

Marketing

and Sales

Outbound

Logistics

Operations

Human Resource management

Firm Infrastructure

Service

Technology

Procurement

Strategic Business Planning for Commercial Producers

The Result of the Value Chain


Margins


Capture

the value from performing value
-
creating
activities as cheaply as possible


The basic idea is that the consumer is willing to pay
a certain amount for the value you create. This is
depicted as the size of the overall pentagon.


The size of the individual activity boxes represents
the cost of performing those particular activities.


Thus, the smaller the size of the individual activity
boxes relative to the value the consumer is willing to
pay, the greater the MARGIN will be for the firm.

Strategic Business Planning for Commercial Producers

The

Value Chain


Grains Farm

Firm Infrastructure

Human Resource Management

Technological Development

Procurement

Inbound

Logistics

Operations

Outbound


Logistics

Marketing

& Sales

Service

Supporting

Activities

Relationship with Suppliers

Relationship with Buyers

Elapsed Time
-

Value added time cost

Strategic Business Planning for Commercial Producers

Primary Activities for a Grain Farm

Inbound

Logistics


Fertilizer and

chemical storage,

custom

application

of inputs

Operations


Tillage

Planning

Fertilizing

Spraying

Cultivate

Harvest


Outbound


Logistics


Grain

transport


to elevator

or buyer


Grain

transport

to storage


Marketing

& Sales


Fwd. contracts

Futures

Options

IP grain

Value added


grain


Service

On
-
time del
-

ivery

Forward


contract

IP

Storage

Tracing

QA

Relationship with Suppliers

Relationship with Buyers

Strategic Business Planning for Commercial Producers

Supporting Activities for a Grain Farm

Infrastructure:
management, planning, finance,

accounting, government compliance, quality control

Human Resource:


motivation tools, compensation,

training, and directing farm employees, including

family, management, and laborers

Technological Development:
research and adoption practices
for things like GPS, VRT, GMO’s, No
-
Till,

the Internet, IP storage facilities

Procurement:
Purchasing inputs: seed, fertilizer, chemicals,

fuel, land, Machinery, storage equipment, office supplies, parts,

tools, insurance etc. with focus on negotiating capabilities

Strategic Business Planning for Commercial Producers

Value Chain Analysis


A firm’s value chain must be compared to
competitors’ value chains to determine where
competitive advantages exist.


To be a source of competitive advantage a
resource or capability must allow a firm to:


Perform an activity in a manner that is superior to
competitor’s performances


Perform a value
-
creating activity that competitors
cannot complete

Strategic Business Planning for Commercial Producers

Linkages within the Value
Chain


Optimization and coordination of activities in
the value chain


Linkages exist between support activities and
primary activities and between separate
primary activities


Generic causes for linkages


Same function can be performed in different ways


Efforts in indirect activities


Activities performed inside the firm reduce the
need for activities in the field


Quality Assurance can be performed in different
ways

Strategic Business Planning for Commercial Producers

Value Chain Linkages in the
Supply Chain

Supplier

Chain

Firm Chain

Buyer Chain

Supplier

Chain

Buyer Chain

Buyer Chain

Strategic Business Planning for Commercial Producers

Linkages with Supplier Value
Chain


Linkages between suppliers’ value chains
and a firms chain provide opportunities for
the firm to enhance competitive advantage.


Division of benefits between firm and its
suppliers is a function of supplier’s
bargaining power and reflecting in
supplier’s margins.


Both coordination with suppliers and hard
bargaining are important to competitive
advantage.

Strategic Business Planning for Commercial Producers

The Buyer’s Value Chain


A firm’s differentiation stems from how its
value chain relates to its buyer’s chain.


Differentiation derives fundamentally from
creating value for the buyer through a
firm’s impact on the buyer’s value chain.


Value is created when a firm creates a
competitive advantage for its buyer.


The buyer must perceive the value to pay a
premium price.

Strategic Business Planning for Commercial Producers

Generating Alternative
Strategies From SWOT


SWOT analysis is a tool for helping assess
the current situation for the firm.


However, we need to be able to combine
the information in the SWOT analysis in a
meaningful way to generate alternative
strategies that we might pursue.


The TOWS matrix is a tool designed to
match external opportunities and threats
with our internal strengths and weaknesses

Strategic Business Planning for Commercial Producers

SWOT Analysis

Opportunities

1.

2.

3.


Strengths

1.

2.

3.


Threats

1.

2.

3.


Weaknesses

1.

2.

3.


Internal

Environment

External

Environment

Strategic Business Planning for Commercial Producers

TOWS Matrix


Technique used in strategy formulation
for combining


External analysis


Opportunities


Threats


Internal analysis


Strengths


Weaknesses

Strategic Business Planning for Commercial Producers

TOWS Matrix

Weaknesses:

1.

2.

3.

Strengths:

1.

2.

3.

WO Strategies

Use Opportunities to

overcome weaknesses

SO Strategies

Use strengths to

take advantage

of opportunities

Opportunities:

1.

2.

3.

WT Strategies

Defensive strategies

to minimize

weaknesses and

avoid threats

ST Strategies

Take advantage of

Strengths to

avoid

threats

Threats:

1.

2.

3.

From

Internal Analysis

(IFAS)

From External Analysis (EFAS)

Source: Weihrich