Internal Analysis-Additional PPT

Amin Wibowo, Ph.D

FEB UGM
Creating Strategic Fit to Leverage Internal Strengths

4–2
Linking Resources and Capabilities to Firm Performance
EXHIBIT 4.4 Tangible and Intangible Resources

4–4
 Resource-Based View

 Stocks and Flows

 ‘the bathtub metaphor’
 Flows are transitory and can be adjusted instantaneously
 Stock as explanation for enduring advantage
 Valuable Resources
 The dynamic interplay of three fundamental market forces
 When a resource is demanded by customers (Demand)
 When it cannot be replicated by competitors (Scarcity)
 When the profits it generated are captured by firm (Appropriability)
 ‘resources are only valuable if they meet customers’ needs
better than those of their competitors (distinctive
competence).
 Competitive superiority
 Sensitive to the possibility of substitution
 Resource scarcity
 Inimitability
 Physically unique
 Path dependency
 Causal ambiguity
 Economic deterrence
 Who captures the profits created by a resource?
(distribution of profit)
 Intrinsic Properties of Resources
 ‘how much a firm has and how long the supply will last’
(capacity)
 Resource accumulate and decay at different rate (durability)
 ‘can resources be used in a variety of applications or in one
only? (specificity)
Building Blocks of Competitive Advantage
Figure 3.6

Copyright © Houghton Mifflin Company. All rights reserved. 3|9

4–10
Applying RBV: Decision Tree Competitive Implications
 The Value Chain

 Primary Activities
 Add value directly in transforming inputs into outputs
 Raw materials through production to customers
The Value Chain

General administration

Human resource management

Technology development

Procurement

 Support Activities Inbound

logistics
Operations
Outbound
logistics
Marketing
and sales
Service

 Indirectly add value Adapted from Exhibit 3.1 The Value Chain: Primary and Support Activities

 Provide support to the primary activities

Source: Adapted with permission of The Free Press, a division of Simon &
Schuster, Inc., from Competitive Advantage: Creating and Sustaining
Superior Performance by Michael E. Porter.
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. 3-4

 Information systems, human resources, accounting, etc.

 Managers can see how competitive advantage flows from

a system of activities (using activity-based accounting).

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EXHIBIT 4.6 Value Chain: Primary & Support Activities
 Strategic Coherence
The Logic of How The Business Fits Together:

 Southwest Airlines  American Airlines

 Low Price
 Short Routes
 No Frills
 Point-to-Point
 One Aircraft --
Boeing 737
 High number of
Aircraft per Route
 No Meals
 Flexible/ Lower Staffing
 Premium Price
 Short, Long, & Int’l
 Variety
 Hub & Spoke System
 Multiple Aircraft
 Low number of
Aircraft per Route
 Meals & Service
 Higher Staffing
Southwest Airline’s Activity System
No baggage
No meals transfers

Limited No
No seat
passenger connections
assignments
amenities with other
airlines

Short-haul,
point-to-point
Frequent, Limited use routes between
reliable 15-minute of travel Standardized midsize cities
departures gate agents fleet of 737 and secondary
turnarounds aircraft airports

Automatic
ticketing
Lean, highly machines
High
productive Very low
compensation
of employees ground and ticket prices
gate crews

High
Flexible High level “Southwest,
aircraft
union of employee the low-fare
stock utilization airline”
contracts
ownership

15
 How to Protect a Competitive Advantage

1. Better Expectations of Future Values

 Buy Resources at a low cost
 Real Estate Development - highway expansion

2. Path Dependence
 Current alternatives are limited by past decisions
 U.S. is the only industrial nation not on the metric system
 Honda’s core competency in gas engines took decades to build

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 How to Protect a Competitive Advantage

3. Causal Ambiguity
 Cause of success or failure are not apparent
 Why has Apple had such a string of successful products?
 Role of Steve Jobs’ vision?
 Unique talents of the Apple design team?
 Timing of product introductions?

4. Social Complexity
 Two or more systems interact creating many possibilities
 A group of 3 people has 3 relationships

 A group of 5 people has 12 relationships

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EXHIBIT 4.11 Strategic Questions in the SWOT Analysis

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