Internal Factor Analysis Summary (IFAS) Information Technology

Presented by Nitin Khattri Amit Kumar Ashish Jha Ameya V Lakhe Manish Pandey

November 18, 2013

Agenda
Introduction to IFAS VRIO Framework IT Industry Overview Dell Inc. IFAS Apple Inc. IFAS

Agenda
Introduction to IFAS VRIO Framework IT Industry Overview Dell Inc. IFAS Apple Inc. IFAS

Objectives

How can a firm identify its strengths and weaknesses? What are firms core competencies? Can you create a sustainable competitive advantage?

Strengths and Weaknesses

Goal: Objective assessment of strengths and weaknesses to: identify, protect and deploy resources, understand capabilities and develop core competencies. Assess strengths and weakness: Relative to competitors and Important to customers.

Internal Factor Analysis Summary (IFAS) Weighted

Internal Factors
Strengths 1 Weight 2

Rating
3

Score
4

Comments 5

Weaknesses

Total Weighted Score

1.00

Notes: 1. List opportunities and threats (510 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factors probable impact on the companys strategic position. The total weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the companys response to that factor. 4. Multiply each factors weight times its rating to obtain each factors weighted score in Column 4. 5. Use Column 5 (comments) for rationale used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how well the company is responding to the strategic factors in its external environment. Source: T. L. Wheelen and J. D. Hunger, External Strategic Factors Analysis Summary (EFAS). Copyright 1991 by Wheelen and Hunger Associates. Reprinted by permission.

The Internal Environment Approaches to Organizational Analysis

Can use resource-based approach Can use value chain analysis Can use functional resource analysis

Agenda
Introduction to IFAS VRIO Framework IT Industry Overview Dell Inc. IFAS Apple Inc. IFAS

The VRIO Framework

Four Important Questions:

Is the resource Valuable? Is the resource Rare? Is the resource Imitable? Can the Organization make use of it?

Applying the VRIO Framework

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Resource Based View

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Internal Analysis

Tells us: What the firms should do, given the relative strength and weakness of resources and capabilities Managers Job: Bundle resource and Capabilities to achieve competitive advantage

VRIO Framework helps manager recognize sources of competitive advantage

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VRIO Analysis- Apple

Resource/ Capability Does it have Value? Is it Is it Is the company Rare? Inimitabl Organized to e? exploit this resource/capabil ity Yes Yes Yes Yes Yes No Yes Yes No Yes Yes Yes

The Brand Supply Chain Management Top Executives International Product Distribution

Yes Yes Yes Yes

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Agenda
Introduction to IFAS

VRIO Framework
IT Industry An overview Dell Inc. IFAS Apple Inc. IFAS

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Indian IT Industry An Overview

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Indian IT Industry - Weakness

Lower productivity levels. Higher attrition rate. Cost of telecom and network infrastructure is much higher in India than in the west. Still on the lower level of value chain. Political opposition from developed countries. Weak domestic market. Local infrastructure.

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Agenda
Introduction to IFAS

VRIO Framework
IT Industry- An Overview Dell Inc. IFAS Apple Inc. IFAS

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DELL INTRODUCTION

Dell Inc. is an American multinational corporation headquartered in Round Rock, Texas, that develops, sells, repairs and supports computers and related products and services. Dell is 3rd Largest PC vendor and #1 shipper of PC monitors in world. More than 110,000 employees worldwide More than 3,000 patents across the world Acquired PerotSystems, Credant Technologies, Gale technology etc as step to become leader in server technology and data storage sphere.

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Internal Factor Analysis Summary (IFAS): Dell Inc.

Internal Factors Strengths
Product reliability and performance Customized products where customers can decide the specifications they want on their products Direct sales model which helps the company collect constant feedback Competitive pricing

Weight 1
.15 .20 .15 .15

Rating
2
3 4 3 3

Weighted Score 3
.75 .80 .45 .45

Weaknesses
High dependence on PC products No business diversification Minimal investments in Research and Development .10 .10 .15 3 3 4 .30 .30 .60

1.00 Total Weighted Score

3.15

Dell VRIO analysis

Aspect

Value

Rarity

Imitability

Organisati on Yes

Competitive Advantage Parity

Pricing

Yes

No

Yes

Customization
Marketing Direct Sales

Yes
Yes Yes

Yes
No No

No
Yes Yes

Yes
Yes Yes

Sustained
Temporary Parity

Agenda
Introduction to IFAS

VRIO Framework
IT Industry- An Overview Dell Inc. IFAS Apple Inc. IFAS

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APPL INTRODUCTION

Apple Inc., formerly Apple Computer, Inc. is an American multinational corporation headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software and personal computers

Apple is the world's second-largest information technology company by revenue after Samsung Electronics, and the world's third-largest mobile phone maker after Samsung and Nokia

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CONTINUE

Its consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites. During the first five years of operations, revenues doubled every four months, an average growth rate of 700%. Its best-known hardware products are the Mac line of computers, the iPod music player, the iPhone smartphone, and the iPad tablet computer

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CONTINUE

As of May 2013, Apple maintains 408 retail stores in fourteen countries as well as the online Apple Store and iTunes Store, the latter of which is the world's largest music retailer. Apple is the largest publicly traded corporation in the world by market capitalization, with an estimated value of US$415 billion as of March 2013 On September 30, 2013, Apple surpassed CocaCola to become the world's most valuable brand in the Omnicom Group's "Best Global Brands" report

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IFAS MATRIX
Item Key internal factor STRENGTH
1 Apple is the most customer-focused business. They are absolutely obsessed with the customer. Customer loyalty that makes the customer price insensitive No debts means Apple can invest in other sectors Existing products are of high quality while compared to competing products in the market . It has succeeded in building an image on providing good value . 0.10 4 0.40

Weight

Rating

score

0.09

0.36

3 4

0.10

0.4

0.07

0.21

0.09

0.36

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IFAS MATRIX
Item
6

Key internal factor

Strong brand that is quite popular among the Apple customers Apple products are hard to imitate Advance team consisting of executives in to conduct intelligence on potential competitors.

Weight Rating

score

0.10

0.40

0.07

0.21

0.09

0.36

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IFAS MATRIX
Item Key internal factor WEAKNESS
1 Poor relations with other key players like Microsoft Apple is too much dependent on product launch

Weight Rating

score

0.07

0.14

0.08

0.24

Apple emphasized its high-price private label ("Value") and continued to increase price

0.08

0.18

Strong presence only limited to few countries

0.06

0.10

Total

3.36

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CONCLUSION
IFAS matrix shows the information related to strategy formulation, Apple achieved an overall of 3.36 total weighted score based on the 1-4 scale. From here we can realize that the company is successful internally.

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Thank you

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