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Monday, May 14, 2012

Organisational Capability Analysis

Analysis of Organisational Capability

In order to develop successful strategies to exploit the external opportunities or control the external threats(Due to  continual changes in external environment) , analysis of an organisation’s capabilities is important for strategy making which aims at producing a good fit between a country’s resource capability and its external situation. Internal analysis helps us understand the organizational capability which influence the evolution of successful strategies.

Many of the issues of strategic development are concerned with changing strategic capability better to fit a changing environment. However, looking at strategic development from a different perspective i.e. stretching and exploiting the organizations capability to create opportunities, it again becomes important to understand these capabilities. The above two perspectives together are called the Resource Based View (RBV) of strategy.

Professionals from different organizations suggest that a firm’s overall strengths and weaknesses and its ability to execute are often found more important to its performance than environmental factors. Internal capabilities and process execution at times allow firms to gain competitive edge over competitors even with relatively lesser resources and lesser advantageous position.


There are three types of resources – Assets, Capabilities and Competencies, which have been  identified under Resource Based View of the firm (RBV). Strategic thinkers explaining the RBV suggest that the organizations are collections of tangible and intangible assets combined with capabilities to use those assets. These help organizations develop understanding these three types of resources and help us to know how a firm’s internal strength and weaknesses affect its ability to compete.


Sunday, May 6, 2012

Value Chain Framework

Value Chain Framework

This is the framework most commonly used to guide analysis of any firm’s strengths and weaknesses. In this framework, any business is seen as a number of linked activities, each producing value for the customer. By creating additional value, the firm may charge more or is able to deliver same value at a lower cost, either of this leading to a higher profit margin. This ultimately adds to the organization’s financial performance.

Figure-I : Value Chain Framework


The value chain framework as shown in Figure-I  is a typical value chain within an organization. Using this framework, it is possible to analyze the organization’s contributions of individual activities in a business and how they add up to the overall level of customer value, the firm produces. It is divided into two parts i.e. primary activities and support activities. The primary activities constitute of the following:

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