Chapter 8: Internal Analysis

Question 1

Definition of Strategic Capability (4)

Answer 1

reflects the ability of an entity:
1. to use and exploit resources available to it.
2. through competences developed in activities and processes performed
3. the ways in which these activities are linked internally and externally
4. overall balance of core competencies

Question 2

Critical Success Factors

Answer 2

those components of strategy in which the organisation must excel to out-perform competition

(related to customer needs - influencing their buying decisions)

Question 3

6 step approach to use CSF

Answer 3

1. Identify the CSFs
2. Identify necessary critical competencies to achieve superior performance in the CSFs.
3. Develop the level of critical competence so that you are able to gain a competitive advantage in CSF
4. Identify appropriate KPI for each critical competence
5. Keep developing critical competence in each aspect of performance, to make it difficult to imitate.
6. Monitor firm’s achievement of the target KPIs and competitors’ performance

Question 4

Definition Benchmarking

Answer 4

Comparing own performance against performance of someone else (best)

(identify differences in performance, close the gaps by raising performance)

Question 5

Internal Benchmarking

Answer 5

Comparing performance of units(branches) with the best performing unit(branch) of the entity.

Question 6

Operational Benchmarking

Answer 6

• Compare performance of a particular operation with the performance of a similar operation
• in a different business entity in a different industry

Question 7

Competitive benchmarking

Answer 7

Compare own performance and its own products with those of its most successful competitors.

Question 8

Customer benchmarking

Answer 8

• The benchmark is a specification of what customers expect.
• An entity compares its performance against what its customers expect

Question 9

Methods of competitor benchmarking

Answer 9

1. Study F/S of competitor
2. Compare financial ratios
3. Find reasons for any significant differences in performance
4. Analyse product/services of them in detail
5. Talk to customers of competitors
6. Compare Sales Price

(analyse csfs of all firms in the market)