Lecture 9 Part 1

okay this is um part one of lecture eight um continuing from our previous discussion so we were
this we were actually discussing about what is what analysis and how to use sort analysis as a
tool to analyze companies strength weakness opportunities and threat and we said that for
analyzing strength and weakness we look at within the company or within the company's
resources and capabilities and to look for opportunities instead to look look outside of the
company um so now simply making this list of these strength opportunities uh weakness and
threat it's not really enough how do you make best usage of use of swot analysis actually um so
the best use of slot analysis is is when you can make a specific conclusions about your
company's situation and what what does it mean for developing strategy based on your sort
analysis actually um so so so if we want to summarize um swot analysis actually involves
drawing conclusions um or swot analysis tools using you usage of swot analysis tools involves
drawing conclusions from the swat listing about swat listing about the company's overall
situation i mean the first thing that we need to do is we need to draw conclusion uh from this uh
four aspect or for uh swat listing actually and and and then translating these conclusions into
strategic actions so it's not only enough to draw conclusion for example after after conducting a
swot analysis i found out what are my strengths what are my weaknesses what are my
opportunities and what are my threat now i have to make an overall judgment about my
company's position if i see that my company's position is is somewhat good so based on that
position i will create strategic actions or uh i will develop strategies actually for example when i
develop my strategy i especially has developed my strategy based on my strength and i also have
game plan for how i would like to take uh exploit new opportunities and how how i would like to
tackle weaknesses and threats actually um so as i was saying that you need to match your
strategy with your internal strength and with your market opportunities internal strength for
example say you have uh you're very good at your your one of your internal strength is you're
very good at developing new product and you see that you're currently you're operating only in
dhaka so and and there is a huge market opportunities out there for uh like in other cities like
raksha and burrito and and mammon ching so on and so forth so what you do is you create a
based on your internal strength you create new new product for each of those markets and and
that's how you can exploit your uh internal strength uh to develop your strategy actually and you
also need to as i was saying that you also need to make uh make sure that your weaknesses and
and and threats uh it does not uh hold you back actually so so you need to have a game plan uh
on how to tackle these weaknesses and and external sets and tackling weaknesses is is is when
you continually work on on your weakness to turn this into uh your strength actually and if you
feel that you say your uh your uh one of your business is doing too poorly or one of your
functional area is you're doing too poorly say you're in terms of hrm you're doing it too poorly
then maybe one of the options could be to outsource this to uh to another another company who
are good at hr operations and that's how uh either you develop you turn your weakness into into
uh strength or you just simply let it go um so what can be again from your strength and you first
need to identify your computer strength and competitive assets and from your strengths and
weaknesses the conclusions um you can draw is you know uh how is your overall business
situation your overall business situation could be alarmingly weak to exceptionally strong in
these two um you know opposite extremes um and where are the attractive and unattractive
aspects of the company's situation this this is also something that you can draw uh and you also
need to uh based on your market opportunity that these are some of the implications um that you
can draw is you can use strength as the foundation for your strategy uh you could you could you
could pursue those market opportunities that best should suit your company's strength also you
need to continually correct your weakness and you you need to company use company strength
to you know hold off your external threats so these are some of the some of the conclusion that
you can draw based on your swot analysis however remember this this list is not exhaustive that
means you can add your own conclusion here and some of the questions that you can ask uh that
you can answer using swot analysis is are like this what are the attractive aspects of the farm
situation what are aspects are of the most concern that means you know the first question is
asking what are my strengths and the second question is asking what are my weaknesses so on
and so forth so so you can you can ask using this swat analysis you can ask many more questions
actually and and put them in a scale of one to ten where one is weak and ten is strong you know
for your farm's overall situation and future prospects language and based on that you can come
up with the uh rank of your of your um of your company all right so that being said um now
comes now comes um another question question number four um in this question so so far what
we did was we started off with the discussion about uh uh we said that the farm is nothing but a
collection of bundle of resources and capabilities and then we started off our discussion with
with the definition of what is what are these uh what do we mean by this uh resource and
capabilities um and then we said that we need to take an inventory of uh of our company's uh
strength and weaknesses and then we said that um this only taking inventory is not enough we
need to put them uh through vdin test um to check for competitive advantage and then we also
learned how to use swot analysis uh using these companies resources and capabilities and con
what conclusion can we draw from this call swot analysis now we we will look at firms value
chain activities remember ah from value chain uh uh valetine activities and its cost structures
remember we we in our chapter one we uh we spoke about um um a business model and and
then there was this uh customer value proposition and then we had we had a profit formula other
these are the signs that that that indicate that your that indicates your company's competitive
strength if your prices and costs are in line with your competitors if the customer value
proportion that you are offering to the to the customers is competitive and cost effective that
means if customers sees your your value proposition as as cost effective that means if customers
feel satisfied while paying for your product and its bundle capabilities are yielding a sustainable
competitive advantage and when when and when uh where and when your resources and
capabilities uh it can help you to develop a competitive advantage that lasts longer actually uh
that are sustainable in that sense actually uh now the higher your cost uh um and the higher your
cost of product or producing a product um then your rival the more vulnerable you you become
or the more uh risky you become actually and the greater the amount of customer value uh that
that your farm can offer uh compared to your rival the less competitive vulnerable your farm
becomes that it's it actually this part is actually talking about a business model so your job is to
uh offer your customer a value um at a lower cost um so the more the the costs the worse for
your company and uh and worse for your cvp or customer value proposition if you can offer uh
customer value at a lower cost that's the best or ideal situation for you and that's the less least
risky uh situation for your farm um so what is a company's value chain actually i i'm sure all of
you have gone through this concept of value chain of uh of michael porter where he showed um
primary activities and and secondary activities the idea of value chain is that uh you need what
valuetain sees value chain looks at a company as as nothing but um as nothing but um um made
up of two part one is every farm has some primary activities and every firm has some secondary
activities and primary activities uh they support the secondary reactive disaster and and the idea
is that in each and every activities you need to create value for the firm actually um if you can
create value for the firm in each and every activities how do you create value by providing a
better better service at a lower cost um say you have you have a you have a supply chain you
have a supply chain um raw material you buy our raw material so now if you can buy raw
material at a lower price it will definitely help you to create a better value in your finished
product and of course this will also be attractive to the uh to the final customers and that you
create value for everyone actually so so that's what the value that's what the value chain is all
about actually so uh the idea of value chain is that you need to create values in each and every uh
activities uh so that it it creates value for you for a longer period of time so the value chain
identifies your inner workings of the firm from customer value proposition business model so
you you you by looking at these primary activities and secondary activities you look at your
customer value proposition or also boost business model it also permits a deep look at the firm's
cost structure um and your ability to offer lower prices profitably and it also reveals the emphasis
that your firm places on activities that enhances differentiation and support um higher prices and
remember uh with differentiation you can you can you can charge higher prices uh as i was
saying the company's value chain identifies primary activities and related support actors support
support activities that create customer value if you look at this as you can see here these these are
all primary activities as you can see supply chain management of operational distribution sales
and marketing service uh these are all up to this is you know uh primary activities uh and cost
and support activities and costs are all these production and r d technology system development
human resource management and general administration these are all support support remember
your support activities must support your primary activities so if support activities fails to create
a favorable environment for primary activities the whole thing will fail actually so what we are
saying is that if we if we consider these all of these as an activity uh what we are saying is that
you need to create value in each of these uh you need to create value in each of these these
activities if you can create value in each of these activities then you can then then you can uh
earn better profit margin and and that you can and and at the end you can uh get a better uh you
can create better value for everyone uh the what involved in value chain actually so how do you
create value as it's simply uh it translates into that if you can lower the cost and and and you
know make quality better then you can create value for everyone actually so value chain analysis
facilitates a comparison activity by activity as i was saying that each and every activity you can
look at how effectively and efficiently your farm deliver value to it to to its customers relative to
its competitors um um and the whole anal analysis process segregates the firm's opportunity to
different types of primary and secondary activities and and you you you can use activity-based
costing i'm sure all of you know what is activity based costing uh i i'm sure you have come
across this term in your accounting course activity-based costing to evaluate your activities and
does the same for significant government basically what it what what it's saying is that um you
need to for identify what are your primary activities what are your secondary activities and then
you need to identify what are the specific what are the specific activities uh or you know you
need to do a comparison of activity by activity in each and every primary activities and and and
secondary activities uh if you look at this say supply chain management you have suppression
management consists of lot of activities activity one two three and four then you have operation
activity one two three four then you have distribution activity one two three four like this and
then uh you try to create value in each and every activities and then you need to you need to
compare this with uh these actually so when you compare this uh this with this then you can
create value for uh both of them actually so that's how you do a value chain analysis and and you
probably use you want to you would like to use activity-based costing to evaluate your activities
and activity-based costing is is is a term that you have come across that i'm sure you have come
across in accounting