1. INTERNAL CONTEXT
LOOKS AT THE INTERNAL
FACTORS THAT INFLUENCE A
FIRMS SUCCESS

2. INTERNAL CONTEXT
Mission
Objectives
Strategy
Results
Stakeholders
Management team – Culture/Style
Resources/Audit
Review

3. THE MISSION – 5 key
elements
1. WHAT IS THE NATURE OF THE FIRM i.e. what
business are we in or should we be in
2. FROM CUSTOMER PERSPECTIVE
3. MUST REFLECT FIRMS VALUES & BELIEFS
4. INCLUDE SUSTAINABLE COMPETITIVE
ADVANTAGE PRINCIPLE e.g. we aim to be the
leader in our field
5. MAIN REASONS FOR CHOICE OF APPROACH
e.g. Volvo stress the team approach – “We must treat
each other with trust and respect”

4. OBJECTIVES
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COME FROM THE MISSION
THEY ARE SPECIFIC
WHAT IS TO BE DONE
WHEN IT IS TO BE DONE BY
QUANTIFIABLE
THEY FOCUS MANAGEMENT
ALLOW OUTCOMES TO BE
MEASURED

5. OBJECTIVES
1. FINANCIAL
e.g. earnings per share, ROR, margins
2. STRATEGIC (time scale/firm size
dependant)
e.g. diversification, merger, new markets,
internationalisation, larger market share,
higher product quality, lower unit cost, wider
product line

6. OBJECTIVES
POTENTIAL CONFLICT BETWEEN
OBJECTIVES
 SURVIVE v GROW
 DISTRIBUTE v INVEST
 LONG TERM v SHORT TERM
 FINANCIAL v ETHICAL
 STAKEHOLDER v STAKEHOLDER

7. THE MANAGEMENT TEAM
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CRUCIAL IN ENSURING BUSINESS
SUCCESS
FACILITATING CHANGE
FOCUSSING THE BUSINESS ON
OBJECTIVES
KEEPING THE BUSINESS COMPETITIVE
MOTIVATING RESOURCES
MUST BE COHESIVE & CREATE

8. MANAGEMENT TEAM
SIZE & MEMBERSHIP DEPENDS ON:
1.
TYPE OF BUSINESS
2.
SIZE OF BUSINESS
3.
PRODUCTS/SERVICES OFFERED
4.
LIFE CYCLE STAGE OF BUSINESS
5.
ORGANISATIONAL STRUCTURE OF THE
BUSINESS

9. THE RELEVANCE OF
CULTURE & STYLE
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KEY IMPACT ON MANAGEMENT TEAM
MT MAJOR IMPACT ON CULTURE & STYLE

10. THE RELEVANCE OF
CULTURE & STYLE
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
KEY IMPACT ON MANAGEMENT TEAM
MT MAJOR IMPACT ON CULTURE & STYLE
CULTURE
• Set of beliefs, values and
learned ways of managing
• Comes from firms past,
present, people, technology,
physical resources, objectives
and values
• Power, Role, Task, Personal

11. THE RELEVANCE OF
CULTURE & STYLE


KEY IMPACT ON MANAGEMENT TEAM
MT MAJOR IMPACT ON CULTURE & STYLE
CULTURE
• Set of beliefs, values and
learned ways of managing
• Comes from firms past,
present, people, technology,
physical resources, objectives
and values
• Power, Role, Task, Personal
STYL
E
• Process of influencing people
• So they will strive to achieve
firms mission – enthusiastically,
willingly
•Trait, Style, Contingency

12. THE RELEVANCE OF
STRUCTURE – its purpose

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TO ALLOCATE WORK &
ADMINISTRATION TO
SPECIFIC FUNCTIONS
TO DISTRIBUTE POWER
TO CONTROL THE
OPERATION OF THE
BUSINESS

13. STRUCTURE
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UNITARY- traditional, functional
MULTI DIVISIONAL – SBU’s
FLAT
MATRIX
HOLDING COMPANY e.g. Virgin
INTEGRATED INTERNATIONAL BUSINESS
e.g. McDonald's
TRANSNATIONAL ASSOCIATION e.g. Ford
*THE KEY COMPONENT ? - People

14. PEOPLE - WHY KEY?
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CAN BE MOTIVATED - financial and non
financial
SKILL IS A SCARCE RESOURCE
EXPENSIVE TO REPLACE – own wood/ buy
trees
MAJOR OVERHEAD
GENERATE ADDED VALUE
CAN MAKE/BREAK THE ORG
CAN BE USED TO ENGINEER CHANGE

15. STRUCTURE & STRATEGY
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WHAT IS STRATEGY - HOW ORG’s AIMS
AND OBJECTIVES ARE TO BE ACHIEVED S/T, M/T, L/T
WHAT COMES FIRST – STRUCTURE OR
STRATEGY?
TRADITIONALLY - STRUCTURE EVOLVES
& STRATEGY FOLLOWS
HOW - STRUCTURE EVOLVES AS ORG
GROWS AND PROCEEDS THROUGH ITS

16. STRUCTURE & STRATEGY
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e.g. as org grows from sole trader to private co
and plc the structure becomes larger and
more bureaucratic - hence “structure evolves”
STRATEGY THEN TENDS TO FOLLOW
ARGUABLY - THEY TEND TO PROCEED IN
UNISON!
? BETTER THAT STRATEGY COMES FIRST
FOLLOWED BY STRUCTURE e.g. Sony uses
this practice.

17. STRUCTURE & STRATEGY
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OR ARE THEY MORE CLOSELY
INTERRELATED i.e. structure needs to be
considered while strategy is being developed
IN THIS MODEL THEN THEY MAY BE
CLOSELY INTERDEPENDANT
MODERN, FLEXIBLE, PRO ACTIVE &
DYNAMIC ORG’s TEND TO FOLLOW THIS
FORM i.e. the structure influences the strategy
and vice versa. ORG’s THAT

18. RELEVANCE OF
RESOURCE AUDIT RESOURCES
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LAND
RAW MATERIALS
LABOUR
CAPITAL
ENTREPRENEUR
INFORMATION & KNOWLEDGE

19. THE RELEVANCE OF THE
RESOURCE AUDIT
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RESOURCES – the means by which the
business generates value
VALUE IS THEN DISTRIBUTED TO
STAKEHOLDERS:
SHAREHOLDERS – higher divi’s, appreciating
share value
WORKERS – improved working conditions
and higher pay
CONSUMERS – lower prices, higher quality,
improved service

20. THE RELEVANCE OF THE
RESOURCE AUDIT
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OTHER STAKEHOLDERS – suppliers, local
community, national community, global
community
REMEMBER - RESOURCES CAN ALSO
PROVIDE SUSTAINABLE COMPETITIVE
ADVANTAGE (SCA) e.g. via highly skilled
staff

21. RESOURCE AUDIT – WHY?
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TO IDENTIFY
THOSE RESOURCES THAT DELIVER SCA
& VALUE ADDED & THOSE THAT DON’T
UNDERUTILISED RESOURCES AND
THOSE THAT ARE NOT NEEDED
RESOURCE GAPS
SKILLS GAPS
OPPORTUNITIES FOR RATIONALISATION
& UNIT COST CUTTING

22. ANALYSIS OF PAST
PERFORMANCE
THE MEASURES USED TO
ASSESS BUSINESS
PERFORMANCE & THE NEED
FOR ANALYSIS

23. PAST PERFORMANCE
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CAN REFER TO PERFORMANCE
FROM KEY STAKEHOLDER
PERSPECTIVE
i.e. shareholders, financiers,
consumers, workers
WIDER PERFORMANCE
i.e. local community/economy, national
and international community/economy

24. PERFORMANCE – key
stakeholders
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FINANCIAL MEASURES
PROFIT & SALES
LIQUIDITY RATIOS
GEARING
PROFITABILITY
INVESTOR RATIOS
TRADING ACTIVITY
UNIT COST
VALUE ADDED
SHARE VALUE

25. PERFORMANCE – key
stakeholders
NON FINANCIAL MEASURES

26. PERFORMANCE – key
stakeholders
NON FINANCIAL MEASURES
•MARKET SHARE
•PRODUCT PORTFOLIO
•QUALITY
•SERVICE
•PRODUCTIVITY
•R & D ACTIVITY

27. PERFORMANCE – key
stakeholders
NON FINANCIAL MEASURES
•MARKET SHARE
•EMPLOYEE BENEFITS
•PRODUCT PORTFOLIO•GROWTH
•QUALITY
•MERGERS/TAKEOVERS
•CUSTOMER SERVICE •BENCHMARKING
•PRODUCTIVITY
•OUTSOURCING
•R & D ACTIVITY
•RATIONALISATION

28. THE NEED FOR ANALYSIS
ASK QUESTIONS & PROVIDE ANSWERS
 HAVE PERFORMANCE MEASURES
CHANGED
 HOW MUCH
 WHY HAVE THEY CHANGED
 HOW HAS THE BUSINESS BEEN
AFFECTED
 WHO HAS BENEFITTED
 WHO HAS SUFFERED

29. WIDER PERFORMANCE
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POLLUTION
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CONGESTION
IMPACT ON
ENVIRONMENT
CHOICE, PRICE
& QUALITY
CONCENTRATIO
N OF POWER
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ETHICAL
BEHAVIOUR
TAX
EMPLOYMENT
SOCIAL
RESPONSIBILTY
ECONOMIC
IMPACT