STRATEGIC MANAGEMENT (20MBA25)

MODULE 3
INTERNAL ANALYSIS

Describe Strategic Vision, Mission, Goals, Long Term Objectives, Short-Term Objectives
and Discuss Their Value to the Strategic Management Process, Resources, Capabilities,
Competencies, Resource Based View of the firm (RBV), Balanced Score Card, SWOC
Analysis, Value Chain Analysis, Benchmarking. Case Study on internal analysis.

STRATEGIC INTENT

Strategic Intent can be understood as the philosophical base of the strategic management
process. It implies the purpose, which an organization endeavor of achieving. It is a statement,
that provides a perspective of the means, which will lead the organization, reach the vision in
the long run.
According to Gary Hamel and [Link], “Strategic intent is the reason of existence of
an organization and the end it wants to achieve.”
Strategic intent gives an idea of what the organization desires to attain in future. It answers the
question what the organization strives or stands for? It indicates the long-term market position,
which the organization desires to create or occupy and the opportunity for exploring new
possibilities.
It shows the beliefs and values of an organization.

STRATEGIC VISION
A vision statement can be referred as the statement defining company’s long term goals. An
organization’s vision statement clarifies the significant primary goals to be achieved, but does
not highlight the plan to accomplish these goals.

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According to Oren Harari, “Vision should describe a set of ideals and priorities, a picture of
the future, a sense of what makes the company special and unique, a core set of principles that
the company stands for and a broad set of compelling criteria that will help to define
organizational success”.
A strategic vision describes management’s aspirations for the company’s future and the course
and direction charted to achieve them.

Features of vision
• Requires careful thinking
• Helps in selecting target market
• Decides the long tern objectives and focus
• Future oriented

Developing strategic vision

The following steps are used in developing a strategic vision:
• Understanding the organisation
• Conduct an audit
• Narrow down the vision
• Set-up the context for vision statement
• Create new future scenarios
• Formulate alternative vision statements
• Select the final vision statement

STRATEGIC MISSION
A mission statement refers to the corporate reasons for the existence of an organization.
Mission statement does not outline the outcomes. It has no time frame or measurement
associated with it.
According to Hunger and Wheelen, ”Mission is the purpose or reason for organization’s
existence”.
According to Thompson, “Mission is the essential purpose of the organization, concerning
particularly why it is in existence, the nature of the business (es) it is in and the customers it
seeks to serve and satisfy”.
A mission statement describes the enterprise’s present business and purpose—“who we are,
what we do, and why we are here.” It is purely descriptive.

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Ideally, a company mission statement (1) identifies the company’s products and/or services,
(2) specifies the buyer needs that the company seeks to satisfy and the customer groups or
markets that it serves, and (3) gives the company its own identity

Features of mission
• Feasibility
• Precise
• Clarity
• Encouraging
• Uniqueness
• Indication of strategy
• Should specify the ways to achieve objectives

Developing strategic mission

Strategic mission statement is developed using the following steps:
• Key decision-maker’s policy
• Visionary long-term concept (Vission statement)
• Organisational mission

Difference b/w vision & mission

Parameter of Comparison Vision Vision

A statement indicating the

The ultimate goal to be
Meaning activities to be pursued for
achieved
accomplishing a goal

In simple words how to Where are we heading

How will we reach there?
describe? towards?

To inspire and hope to the To provide guidance or

Main Purpose people to contribute towards roadmap for achieving the
attaining the goal goal

Helps understand why they Help recognize what exactly

Benefit to employees
are doing a particular task are they doing

The company understands The company recognizes

Benefit to organization what it wants to achieve in what it should do in the
future present

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Yes, it can change as per

Whether it can change or is Ideally will remain constant, changing circumstances or
flexible? changes will be minimal on the client perception but
will relate to the main goal

Whether it is focussed on Future i.e. focussed on

Present i.e. focussed on today
the present or future? tomorrow

Example of how a Where does the company What does the company need
statement can look like or intend to go in the future? By to perform today? For whom
how it can be designed when? should the company serve?

The mission of LinkedIn is-

The vision of LinkedIn is-
“The mission of LinkedIn is
“Create economic
Example of a real simple: connect the world’s
opportunity for every
statement of a company professionals to make them
member of the global
more productive and
workforce”
successful”

Vision comes first as it

Whether vision comes first The mission comes after
guides the overall structure
or mission? vision
for mission

Long timeline because it Short timeline because it can

Timeline focuses on achieving the be changed as per prevailing
final goal circumstances

Scope Wide Narrow

GOALS
Organizational goals refer to the ideal situations to be achieved in undefined time-duration in
future. These goals direct the daily activities and decisions. However, goals do not essentially
lead to the quantifiable outcomes. These statements are related to the vision and mission
statements.
Goals can be followed for day to day operational activities and decisions, not necessarily tied
up with quantifiable results.
According to King and Cleland, “Goal is to establish a venereal tone or organizational culture;
to serve as a focal point for those who can identify with the organization purpose and direction
and to defer those who cannot, from participating in the organization’s activities; to facilitate
the translation of the broad purposes and mission into identifiable tasks and their assignment
to responsible groups within the organization and to help in allocating organizational
resources”.

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Features of goals
• Specific
• Realistic and Challenging
• Time constraint
• Measurable
• Level-Oriented goals
• Commitment

Types of goals
• Official Goals: Official goals are the common objectives of the organisation. These
goals validate the activities of the organisation and stabilize the organisation in its
environment.
• Operative Goals: Operative goals indicate the actual targets that an organisation
wishes to achieve. These can be considered as the operating policies.
• Operational Goals: These goals are set by the middle level managers for supervising
or controlling the subordinates.

OBJECTIVES
Objectives are the specified targets to be achieved in a stipulated period of time. These
objectives help the managers in evaluating performances of the employees in term of quality
and quantity.
Objectives answer the questions like- what to achieve, how much to achieve, when to achieve,
how to achieve and who must achieve it.
Objectives also provide measures for evaluating the final performance of employees.
According to Robert L. Trewatha and M. Gene Newport, ”Objectives may be defined as the
targets people seek to achieve over various time periods”.

Features of objectives
• Multiple objectives
• Priority based
• Based on time period
• Flexibility
• Precise and Measurable
• Connectivity among Objectives

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Classification of objectives
• Primary objectives: They are concerned with fulfilling the needs of primary
stakeholders and consumers like maximizing profit, increasing market share etc.,
• Secondary objectives: Also called tactical objectives, they are set to perform the daily
operations smoothly.
• Short term objectives: These objectives are set to achieve short-term targets. They are
set for upto one year. Various short term objectives are, Financial objectives, employee
objectives, production objectives and sales objectives. The short term objectives can be
used for increasing the sales, reducing the labour turnover etc.,
• Medium term objectives: These objectives have broader perspectives and are set for
the period of 18 months to five years.
• Long term objectives: These objectives are broad and inspiring in nature. They are set
for more than 5 years. For example, diversifying the business, acquiring or merging a
new business, global expansion of business, etc.,
• Financial objectives: The objectives are associated with monetary benefits.
• Non financial objectives: These objectives are not associated with monetary benefits.
• Strategic objectives: These objectives are those aims that are formulated to bring
major changes in response to the changes, competition and issues in the environment.

Difference b/w goals & objectives

Parameter of
Objective Goal
Comparison
Scope – Narrow Scope – Broad
Plan of action
Target – Specific Target – General
Usually, a smaller period
Period compared with the goal’s The goal has a longer period.
duration
Not as easy as compared to the
Measurement Easily measurable
objectives
Objectives are facts that
Principle Goals are based on ideas
obtained to achieve goals
The objective is the steps taken The goal is a destination decided to
Function
to achieve a goal. reach. It is an achievement.

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FRAMEWORK FOR INTERNAL APPRAISAL

RESOURCES
A resource is a productive input or competitive asset that is owned or controlled by the firm.
Firms have many different types of resources at their disposal that vary not only in kind but in
quality as well. Some are of a higher quality than others, and some are more competitively
valuable, having greater potential to give a firm a competitive advantage over its rivals.

Types of Company Resources

A useful way to identify a company’s resources is to look for them within categories. Broadly
speaking, resources can be divided into two main categories: tangible and intangible resources.

1. Tangible resources: Tangible resources are the most easily identified, since tangible
resources are those that can be touched or quantified readily.
• Physical resources: land and real estate; manufacturing plants, equipment,
and/or distribution facilities; the locations of stores, plants, or distribution
centers, including the overall pattern of their physical locations; ownership of
or access rights to natural resources (such as mineral deposits).
• Financial resources: cash and cash equivalents; marketable securities; other
financial assets such as a company’s credit rating and borrowing capacity.
• Technological assets: patents, copyrights, production technology, innovation
technologies, technological processes.

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• Organizational resources: IT and communication systems (satellites, servers,

workstations, etc.); other planning, coordination, and control systems; the
company’s organizational design and reporting structure.
2. Intangible resources: Intangible resources are harder to recognize/identify, but they
are often among the most important of a firm’s competitive assets.
• Human assets and intellectual capital: the education, experience, knowledge,
and talent of the workforce, cumulative learning, and tacit knowledge of
employees; collective learning embedded in the organization, the intellectual
capital and know-how of specialized teams and work groups; the knowledge of
key personnel concerning important business functions; managerial talent and
leadership skill; the creativity and innovativeness of certain personnel.
• Brands, company image, and reputational assets: brand names, trademarks,
product or company image, buyer loyalty and goodwill; company reputation for
quality, service, and reliability; reputation with suppliers and partners for fair
dealing.
• Relationships: alliances, joint ventures, or partnerships that provide access to
technologies, specialized know-how, or geographic markets; networks of
dealers or distributors; the trust established with various partners.
• Company culture and incentive system: the norms of behavior, business
principles, and ingrained beliefs within the company; the attachment of
personnel to the company’s ideals; the compensation system and the motivation
level of company personnel.

CAPABILITIES
A capability (or competence) is the capacity of a firm to perform some internal activity
competently. Capabilities or competences also vary in form, quality, and competitive
importance, with some being more competitively valuable than others.
Capabilities exist when resources have been purposely integrated to achieve a specific task or
set of tasks. These tasks range from human resource selection to product marketing and
research and development activities. Critical to the building of competitive advantages,
capabilities are often based on developing, carrying, and exchanging information and
knowledge through the firm’s human capital.

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Examples of Firms’ Capabilities

COMPETENCIES
Core competencies are capabilities that serve as a source of competitive advantage for a firm
over its rivals. Core competencies distinguish a company competitively and reflect its
personality. Core competencies emerge over time through an organizational process of
accumulating and learning how to deploy different resources and capabilities.
To assess a company’s competitive power, one must go beyond merely identifying its resources
and capabilities to probe its caliber. Thus, the second step in resource and capability analysis
is designed to ascertain which of a company’s resources and capabilities are competitively
superior and to what extent they can support a company’s quest for a sustainable competitive
advantage over market rivals.
If this advantage proves durable despite the best efforts of competitors to overcome it, then the
company is said to have a sustainable competitive advantage.

The Four Tests of a Resource’s Competitive Power / Four Criteria of Sustainable

Competitive Advantage:
The competitive power of a resource or capability is measured by how many of four specific
tests it can pass. These tests are referred to as the VRIN tests for sustainable competitive
advantage.
The VRIN tests for sustainable competitive advantage ask whether a resource is valuable, rare,
inimitable, and nonsubstitutable.
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 Valuable Capabilities -Help a firm neutralize threats or exploit opportunities

 Rare Capabilities -Are not possessed by many others
 Costly-to-Imitate Capabilities -
• Historical: A unique and a valuable organizational culture or brand name.
• Ambiguous cause: The causes and uses of a competence are unclear.
• Social complexity: Interpersonal relationships, trust, and friendship among
 Nonsubstitutable Capabilities -No strategic equivalentmanagers, suppliers, and
customers
Outcomes from combinations of the criteria for sustainable competitive advantage

RESOURCE BASED VIEW OF THE FIRM

The resource-based view (RBV) of the organisation is a strategy for achieving competitive
advantage that emerged during the 1980s and 1990s, following the works of academics and
businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant.
The core idea of the theory is that instead of looking at the competitive business environment
to get a niche in the market or an edge over competition and threats, the organisation should
instead look within at the resources and potential it already has available.
According to RBV, it is significantly easier to exploit new opportunities using resources and
competencies that are already available, rather than having to acquire new skills, traits or
functions for each different opportunity. These resources are the main focus of the RBV model,
with its supporters arguing that these should be prioritised within organisational strategy
development.

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Types of Resource
Within an RBV model, there are two main types of resource (assets), which will likely be
familiar to accountants and financial specialists:
• Tangible assets. These are physical things - for example, property, land, products and
capital. These are resources which can generally be bought easily on the market and
thus offer little competitive advantage, as other organisations can also acquire identical
assets quickly if they should like.
• Intangible assets. This refers to items and concepts that have no physical value but can
still claim to be owned by the organisation. This may refer to any reputation, trademarks
or intellectual property which the organisation may possess. Some of these - e.g.
reputation - are built up over a significant period of time, and is something which other
competitors or comparable organisations cannot buy on the market. These will likely
stay within the organisation and are their main source of competitive advantage.

Assumptions of RBV
There are two significant, critical assumptions of RBV - that resources must also be:
• Heterogenous. This first major assumption is that resources, skills and capabilities
must vary significantly from one organisation to another. If these organisations had the
exact same set of resources and individuals, they would not be able to employ varying
strategies in order to compete with one another, as other organisations would be able to
follow them step-by-step (known as "perfect competition").
• Immobile. The second assumption of RBV is that resources are immobile, and thus
unable to move freely from organisation to organisation (e.g. employee movement), at
least over the short-term. Due to this, organisations are unable to quickly replicate the

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resources of rival organisations and therefore implement the same strategies. Intangible
assets - knowledge, processes, intellectual property, etc. - are more likely to be 100%
immobile than are tangible assets.

VRIO Framework
Although possession of heterogeneous and immobile resources is crucial to organisational
success, it is not alone if they wish to sustain this competitive advantage.
Barney (1991) identified a framework for examining the key properties of resources and
organisations (VRIN). These criteria were altered later by other leadership thinkers, and the
new acronym VRIO was developed. This stands for:
 Valuable. Resources are valuable if they can help to increase the value of the service
or product supplied to customers or others reliant on the organisation. This can be
improved by increasing differentiation, decreasing the cost of production, or other
general modifications to improve the quality and worth of the service. Any resources
that do not meet this condition may lead to a competitive disadvantage.
 Rare. Any resources - both tangible or intangible - which can only be acquired by one
or very few organisations, may be considered rare. If organisations have the same
resources or capabilities, this can result in competitive parity.
 Low Imitability. If an organisation holds resources which are valuable or rare, they
can at least achieve a competitive advantage in the short-term. However, to sustain
this advantage the resources need to be costly to imitate or substitute, or else rivals
may begin to close the gap by obtaining the same or similar resources.
 Organised to capture value. Resources do not necessarily convey a competitive
advantage - if the organisation, its systems and its processes are not designed to exploit
the resource to its fullest, then it cannot hope to gain a competitive advantage. This
could refer to not utilising talented or knowledgeable individuals in the correct
department or role, or not fully building campaigns that utilise the organisation's
positive reputation, amongst many other examples.
Only when all of these factors are fulfilled can one gain a sustained competitive advantage, and
can innovate and get ahead in the market. The process for maximising an advantage using the
RBV should follow as such:
1. Identify the organisation's potential key resources
2. Evaluate whether the resources fulfil the VRIO criteria (using the flowchart below)

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3. Develop and nurture the resources that pass these criteria

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BALANCED SCORECARD
The Balanced Scorecard, referred to as the BSC, is a framework to implement and manage
strategy. It links a vision to strategic objectives, measures, targets, and initiatives. It balances
financial measures with performance measures and objectives related to all other parts of the
organisation. It is a business performance management tool.

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The Four Perspectives

Financial
The high-level financial objectives and financial measures of the organisation that help answer
the question – How do we look to our shareholders? Financial objectives are usually the easiest
to define and measure. However, creating a financial objective, for example, Improve Profit,
rarely provides a clue as to how to achieve the objective. by linking objectives from the lower
levels in the model, we begin to see exactly where to define projects and make investments.
Customer
Objectives and measures that are directly related to the organisation’s customers, focusing on
customer satisfaction. To answer the question: How do our customers see us? It is always
important to take a step outside and view your company or organisation from your customers
view point. You need to understand what they want from you, not necessarily, what you can
do for them.
Internal Processes
Objectives and measures that determine how well the business is running and whether the
products or services conform to what is required by the customers, in other words, what should
we be best at? Some of the biggest cost items can be reduced by streamlining internal processes.
This is also the best area to focus on new and creative ideas.
Learning and Growth (Organisatinal Capacity)
Objectives and measures concerning how well our people perform, their skills, training,
company cu lture, leadership and knowledge base. This area also includes infrastructure and
technology. Organisational Capacity tends to be the area where most investment takes place. It
answers the question: How can we improve and create value?
The real value of the Perspective approach is that it provides a framework to describe a business
strategy. It focuses on objectives and measures that both inform us about progress and allow
us to influence activities to achieve the strategy.

SWOC ANALYSIS
SWOC analysis is a strategic planning method used to research external and internal factors
which affect company success and growth. Firms use SWOC analysis to determine the
strengths, weaknesses, opportunities, and challenges of their firm, products, and competition.
SWOC analysis is relevant to SWOT analysis. SWOT examines strengths, weaknesses, and
opportunities. But it focuses on threats rather than challenges. The two are similar but they do

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have their differences, which is why firms may choose to use SWOC or SWOT.

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Strengths
Strengths are features which benefit the company, such as product sales. Strengths can also be
more abstract. If you’ve decided to build a product because you know you can offer it cheaper
than your competitor, this is an overall strength of the company. Or if you have records of
better customer service via positive reviews online, this is a strength you can use to your
advantage.
Weaknesses
The next step is noticing weaknesses. Weaknesses cause a company to struggle. For example,
if you’ve decided to target a younger audience but your packaging is still dedicated to senior
citizens, the new consumer base will struggle to connect to the product. This will show in
reports, and cause an internal struggle within the company.
Weaknesses need to be documented and acknowledged to handle them promptly before it
spreads and leads to overall destruction.
Opportunities
Opportunities are often external. They provide ways for firms to grow successfully. For
example, a digital marketing agency helps a client develop an effective email marketing
strategy. The agency has been thinking of doing graphic design so they offer a reduced fee to
re-do the existing client’s logo. This is an opportunity for the agency to develop a new section
of their business without having to devise a marketing plan because they can reach out to
existing clients.
Being open to opportunities, knowing when to look for them, and how to act on them can boost
a firm’s success. Documenting past opportunities can help create a plan on how to capitalize
future opportunities.
Challenges
The final step in SWOC analysis is acknowledging challenges. This is how SWOC and SWOT
analysis differ because SWOT analysis focuses on threats.
Challenges are similar to threats but have the chance of being overcome. Threats have the
potential to damage a firm, but challenges often already exist and need to be handled
appropriately.
This step is crucial. If you’ve already examined the strengths, weaknesses, and opportunities
but skip assessing challenges, you may be on the path to failure. Challenges can greatly
undermine any progress you’ve made, so by ignoring this step, you’ve opened yourself up to
potential failure.

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BENCHMARKING
Benchmarking is the competitive edge that allows organizations to adapt, grow, and thrive
through change. Benchmarking is the process of measuring key business metrics and practices
and comparing them—within business areas or against a competitor, industry peers, or other
companies around the world—to understand how and where the organization needs to change
in order to improve performance. There are four main types of benchmarking: internal,
external, performance, and practice.
1. Performance benchmarking involves gathering and comparing quantitative data (i.e.,
measures or key performance indicators). Performance benchmarking is usually the first step
organizations take to identify performance gaps.
What you need: Standard measures and/or KPIs and a means of extracting, collecting, and
analyzing that data.
What you get: Data that informs decision making. This form of benchmarking is usually the
first step organizations take to identify performance gaps.
2. Practice benchmarking involves gathering and comparing qualitative information about how
an activity is conducted through people, processes, and technology.
What you need: A standard approach to gather and compare qualitative information such as
process mapping.
What you get: Insight into where and how performance gaps occur and best practices that the
organization can apply to other areas.
3. Internal benchmarking compares metrics (performance benchmarking) and/or practices
(practice benchmarking) from different units, product lines, departments, programs,
geographies, etc., within the organization.
What you need: At least two areas within the organization that have shared metrics and/or
practices.
What you get: Internal benchmarking is a good starting point to understand the current standard
of business performance. Sustained internal benchmarking applies mainly to large organizations
where certain areas of the business are more efficient than others.
4. External benchmarking compares metrics and/or practices of one organization to one or
many others.
What you need: For custom benchmarking, you need one or more organizations to agree to
participate. You may also need a third party to facilitate data collection. This approach can be
highly valuable but often requires significant time and effort.

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What you get: An objective understanding of your organization’s current state, which allows you
to set baselines and goals for improvement.

Benchmarking Process
1. Select a subject to benchmark: Executives and other senior management should be involved
in deciding which processes are critical to the company’s success. The processes should then be
prioritized based on which metrics are most important to all stakeholders. After prioritizing,
select and define the measures you want to collect.
2. Decide which organizations or companies you want to benchmark: Determine if you are
going to benchmark processes within your own company, a competitor, or a company outside of
your industry.
3. Document your current processes: Map out your current processes so you can identify areas
that need improvement and more easily compare against the chosen organization.
The road to improvement starts with a better understanding of where you're at now.
4. Collect and analyze data: Gather information through research, interviews, casual
conversations with contacts from the other companies, and with formal interviews or
questionnaires. You can also collect secondary information from websites, reports, marketing
materials, and news articles. After you have collected enough data, get all stakeholders together
to analyze the data.
5. Measure your performance against the data you’ve collected: Look at the data you’ve
collected side by side with the metrics you gathered from your analysis of your own processes.
You may want to layer your performance metrics on top of your process diagrams or map out
your competitor’s processes to more easily see where you’re falling behind.
As you analyze the comparisons, try to identify what causes the gaps in your process.
6. Create a plan: Create a plan to implement changes that you have identified as being the best
to close performance gaps. Implementation requires total buy-in from the top down. Your plan
must include clearly defined goals and should be written with the company’s culture in mind to
help minimize any pushback you may get from employees.
7. Implement the changes:Closely monitor the changes and employee performance. If new
processes are not running smoothly as expected, identify areas that need to be tweaked. Make
sure all employees understand their jobs, are well trained, and have the expertise to complete
their assigned tasks.
Document all processes and make sure all employees have access to documentation and

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instructions so that all are on the same page working toward the same goal.

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8. Repeat the process: After successfully implementing a new process, it’s time to find other
ways to improve. Review the new processes you’ve implemented and see if there are any
changes that need to be made. If everything is running smoothly, look to other areas or more
ambitious projects that you may want to benchmark and start the process again.
Advantages
 Easy to understand and use.
 If done properly, it’s a low cost activity that offers huge gains.
 Brings innovative ideas to the company.
 Provides you with insight of how other companies organize their operations and
processes.
 Increases the awareness of your costs and level of performance compared to your rivals.
 Facilitates cooperation between teams, units and divisions.
Disadvantages
 You need to find a benchmarking partner.
 It is sometimes impossible to assign a metric to measure a process.
 You might need to hire a consultant.
 If your organization is not experienced at it, the initial costs could be huge.
 Managers often resist the changes that are required to improve the performance.
 Some of best practices won’t be applicable to your whole organization.

VALUE CHAIN ANALYSIS

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Value chain analysis allows the firm to understand the parts of its operations that create value
and those that do not. Understanding these issues is important because the firm earns above-
average returns only when the value it creates is greater than the costs incurred to create that
value.
The value chain is a template that firms use to understand their cost position and to identify the
multiple means that might be used to facilitate implementation of a chosen business-level
strategy. As shown in Figure, a firm’s value chain is segmented into primary and support
activities. Primary activities are involved with a product’s physical creation, its sale and
distribution to buyers, and its service after the sale. Support activities provide the assistance
necessary for the primary activities to take place.
The value chain shows how a product moves from the raw-material stage to the final customer.
For individual firms, the essential idea of the value chain is to create additional value without
incurring significant costs while doing so and to capture the value that has been created.
Primary Activities
i. Inbound Logistics: Activities, such as materials handling, warehousing, and inventory
control, used to receive, store, and disseminate inputs to a product.
ii. Operations: Activities necessary to convert the inputs provided by inbound logistics into
final product form. Machining, packaging, assembly, and equipment maintenance are
examples of operations activities.
iii. Outbound Logistics: Activities involved with collecting, storing, and physically
distributing the final product to customers. Examples of these activities include finished
goods warehousing, materials handling, and order processing.
iv. Marketing and Sales: Activities completed to provide means through which customers
can purchase products and to induce them to do so. To effectively market and sell
products, firms develop advertising and promotional campaigns, select appropriate
distribution channels, and select, develop, and support their sales force.
v. Service: Activities designed to enhance or maintain a product’s value. Firms engage in
a range of service-related activities, including installation, repair, training, and
adjustment.
Each activity should be examined relative to competitors’ abilities. Accordingly, firms rate
each activity as superior, equivalent, or inferior.

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Support Activities
i. Procurement: Activities completed to purchase the inputs needed to produce a firm’s
products. Purchased inputs include items fully consumed during the manufacture of
products (e.g., raw materials and supplies, as well as fixed assets— machinery,
laboratory equipment, office equipment, and buildings).
ii. Technological Development: Activities completed to improve a firm’s product and the
processes used to manufacture it. Technological development takes many forms, such as
process equipment, basic research and product design, and servicing procedures.
iii. Human Resource Management: Activities involved with recruiting, hiring, training,
developing, and compensating all personnel.
iv. Firm Infrastructure: Firm infrastructure includes activities such as general
management, planning, finance, accounting, legal support, and governmental relations
that are required to support the work of the entire value chain. Through its infrastructure,
the firm strives to effectively and consistently identify external opportunities and threats,
identify resources and capabilities, and support core competencies.
Each activity should be examined relative to competitors’ abilities. Accordingly, firms rate each
activity as superior, equivalent, or inferior.

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