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Transcript of 1 Management Audit and Environmental Analysis Geoff Leese October 2005 Revised September 2006, July...
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Management Audit and Environmental Analysis
Geoff Leese October 2005 Revised
September 2006, July 2007, August 2008,
August 2009
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SWOT analysis
Strengths Weaknesses Opportunities Threats
Internal (Management audit)
External (Environmental Scanning)
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Management audit The 7-S model Value chain analysis Network analysis
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McKinsey’s 7-S Framework
Strategy Structure Systems Shared Values Staff Skills Style
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an approach to organising
aid to building a cohesive strategy all equally important 7 interdependent variables change one, impacts others use this to evaluate strategy
developments soft is harder to measure good for capturing importance of the
links
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Value chain analysis (Porter)
Views the organisation as a chain of value-creating activities.
Must create sufficient value to exceed their cost thus generating profit (or at least not generating loss!)
Primary and support value chain activities
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Primary value chain activities
Inbound logistics Operations
Outbound logistics
Sales and marketing
Service
Any or all of these can be important in a given scenario – sometimes defining them is not so simple!
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Support value chain activities
Procurement Technology development Human Resource Management Infrastucture management
Legal, financial, QA, estates and buildings etc
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Value chain analysis
Identify the activities and process flows
Identify linkages between activities Identify ways to optimise the value
chain Outsourcing? Involving the customer?
– On-line booking– Self-assembly furniture
Involving suppliers?
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Organisational network analysis
Social network analysis applied to organisations
Maps “nodes” (people, groups, functions) and the interactions between them (relationships or flows)
Measures “centrality” of nodes (their importance) using mathematical criteria
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Some ONA criteria
Degrees (number of direct connections)
Betweenness (nodes that connect other nodes )
Closeness (short paths to many nodes)
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An ONA diagram
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Environmental scanning(1)
Macro environment PEST,SLEPT,STEP
Micro-environment Competitors, suppliers, distributors,
customers Methods
Ad-hoc (usually in response to crisis!) Regular scheduled Continuous
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Macroenvironmental scanning
PEST (STEP, SLEPT) analysis Political (includes legal!) Economic Social (includes “Green”) Technological
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Political factors
Taxation Employment/Health and Safety
law Regulation/deregulation Trade restrictions and tariffs
(or lack of them!) Political stability
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Economic factors
Connected to political ones Economic cycle Growth or recession? Interest rates Inflation rates Exchange rates
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Social factors
Demography Age distribution Geographical distribution Cultural norms “How we live”
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Technology factors
Rate of technological change Automation Technology incentives Emerging technologies Levels of R&D activity
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Microenvironmental scanning
Competitor analysis Competitor array Competitor profiling
Consumer analysis (market research)
Product innovations
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Competitor array example
Should we include ourselves?
Key Industry Success Factors Weighting Competitor
1 rating Competitor 1 weighted
Competitor 2 rating
Competitor 2 weighted
1 - Extensive distribution .4 6 2.4 3 1.2
2 –Customer focus .3 4 1.2 5 1.5
3 - Economies of scale .2 3 .6 3 .6
4 - Product innovation .1 7 .7 4 .4
Totals 1.0 20 4.9 18 3.7
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The SWOT matrix
Opportunities Threats
Strengths S-O strategies S-T strategies
Weaknesses W-O strategies
W-T strategies
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SWOT Strategies Strength-Opportunity
Make use of strengths to grasp opportunities that fit them
Strength-Threat Identify ways to use strengths to minimise
external threats Weakness-Opportunity
Overcome weaknesses to pursue opportunities
Weakness-Threat Prevent weaknesses from encouraging
threats
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Summary
SWOT analysis Assess and analyse strengths and
weaknesses– Seven S – Value chain– Organisational network analysis
Assess and analyse opportunities and threats
– PEST analysis– Competitor analysis– Market research
Devise strategies based on all four
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Further reading
Bennett Chapter 5 Johnson and Scholes chapters 3
and 4 For ONA –
http://www.orgnet.com/sna.html General strategic management
stuff http://www.geocities.com/WallStre
et/District/6592/