Organization Capability Analysis in Program Management

Instructor: Elizabeth Wamicha

Elizabeth teaches undergraduate courses in Business and Information Technology for the last 7 years. She is currently on course to completing a Doctorate in Information Systems

Is your company ready for a big change? In this lesson, learn the various evaluation techniques organization use to analyze their readiness, or if implemented programs are well aligned with their strategic plan.

What is Organizational Capability?

Pretend Food Silver is a food processing company based in North America that grows and sells organic food. They have recently decided to expand their business to South America and they plan to do this by implementing several projects in their expansion program.

However, the CEO wants to be sure they are making the right strategic decision as a company to go ahead with this expansion. They have therefore hired David, an experienced program manager to carry out an extensive capability analysis to establish if Food Silver:

  • can align this expansion program with their strategic plans
  • is ready to exploit the opportunities available in the South American market
  • will be able to manage and control the potential threats

In the ever-changing global environment, many organizations want to successfully exploit opportunities in the external environment while maintaining control of the threats. To make big changes though, they should make sure they assess these objectives, with attention to priority, feasibility, readiness, and alignment.

A capability analysis is an assessment of a company's ability to reach a certain goal and focuses on strategic development. How best can Food Silver's strategy fit in with a changing environment?

At the same time, Food Silver needs to look inward at their own strengths and weaknesses. In many cases, an organization's internal capabilities can help it perform well in a new environment by providing it with some competitive edge. The next two sections looks further at two popular methods used in carrying out a capability analysis.

Resource Based View Method

The Resource Based View (RBV) method is used in capability analysis to identify and analyze the resources accessible to the organization. RBV categorizes resources into three main types: assets, capabilities, and competencies.

The idea is that all organizations have assets that, when combined with the right capabilities and competencies, can actually aid an organization carry out its strategy.

1. Assets - factors of production that companies use to produce valuable products and services.

Assets can be tangible or intangible. Tangible assets are physical resources that are available to an organization such as production machines. Intangible assets do not have any physical presence, but are still useful to an organization. Food Silver has a positive reputation among its customers, which helps their business overall.

2. Capabilities - being able to use assets well.

In most cases, in order for an organization to make maximum use of its assets, it is important for it to have the right capabilities. Here Food Silver would have to establish if the right infrastructure exists to begin operations in the South American market.

3. Competencies - the ability to implement strategic plans.

Does the organization have the skills required to effectively implement the necessary program and related projects? In this case one question that Food Silver can ask themselves is if they will have skilled staff in South America who will be able to effectively use the food production machinery and communicate with local staff.

Critical Success Factor (CSF) Method

The Critical Success Factor Method (CSF) takes into account the factors that will make an organization successful in a competitive environment. It's another method that David can use to establish the capability of Food Silver to implement its expansion program to South America. Once these factors are identified, an organization should work hard to constantly improve on them if they wish to succeed. The two main critical success factor categories are:

1. Competitive position - the way in which a particular company has placed itself with respect to other players in the industry.

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