Internal Environmental Scan/Organizational Assessment

Due Monday 9/23/13 at 6pm

This section provides the opportunity to develop your course project. Conducting an internal environmental scan or organizational assessment, provides the ability to put the strategy audit together.

In this module, you will conduct a comprehensive assessment of the internal environment at your business unit or organization you are working with for this project, also known as an organizational assessment, and present your findings in a report. In your report, you should analyze the operating characteristics and assets of your business unit.

The SWOT model is one of the most common business tools used during organizational assessment. Another is developing a balanced scorecard based on a prescribed or planned set of performance objectives that will be measured and evaluated regularly. In this assignment, based on the external environmental scan you conducted in previously and the internal environmental scan in this assignment, you will develop a SWOT analysis and a balanced strategic scorecard.

Part I: Internal Environmental Scan (2–3 pages)

The internal environmental scan or organizational assessment should include the following:

  • Mission, vision, and values: Assess the organization’s understanding of the mission, vision, and values, and how they relate the business strategy. Is there consensus on the mission and vision of the organization? What are the shared values of the organization? What are the behaviors espoused by these values?

  • Strategy clarification: Assess the organization’s understanding of the business strategy through the interview with a mid-level or senior manager. Assess his or her understanding and agreement of the business unit’s value proposition, market position, and competitive advantage.
  • Cultural assessment: Explain the unwritten rules and shared values that govern behaviors in the organization. Do they act as enablers or blockers to the strategy? For example, is there a culture of information sharing and collaboration that enables the organization to respond quickly across structural boundaries to solve problems for customers? On the other hand, do groups not share important information through informal mechanisms, thus slowing response times?
  • Value chain analysis: Identify the primary (direct) and support (indirect) activities that create and deliver your product or service to your customers. Assess each activity’s contribution to competitive advantage through cost or differentiation. Identify any areas where the business may be at a competitive disadvantage.
  • Summary of findings: Using these different analyses, identify the organizational strengths and weaknesses as they relate to the business strategy. Organizational strengths are assets, capabilities, and resources that contribute directly to the organization’s strategic fit, differentiation, and competitive advantage relative to competing organizations. Organizational weaknesses are characteristics and capabilities (often lacking) that place the organization at a disadvantage relative to competitors.

Part II: SWOT Analysis (1–2 pages)

Your SWOT analysis should summarize the opportunities and threats from the external environmental scan with the strengths and weaknesses from your organizational assessment or internal environmental scan.

Your output should include a matrix depicting strengths or weaknesses on the horizontal axis and opportunities or threats on the vertical axis. This matrix will reveal a set of strategy forces that can be used to assess the current strategy and identify important potential changes to the strategic direction of the company.

In creating your SWOT analysis, look for natural pairings of internal and external factors that match internal resources and capabilities to the external environment. Internal strengths and external opportunities depicted in the upper-left quadrant on your matrix might form complementary pairs that suggest necessary strategic focus for the business unit to pursue opportunities that fit its competitive strengths. Conversely, internal weaknesses and external threats shown in the lower right quadrant of the matrix may combine to illustrate the need for a defensive strategy to avoid becoming highly susceptible to competitive threats.

Your matrix should not simply be a collection of four lists compiled together in a matrix. Your analysis should combine factors and explain why specific strengths complement specific opportunities, and selected weaknesses are amplified by external threats. In addition to your matrix, provide a brief narrative that summarizes the main findings in your analysis and the implications for the current and projected strategy.

Part III: Balanced Strategic Scorecard (1–2 pages)

Use the balanced scorecard or another similar tool to recommend indicators and measurements that will tell you if the company is successful or unsuccessful in progressing toward your vision through execution of strategy.

A balanced scorecard presents organizational performance on four primary groups of measures:

  • Financial
  • Customer (external stakeholder)
  • Learning and growth
  • Internal process

You should develop a strategy scorecard that ties the performance of your business unit in these areas to its overall business strategy. The challenge you face is selecting two-to-three measures in each of the four areas that give a measurable and reliable indication of the business unit performance in the key activities that promote strategic fit, customer value, and sustained competitive advantage.

Write an 5–7-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention:

The paper should include a cover page, executive summary/abstract, table of contents, body of paper—proper headers (mission, vision, and values assessment; strategy clarification; cultural assessment; value chain analysis; summary of key findings; SWOT analysis; balanced strategic scorecard; and references).

              

Mission, vision, and values: Assess the organization’s understanding of the mission, vision, and values, and how they relate the business strategy. Is there consensus on the mission and vision of the organization? What are the shared values of the organization? What are the behaviors espoused by these values?16

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Assignment 2 Grading Criteria Maximum Points

Strategy Clarification: Assess the organization’s understanding of the business strategy through an interview with a mid-level or senior manager. Assess his or her understanding and agreement of the business unit’s value proposition, market position, and competitive advantage.

Cultural Assessment: Explain the unwritten rules and shared values that govern behaviors in the organization. Do they act as enablers or blockers to the strategy? For example, is their culture of information sharing and collaboration that enables the organization to respond quickly across structural boundaries to solve problems for customers? Or do groups not share important information through informal mechanisms, thus slowing response times?

Value Chain Analysis: Identify the primary (direct) and support (indirect) activities that create and deliver your product and/or service to your customers. Assess each activity’s contribution to competitive advantage through cost or differentiation. Identify any areas where the business may be at a competitive disadvantage.

Findings: Using these different analyses, identify the organizational strengths and weaknesses as they relate to the business strategy.

Write using ethical scholarship and proper grammar and mechanics.

Total: 100

Running head:
EXTERNAL ENVIRONMENTAL ANALYSIS

1

EXTERNAL ENVIRONMENTAL ANALYSIS-WAL-MART CORPORATION
5

External Environmental Analysis-Wal-Mart Corporation

Name

Institution

Executive summary

The paper starts by introducing the topic and explaining how it affects businesses. It proceeds with a highlight about the company’s background. It highlights issues of economic, political, regulatory and legal, societal, technological, and environmental factors and trends. The paper further addresses the issues of current external environment and uses five forces analysis by Porter (2008) on the same. The five forces highlighted include supplier power, buyer power, threats of new entrants, competitive rivalry, and threats of substitution.

Introduction

External environmental environment analysis highlights information regarding a business’s political, industry, competition, and social settings. These factors influence the business although they are out of its control. For example, when a new political party takes power and amends regulations, which may in turn require the company to spend in new assets or modify its products. Another example is the change of customer’s base due to changing demographics, trends and needs such as an aging population. Managers of businesses need to be conscious of these situations in order to take full advantage of opportunities and reduce the impact of threats.

Information gathering can be done through scanning and general surveillance to identify early signs of changes; monitoring and close consideration to particular developments; and follow actions of rivals through competitive Intelligence. There are two areas of analysis namely, general and competitive environment. General environment comprise as economic, political, regulatory and legal, societal, technological, and environmental factors and trends (Becher, 2005). On the other hand, competitive environment include Porter Five-Forces concept to rwwS8GuB determine the attractiveness of an industry, business key success factors, competitive changes in times of industrial evolution, strategic groups and national competitive advantage.

Wal-Mart Corporation is a retail store chain that is headquartered in the US and with many domestic and international stores. Its mission is to help its targeted audience to save money so they can live better. Its goal is to be an international brand while the vision entails working together to lower costs. Wal-Mart corporation target customer includes persons with modest incomes and shoppers sensitive in prices although the target base is continually changing as the environment dictates. Its main competitors include Target, Amazon, Costco, Home depot, Kroger, Staples, and Office depot among others. The company’s focus is to offer the best value to customers for the lowest price.

External environmental scan/five forces analysis

Assessment of external factors applying five forces

Michael Porter (2008), five forces tool is a primary yet dominant tool to understand where power lies in a business situation. It assists to understand existing competitive strength and possible strength of the envisioned position (Porter, 1996). Knowledge and clarity of strength in a competitive situation will help Wal-Mart to take advantage of its strength and modify weak areas.

Supplier power

This assesses the ability of Wal-Mart suppliers to drive up price. Abilities of these suppliers to influence Wal-Mart will be influenced by the number of providers on key inputs, distinctiveness of their products, and the sunk cost. The few the supplier alternatives for Wal-Mart the more the balance of power incline in favor of suppliers. The number and size of suppliers for Wal-Mart is large both domestic and internationally and provide goods for mass market. Wal-Mart has the agility and flexibility, and it can easily move from one supplier or brand to another. Its turnover is big and enjoys huge economies of scale which can easily attract any potential supplier. Its many stores provide it with an advantage in regard to appeal for potential business partners. Wal-Mart has continued to enhance introduction of private label, and this pushes power in its favor.

Buyer power

It refers to the ease for purchasers to force prices down. Factors persuading this include number of buyers, value of individual buyers, and cost to switch to others. Wal-Mart transacts with many buyers and it has a distinct value proposition. Although the price is a key factor for most Wal-Mart customers, it is attracting customers who are not entirely price sensitive but are seeking convenience and quality. Buyers are located within proximity, and who runs into millions hence their individual acts may not drastically influence the power. It is therefore clear that the balance of power lies with Wal-Mart.

Competitive rivalry

This aspect revolves around the numbers and capabilities of rivals. Target, Amazon, Costco, Home depot, Kroger, Staples, and Office depot are some of the principal competitors for Wal-Mart Corporation. These competitors offer equally attractive products and even at competitive prices. This scenario implies that customers can easily change allegiance if they do not get expected value from Wal-Mart. The move to global markets is mainly influenced by domestic competition. Wal-Mart has been received well in international markets especially Canada, and this sounds well for the company. Wal-Mart has a strong customer loyalty base in spite of the low degree of product differentiation in the industry. This in essence reduces the intensity in competition. Wal-Mart has sustained its competitiveness through innovation in products and systems as a means of reducing prices and increasing efficiency.

Threats of substitution

Online platforms, neighborhood retail shops, mom and dad stores provide alternatives options for Wal-Mart customers. Most buyers are flexible and can move to other options easily without adjustment cost or significant inconvenience. Its products are not vastly differentiated and switching information is readily available. This setting gives the balance of power skewed in favor of consumers and the industry.

Threats of new entrants

Generally, new entrants change the industry environment. High returns in an industry attract new players and accordingly affect the profitability. Existing players and industry formation can obstruct new player’s entry through patents, rights, and resource requirements. The retail industry is a high obstacle and low exit sector making it good for existing players but a challenge for new players. Wal-Mart has a strong brand name and has considerable economies of scale. New entrants will face significant challenges of access to the distribution network, sunk costs, resource requirements, faithful existing customers, small profit margins, cost disadvantages, and government policies. The current environment favors Wal-Mart.

Political factors

Refer to how and to what level an administration intervenes in the economy. This may include tax guidelines, labor regulations, tariffs, environmental law, trade restrictions, and political stability (Thompson et al, 2011). They may also entail goods and services which the administration needs or does not need. The government ensures competitive tax regimes for enterprises. There are several trade restrictions and tariffs to protect local industries. Wal-Mart imports many items from cheaper and competitive production destinations. There are strong workers unions and consumer organizations that consistently protect workers and consumers respectively. Recently trends show a move towards a sensitive population in regard to the environment. Many laws are legislated to protect the environment from landfills and other environmental hazards.

Economic factors

Comprise economic growth, exchange rates, interest rates, and the inflation rate. For example, interest rates influence a company’s cost of capital and hence growth and expansion of business. Foreign exchange rates influence the costs of exports goods and price of imported goods in an economy. Wal-Mart operations depend heavily on imports from competitive sources.

Social factors

Embrace the cultural aspects that include health awareness, population growth, age range, and emphasis on safety. Trends in social aspects shape the demand for a company’s products and services. For instance, an ageing American population may imply a smaller labor force hence increasing the cost of labor. In addition, Wal-Mart may adjust strategies in marketing to adapt to these social trends.
Technological factors

Entail environmental aspects, such as R&D functions, computerization, and technology inducements. They can influence, minimum efficient production level, systems competitiveness and persuade outsourcing decisions (Barney, 1991). Further, its changes can affect expenditures, quality, and innovation. Logistical functions at Wal-Mart heavily rely on technology.

Classification

Opportunities

· Huge potential market in Asia and other emerging economies.

· One stop shopping preference by shoppers

· Increase in liberalized economies and investment friendly destinations

· Adaption and embrace of strategic alliances such as acquisitions and integration

· Internalization of markets

· Enhancement of e-commerce

Threats

· Emerging new retail shopping concepts

· Exposed to competitions

· political challenges, cultural and practice divergences

· Intense price rivalries

· Large international competitors in global scale

· Slow economic growth

· Instabilities in some strategic markets such as in the middle East

References

Barney, J.B., (1991), Firm Resources and Sustained Competitive Advantage. Journal of

Management; 17, (1), pp.99–120

Becher, J. D. (2005). Operational alignment: Bridging the gap between strategy and

execution. Business Performance Management Magazine, 3(1), 11.

Michael E. Porter. (2008). “The Five Competitive Forces that Shape Strategy”, Harvard Business

Review, January 2008, p. 86-104

Porter, M. (1996). What is strategy? Harvard Business Review 74(6), 61–78.

Thompson, A., Peteraf, M., Gamble, J., & Strickland, A.J. (2011). Crafting and executing

strategy: The quest for competitive advantage: Concepts and cases. (18th ed.) New

York: McGraw-Hill.

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