Edinburgh Business School MBA AUC Academic Partner Strategic Planning Module 6 - Part 1 Internal Analysis of the Company Instructor: Moataz Darwish, MBA Contents 6.1 Opportunity Cost 6/3 6.2 Fixed Costs, Variable Costs and Sunk Costs 6/4 6.3 Marginal Analysis 6/5 6.4 Diminishing Marginal Product 6/8 6.5 Profit Maximisation 6/10 6.6 Estimating Production Costs 6/10 6.7 Accounting Techniques: Break Even, Payback and Sensitivity 6/13 6.8 Accounting Ratios 6/17 6.9 Benchmarking 6/22 6.10 Research and Development 6/23 6.11 Human Resource Management 6/29 6.12 The Scope of the Company 6/31 6.13 The Value Chain 6/40 6.14 Competence 6/43 6.15 Strategic Architecture 6/49 6.16 Strategic Advantage Profile 6/54 EBS MBA / AUC 2 Fixed Costs, Variable Costs and Sunk Costs Estimating Production Costs Accounting Ratios Opportunity Cost Marginal Analysis Diminishing Marginal Product Profit Maximization Accounting Techniques: Sensitivity Analysis Break-Even Analysis Payback Period Research and Development: Research and Innovation Development Benchmarking EBS MBA / AUC The Scope of the Company Economies of scale Economies of scope Diversification Synergy Vertical Integration Module 6 Value Chain Competence Strategic Architecture Human Resource Management Types of cultures 3 The Model EBS MBA / AUC 4 Introduction Using analytical tools from different disciplines to: to assess the effectiveness with which resources have been allocated in the past, identify the sources of competitive advantage estimate the strengths and weaknesses of the company EBS MBA / AUC 5 Opportunity Cost Constraints on the resources requires choice amongst alternatives. The best alternative forgone is the opportunity cost of the action chosen. EX. The opportunity cost, in purely financial terms, of spending $1 million on marketing is to reduce prices because this is the next best alternative; since these two options have a similar level of risk they can be compared directly. He