ANALYSIS OF THE FIRM

Resources and Capabilities

Industry and Firm Analysis

Industry Opportunities

STRATEGY

Firm Resources and Capabilities

“IndustryStructure”

“FirmCapability”

-Analyze industry structure-Superior product positioning in an attractive industry

-Analyze firm resources-Develop unique resources and capabilities

HOW TO BUILDSUSTAINABLECOMPETITIVEADVANTAGE

Creating Competitive Advantage

Strategy Profit

Strategy: goal and set of policies designed to achieve competitive advantage in a particular marketplace

Competitive Advantage: ability to transform inputs into goods andservices at a maximum profit on a sustained basis, better than competitors

FirmCompetitive Advantage

ShareholderValue

Resource-based ViewAbility of Firm to compete is impacted

by strengths and weaknessesResources and CapabilitiesCore Competence defines the essential

characteristics and abilities of the company

Resources of the Firm Tangible Assets

Financial Resources Physical Assets

Intangible Resources Culture Reputation - Brand Technology

Human Resources Skills Motivation Team work - communication

CapabilitiesUnique set of ResourcesStrength relative to the competitionCapabilities - Core Competence

Core CompetenceCapabilities or Competences are the

Collective Learning in the OrganizationCross-Functional Capability to

coordinate diverse skills and integrate multiple streams of technology

Work across organizational boundariesComplex Harmonization of individual

resources and skills

Core Competence

1. Access to wide variety of markets

2. Significant contribution to perceived end-user benefits

3. Difficult to Imitate

Capability Example

Wal*Mart Store Location Distribution Technology – Information System Culture - Human Resources Style of Leadership

Capability Example

Coca-Cola Reputation – Brand Financial Strength

Capability Example

Intel First-to-Market Branding Financial Resources

Creating CapabilitiesLeverage Resources

Concentrate Accumulate Complement Conserve Recover

Appraising CapabilitiesDurabilityTransferabilityReplicability

Capabilities Analysis Identify Key Resources / Capabilities Appraise Resources and Capabilities

Assess Importance Assess Relative Strength (Benchmarking) Identify Resources / Capabilities High in

Importance and Strength

Develop Strategy Exploit Key Strengths Manage Key Weaknesses – Development

Capability DevelopmentDevelop InternallyAcquisitionStrategic AllianceSequencing

Capability Development Internal implications of new, developing

resources and capabilities Incubation

Summary

Resources

Capabilities

Potential

Strategy

1. Identify the Firm’s Resources and Capabilities

2. Explore linkages between Resources and Capabilities

3. Appraise the Firm’s Resources and Capabilities in terms of:a. Strategic importanceb. Relative Strength

4. Develop strategy implications:a. In relation to strengths – How can they be

exploited?b. In relation to weaknesses –

Develop or AcquireOutsource

Grant, Contemporary Strategy Analysis