environmental scanning internal

7/31/2019 Environmental Scanning Internal

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Resource-Based Approach

Internal strategic factors:

Critical strengths and weaknesses

that are likely to determine if the firmwill be able to take advantage of

opportunities while avoiding threats.


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A resource is an asset, competency, process,skill, or knowledge controlled by the corporation.

Barneys VRIO Framework to evaluate firms keyresources:

Value: Does it provide competitive advantage?

Rareness: Do other competitors possess it?

Imitability: Is it costly for others to imitate?

Organization: Is the firm organized to exploit theresource?


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Grants resource-based approach

to strategy analysis

1. Identify and classify the firms resources

in terms of strengths and weaknesses.

2. Combine the firms strengths into specific

capabilities.

- Core Competencies- Distinctive Competencies


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3. Appraise the profit potential of these

resources and capabilities in terms of their

potential for sustainable competitive

advantage and the ability to harvest the

profits resulting from the use of these

resources and capabilities.


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4. Select the strategy that best exploits the

firms resources and capabilities relative to

external opportunities.

5. Identify resource gaps and invest in

upgrading weaknesses.


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Determine The Sustainability of An

Advantage

Durability: rate at which a firms underlying

resources and capabilities depreciate or

become obsolete.

Imitability: rate at which a firms underlying

resources and capabilities can be

duplicated.


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Transparency: speed with which otherfirms can understand the relationship ofresources and capabilities supporting a

successful firms strategy.Example: Gillettes Sensor razor design

was very difficult to copy, because themanufacturing equipment needed toproduce it was very expensive andcomplicated.


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Transferability: the ability of competitors to

gather the resources and capabilities

necessary to support a competitive

challenge.

Example: It may be very difficult for a

wine maker to duplicate a French winerys

key resources of land and climate, if theimitator is located in India.


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Replicability: ability of competitors to useduplicated resources and capabilities to imitatethe other firms success.

Example: Wal-Marts sophisticated cross-docking

system, which provides the company asubstantial cost advantage by improving itsability to reduce shipping and handling costs.While Wal-Mart has the same resources in termsof retail space, employee skills, and equipmentas many other discount chains, it has the uniquecapability to manage its resources for maximumproductivity.


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Retail cross-dock example: Using the

cross-dock technique, Wal-Mart was able

to effectively leverage their logistical

volume into a core strategic competency.


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