Download - Strategic management Ch 03
-
8/3/2019 Strategic management Ch 03
1/23
1
Strategic Management:Concepts and Cases
Part I: Strategic Management Inputs
Chapter 3: The Internal Organization:Resources, Capabilities, Core Competencies and
Competitive Advantages
-
8/3/2019 Strategic management Ch 03
2/23
2
The Strategic Management Process
-
8/3/2019 Strategic management Ch 03
3/23
3
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Overview: Eight content areas
Importance of understanding internal organization
Value: Definition and importance
Tangible vs intangible resources
Capabilities: Definition and development
Core competencies: Criteria (N=4)
Value Chain Analysis Outsourcing: Definition and why?
Importance of internal organization assessment
-
8/3/2019 Strategic management Ch 03
4/23
4
Innovation vs. Efficiency: 3M
Diversified technology into 6 business segments
Historically: Commitment to innovation Slogan: The Spirit of Innovation. Thats 3M.
Relied on skills of scientists and engineers Historically 1/3 annual sales from products introduced
into marketplace in most recent 5 yrs.
30-plus core technologies basis for > 55,000 products
Changing times: by mid-2007 only 25% sales earnedfrom products introduced over previous 5 yrs why?
-
8/3/2019 Strategic management Ch 03
5/23
5
Innovation vs. Efficiency: 3M (Contd)
Leadership
CEO McNerney (formerly of GE) implemented Six-
Sigma, a management technique to decrease
product defects and increase efficiency Six Sigma doesnt lend itself to creativity / innovation,
something imperative in the R&D arena
Six Sigma
Focuses on actions to define, measure, analyze,improve and control efficiency
Efficiency vs. innovation its one or the other!
New CEO Buckley a reenergization of R&D
-
8/3/2019 Strategic management Ch 03
6/23
6
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Overview: Eight content areas
Importance of understanding internal organization
Value: Definition and importance
Tangible vs intangible resources
Capabilities: Definition and development
Core competencies: Criteria (N=4)
Value Chain Analysis Outsourcing: Definition and why?
Importance of internal organization assessment
-
8/3/2019 Strategic management Ch 03
7/23
7
Analyzing the Internal Organization (IO)
Context of Internal Analysis
Creating Value
The Challenge of Analyzing the IO
-
8/3/2019 Strategic management Ch 03
8/23
8
Analyzing the Internal Organization (IO) (Contd)
Context of Internal Analysis Global mind-set
Ability to study an internal environment in ways that do not
depend on the assumptions of a single country, culture, orcontext
Analyze firms portfolio of resources and bundle
heterogeneous resources and capabilities
Understand how to leverage these bundlesAn organization's core competencies creates and sustains
its competitive advantage
Creating Value
The Challenge of Analyzing the IO
-
8/3/2019 Strategic management Ch 03
9/23
9
Components of Internal Analysis Leading to
Competitive Advantage and Strategic Competitiveness
-
8/3/2019 Strategic management Ch 03
10/23
10
Analyzing the Internal Organization (IO) (Contd)
Context of Internal Analysis
Creating Value Exploit core competencies or competitive advantage
Value: measured by a product's performancecharacteristics and by its attributes for which customers
are willing to pay
The Challenge of Analyzing the IO
-
8/3/2019 Strategic management Ch 03
11/23
11
Analyzing the Internal Organization (IO) (Contd)
Context of Internal Analysis Creating Value
The Challenge of Analyzing the IO Strategic decisions are non-routine, have ethical implications and
influence the organizations above-average returns Involves identifying, developing, deploying and protecting firms
resources, capabilites and core competencies
Managers face uncertainty on many fronts -- Proprietary technologies Changes in economic and political trends, societal values and shifts
in customer demands Environment increases complexity
Intraorganizational conflict Due to decisions about core competencies and how to nurture them
-
8/3/2019 Strategic management Ch 03
12/23
12
Conditions Affecting Managerial Decisions About
Resources, Capabilities, and Core Competencies
-
8/3/2019 Strategic management Ch 03
13/23
13
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Overview: Eight content areas
Importance of understanding internal organization
Value: Definition and importance
Tangible vs. intangible resources
Capabilities: Definition and development
Core competencies: Criteria (N=4)
Value Chain Analysis Outsourcing: Definition and why?
Importance of internal organization assessment
-
8/3/2019 Strategic management Ch 03
14/23
14
Resources, Capabilities and Core Competencies
Competitive Advantage (CA) foundation includes Resources
Bundles to created organizational capabilities
Tangible and intangible (As seen in Figure 3.1) Capabilities
Source of a firms core competencies and basis for CA
Purposely integrated to achieve a specific task/set of tasks
Core Competencies Capabilities that serve as a source of CA for a firm over its
rivals
Distinguish a company from its competitors the
personality
-
8/3/2019 Strategic management Ch 03
15/23
15
Resources, Capabilities and Core Competencies
TangibleAssets that can be seen, touched and quantified Examples include equipment, facilities, distribution
centers, formal reporting structures Four specific types
IntangibleAssets rooted deeply in the firms history, accumulated
over time In comparison to tangible resources, usually cant be
seen or touched Examples include knowledge, trusts, organizational
routines, capabilities, innovation, brand name, reputation
Three specific types
-
8/3/2019 Strategic management Ch 03
16/23
16
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Overview: Eight content areas
Importance of understanding internal organization
Value: Definition and importance
Tangible vs. intangible resources
Capabilities: Definition and development
Core competencies: Criteria (N=4)
Value Chain Analysis Outsourcing: Definition and why?
Importance of internal organization assessment
-
8/3/2019 Strategic management Ch 03
17/23
17
Building Core Competencies:
Criteria and Value Chain Analysis
Two tools firms use to identify and build on their
core competencies
Four specific criteria of Sustainable CA
Value Chain Analysis
-
8/3/2019 Strategic management Ch 03
18/23
18
Building Core Competencies:
Criteria and Value Chain Analysis
Four specific criteria of Sustainable CA Valuable
Rare
Costly-to-imitate Nonsubstitutable capabilities
Competitive consequences include Disadvantage, parity, temporary advantage and
sustainable advantage
Performance implications include returnsAbove, below or average
-
8/3/2019 Strategic management Ch 03
19/23
19
Building Core Competencies:
Criteria and Value Chain Analysis
Value Chain Analysis Primary activities
Involved with products physical creation, sales and
distribution to buyers, and service after the sale Service, marketing/sales, outbound/inbound logistics and
operations
Support activities Provide assistance necessary for the primary activities to
take place Includes firm infrastructure, HRM, technologies
development and procurement
-
8/3/2019 Strategic management Ch 03
20/23
20
The Basic Value Chain
-
8/3/2019 Strategic management Ch 03
21/23
21
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Overview: Eight content areas
Importance of understanding internal organization
Value: Definition and importance
Tangible vs. intangible resources
Capabilities: Definition and development
Core competencies: Criteria (N=4)
Value Chain Analysis Outsourcing: Definition and why?
Importance of internal organization assessment
-
8/3/2019 Strategic management Ch 03
22/23
22
Outsourcing
Definition: Purchase of a value-creating activity
from an external supplier Effective execution includes an increase in flexibility, risk
mitigation and capital investment reduction Trend continues at a rapid pace
Firms must outsource activities where they cannot create
value or are at a substantial disadvantage compared to
competitors Can cause concerns
Usually revolves around innovative ability and loss of jobs
-
8/3/2019 Strategic management Ch 03
23/23
23
Competencies, Strengths, Weaknesses
and Strategic Decisions
Firms must identify their strengths and weaknesses
Appropriate resources and capabilities needed todevelop desired strategy and create value forcustomers/other stakeholders
Tools (I.e., outsourcing) can help a firm focus on corecompetencies as the source for CA
Core competencies have potential to become corerigidities Competencies emphasized when no longer competitively
relevant can become a weakness
External environmental conditions and events impact afirms core competencies