Professional Documents
Culture Documents
Chap3 Internal Analysis
Chap3 Internal Analysis
Chap3 Internal Analysis
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Strategic Management Process and SM Course Flow
External
Environment Vision
Mission
Internal
Environment
Strategic
M&A Cooperativ Strategic
Internationa Entrepreneurshi
Strategie e Leadership
Strategic Outcome
l strategies p
s Strategies
Strategic
Competitiveness
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2–2
Competitive Advantage
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Competitive Advantage (cont’d)
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Analyzing the External Environment
Opportunities
and threats
Unique resources,
capabilities, and
competencies
(required for sustainable
competitive advantage)
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3–7
Creating Value
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Creating Competitive Advantage
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Resources, Capabilities
and Core Competencies
• Resources
Competitive
Advantage – Are the source of a firm’s
capabilities.
– Are broad in scope.
Core
Competencies
– Cover a spectrum of
individual, social and
Capabilities organizational
phenomena.
Resources
– Alone, do not yield a
• Tangible competitive advantage.
• Intangible
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Table 3.1 Tangible Resources: 4 types
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Table 3.2 Intangible Resources(3 types)
Human • Knowledge
Resources • Trust
• Skills
• Abilities to collaborate with others
Innovation • Ideas
Resources • Scientific capabilities
• Capacity to innovate
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Resources, Capabilities
and Core Competencies
• Capabilities
Competitive
– Represent the capacity to deploy
Advantage
resources that have been
purposely integrated to achieve a
desired end state
Core
Competencies – Emerge over time through complex
interactions among tangible and
intangible resources
Capabilities
– Often are based on developing,
carrying and exchanging
Resources information and knowledge through
• Tangible
• Intangible
the firm’s human capital
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Resources, Capabilities
and Core Competencies
• Capabilities (cont’d)
Competitive – The foundation of many
Advantage capabilities lies in:
• The unique skills and
knowledge of a firm’s
Core employees
Competencies
• The functional expertise of
those employees
Capabilities
– Capabilities are often
developed in specific
Resources functional areas or as part
• Tangible
• Intangible of a functional area (e.g.
distribution).
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Table 3.3 Examples of Firms’ Capabilities
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Resources, Capabilities
and Core Competencies
• Core Competencies
Competitive – Resources and capabilities that
Advantage
are the sources of a firm’s
competitive advantage:
Core • Distinguish a firm competitively
Competencies
and reflect its personality.
Capabilities
• Emerge over time through an
organizational process of
accumulating and learning how
Resources
• Tangible to deploy different resources
• Intangible and capabilities.
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Resources, Capabilities
and Core Competencies
Core Competencies
Competitive
Advantage
– Activities that a firm performs
especially well compared to
competitors.
Core – Activities through which the firm
Competencies
adds unique value to its goods
or services over a long period of
Capabilities
time.
Resources
• Tangible
• Intangible
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Building Core Competencies
•
– Nonsubstituable
Valuable
• Rare
• Costly to imitate
• Nonsubstitutable
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Table 3.4 The Four Criteria of Sustainable Advantage
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Outcomes from Combinations
of the Four Criteria
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Value Chain Analysis
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Value Chain Analysis (cont’d)
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Value Chain Analysis (cont’d)
• Value Chain
– Shows how a product moves from the raw-material
stage to the final customer.
• To be a source of competitive advantage, a
resource or capability must allow the firm:
– To perform an activity in a manner that is superior to
the way competitors perform it,(differently) or
– To perform a value-creating activity that competitors
cannot complete (different activities)
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Figure 3.3 A Model of the Value Chain
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Figure 3.4 Creating Value through Value Chain Activities
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Figure 3.5 Creating Value through Support Functions
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The Value-Creating Potential
of Primary Activities
• Inbound Logistics
– Activities used to receive, store, and disseminate
inputs to a product
• Operations
– Activities necessary to convert the inputs provided by
inbound logistics into final product form
• Outbound Logistics
– Activities involved with collecting, storing, and
physically distributing the product to customers
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The Value-Creating Potential
of Primary Activities (cont’d)
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The Value-Creating Potential
of Primary Activities: Support
• Procurement
– Activities completed to purchase the inputs needed to
produce a firm’s products.
• Technological Development
– Activities completed to improve a firm’s product and
the processes used to manufacture it.
• Human Resource Management
– Activities involved with recruiting, hiring, training,
developing, and compensating all personnel.
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The Value-Creating Potential of
Primary Activities: Support (cont’d)
• Firm Infrastructure
– Activities that support the work of the entire value
chain (general management, planning, finance,
accounting, legal, government relations, etc.)
• Effectively and consistently identify external opportunities
and threats
• Identify resources and capabilities
• Support core competencies
– Each activity should be examined relative to
competitor’s abilities and rated as superior, equivalent
or inferior.
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Outsourcing
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Outsourcing Decisions
Technological Development
Human Resource Mgmt.
Service
Support Activities
Firm Infrastructure
Marketing and Sales
Procurement
Outbound Logistics
Operations
Inbound Logistics
Primary Activities
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Strategic Rationales for Outsourcing
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Strategic Rationales
for Outsourcing (cont’d)
• Accelerating re-engineering benefits
– Achieves re-engineering benefits more quickly by
having outsiders—who have already achieved world-
class standards—take over process.
• Sharing risks
– Reduces investment requirements and makes firm
more flexible, dynamic and better able to adapt to
changing opportunities.
• Freeing resources for other purposes
– Redirects efforts from non-core activities toward those
that serve customers more effectively.(e.g. Airtel)
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Outsourcing Issues
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Competencies, Strengths,
Weaknesses, and Strategic Decisions
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