Business Strategy

Post Mid Sem Assignment

By
Sampath Hewage
7LB 215
EMBA OCT 2009

1. How can value chain analysis help identify a company’s strengths and
weaknesses?
Value chain analysis is based on the assumption that a business’s basic purpose
is to create value for its users and its products or services. Value chain analysis
divides firm’s activities into two major categories, i.e. primary activities and support
activities. Primary activities are those activities that are involved in the physical
creation of the product, marketing and after-sales service. Support activities assist
the primary activities by providing infrastructure that allows them to take place on
an on-going basis.

Fig 1: Identification of Strengths and Weaknesses of Firms by Value Chain Analysis

 The value chain analysis of firm reveals what it is doing, what it wishes to do and
what it might do. In this method of analysis, strengths and weaknesses are
assessed by dividing a business into a number of linked activities, each of which
may produce value for customer. In value chain analysis, managers divide the
activities of their firms into set of separate activities that add value. To do so,
activates of the organization (such as raw material procurement, logistics,
operations, sales and marketing, technology development, firm infrastructure etc)
have to be identify=ed and examined by managers. These primary and support
activities are further divided through analysis. Managers thus acquire in-depth
understanding of their firm’s capabilities, its cost structure, and how these create
competitive advantage or disadvantage.
The value chain analysis not only indicates what the firm’s resources are but
also judges how well theses resources have been used by the management. This
directs managers to analyze firm’s strengths and weaknesses. The firm’s strengths
and weaknesses refer to its strengths and weaknesses with regard to its activities
and resources.

The identification of resource (assets) profile and activity mapping helps easy
analysis of strengths and weaknesses of the firm. When managers assign costs and
assets to each activity, managing internal strengths and weaknesses is much easier
and simpler. Fig 1 shows such activity mapping and allocation of costs to each
activity and also identification of strengths and weaknesses of a firm.

2. In what ways can a corporation’s structure and culture be internal

strengths and weaknesses?
The organizational structure and culture comes under infrastructure in the
support activities of a firm. The structure refers to organization’s formal reporting
framework. The organizational culture is defined as the set of important
assumptions (often unstated) that members in an organization share in common.
The organizational structure serves as a support to its primary value chain
activities. A flatter organizational structure allows speedy decision making and
strengths and weaknesses analysis. A flatter organizational structure makes internal
communication less complex.
The organizational structure has to be in line with the mission of business firm.
The organizational structure directs the management in assigning responsibilities
systematically and facilitates better coordination and integration between different
value chain activities. This way the organizational structure can become a strength
or weakness in a company.
The rapid growth in organizations requires rapid change in the organization. The
organization structure should be agile so that new changes can be easily
accommodated. If not the organization will not be able create competitive
advantage and long term survival will be uncertain. Here also the organizational
structure can be a strength or a weakness depending on its nature.
The organizational culture consists of a set of beliefs, values and norms. These
should be inline with organizations long term strategy. The organizational culture
should be a strength of the organization. The organizational culture can be affected
by the external social culture. Therefore even in the same organization, the
organizational culture in different geographical locations is different.
Fundamental commitment through internalization of beliefs and the values of the
organization by the members result in corresponding behavior that is intrinsically
rewarding for the members. The members derive immense personal satisfaction
from their actions in the organization since they are congruent with their personal
beliefs and values. The assumptions become shared assumptions through
internalization among an organization’s individual members.
The culture of an organization if needed to be a strength for the origination has to
be change oriented. If the culture of the organization is in line with its mission and
also change-oriented, that kind of culture is a strength of the organization.
The newly established organizations have more entrepreneurial type
organizational cultures while earlier established ones have orthodox type of culture.
This allows new organizations to get adjusted quickly to environmental forces. The
growth of business will be rapid in the entrepreneurial type organizations at the
culture acts as a catalyst to its growth. The earlier established organizations, which
have unionized labor needs greater effort to adapt to environmental changes.