Instructor: Doan Van Ha

Email: hadv@hvnh.edu.vn
Tel: 098 688 8371
§ Reading: Five Guys case study

§ Check: https://www.fiveguys.com/
§ Watch: The Founder (2016)
§ Understand the significance of the internal environment and core competencies for
the strategies of multinational firms
§ Distinguish between the positioning perspective and the resource-based
perspective (RBP)
§ Understand The VRIO frame work

§ Conduct a value chain and value system analysis

§ The Positioning Perspective suggests that the business opportunity should
be the starting point for developing successful strategies
§ Use Five-force model
§ Use Strategic Group
§ PEST
§ The Resource-Based Perspective suggests that unique firm resources
should be the starting point for developing successful strategie
§ SWOT analysis
§ generate insights from
external and internal analysis
and derive strategic
implications. THREATS
WEAKNESS

§ allows a strategic leader to

evaluate a firm’s current
situation and future prospects
by simultaneously STRENGTH OPPORTUNIE
considering internal and S
external factors.
§ Core competencies
§ Developed by Hamel and Prahalad in
1990
§ The combination of individual
technologies and production skills that
underline a company's multiple
production lines and critically underpin
the firm’s competitive advantage
§ Core competencies- The tree metaphor
§ Core competencies
§ Capacities
§ Organizational and managerial skills necessary to orchestrate a diverse
set of resources and deploy them strategically.
§ are complex bundles of skills and collective learning, exercised through
organizational processes, that ensure superior coordination of functional
activities

§ E.g Company’s structure, routines, and culture

§ Resources
§ Resources are any assets such as cash,
buildings, machinery, or intellectual Resources
property that a firm can draw on when
crafting and executing a strategy.
§ Intangible: Having no physical attributes
and thus invisible Capabilities
§ Tangible: having physical attributes
visible
§ Resource includes any assets as well as any
capabilities and competencies that a firm Core
competences
can draw upon when formulating and
implementing strategy.
§ VRIO framework
§ is the tool used to analyze firm’s internal resources and capabilities to
find out if they can be a source of sustained competitive advantage.
§ To be the basis of a competitive advantage, a resource must be:

VALUABLE

RARE
COSTLY TO
IMITATE
EXPLORED BY
ORGANIZATION
§ The question of value (V)
§ Do a firm’s resources and capabilities enable it to respond to
environmental threats or opportunities?
§ The question of rareness (R)
§ How may rival firms already possess particular valuable resources and
capabilities?
§ The question of imitability (I)
§ Do firms without a resource or capability face a cost disadvantage in
obtaining it compared to firms that already possess it?
§ The question of organization (O)
§ Is a firm organized to exploit the full competitive potential of its resources
and capabilities?
§ Value added
§ Managers must understand the economic value of the different activities that a
firm performs.
§ The difference between the market value of the output of an organization and the
cost of its inputs.
§ The value chain

§ idea that a company is a chain of activities for transforming inputs into

outputs that customers value
§ Internal activities a firm engages in when transforming inputs into outputs
§ Each activity adds incremental value.
§ Each activity also adds incremental costs.
§ Value chain analysis
§ Depicts the main activities inside the firm and aims to reveal the relative value added
among the different parts of the firm’s operations
§ Value chain analysis
§ Primary activities:
§ Deals with activities needed to create or delivery a product or serices
§ Firm activities add value directly.
§ Value chain analysis
§ Support activities:
§ that either add value by themselves or add value through important
relationships with both primary activities and other support activities
§ Firm activities that add value indirectly.
§ Value chain in sector
§ Where is he Exxon Mobile?
§ Value system
§ a firm is part of wider system of creating value, which involve the value chain of
customers, suppliers, and distributor
§ it is the extension of value chain concept to inter-firm relationship
§ Internal Factor Evaluation (EFE) is strategy tool used to examine
firm’s internal environment and to reveal its strengths as well as
weaknesses
§ Understanding the factors used in the IFE Matrix is more important
than the actual weights and ratings assigned.
§ Assign a weight to each factor increase in relation to importance: 1

§ Assign a rating to each factor: 1 (little response), 2 (respond below average), ; 3

response above average; 4 very good response.
§ Multiply the weight by the rating and add all the weighed scores

Total weighted score of 4.0

÷ Organization response is outstanding to …..

Total weighted score of 1.0

• Firm’s strategies not capitalizing on

A value of 2.95 or is an indicator that a

firm has compact internal strength
§ Baking Academy is about to develop the strategy in new
context and your are in the team responsible for this task.
Build the IFE and give your ideas.
§ END OF CHAPTER 3