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Capabilities of organization: sets of resources and processes for competitive advantage

Objective of the presentation: a) explain how concept of capabilities allows to undestand competitive successb) review path dependent nature of capabilities and dangers of lock-in

assoc. prof. Mantas VilkasKaunas University of Technology Lithuania, mantas.vilkas@ktu.lt

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The concept of capabilities

A capability is a strength of a bundle of interrelated processes for performing specific tasks

Capability – is bundle of processes, shaped by (specific) asset position, and the paths available to it

Hermetizers of oil rigs

Tried out technology and construction for packers

Investment in equipment and learning

Partnerships and confidence in oil sector

Technology for testing

Confident providers of materials and parts

Processing long metal elements by turning

Are your capabilities real?1. The test of consumer relevance: Is the capability relevant to customers

??

Are your capabilities real? 2. The test of inimitability: Is the capability hard to copy?

Unique assets

Techno-logiesIntangible assets

Causal ambiguity/ Complexity

Are your capabilities real?

2. The test of consumer relevance: Is the capability relevant to customers

3. The test of appropriability: Who captures the value that the capability creates?

4. The test of substitutability: Can a unique capability be trumped by a different capability?

Plasma - LCD - CRT

5. The test of competitive superiority: Whose capability is really better?

From competitive advantage to core rigidity

The same objectives may be achieved by various approaches Imaging -> lcd, plasma, crt, projectors pull systems -> management information systems versus pull

lean methods Decisions restrict future opportunities

Stumbras closed its distillery

Organizational paths based on capabilities

Path dependent nature of Ekranas behaviour

Formation phase

Capabilities:1. Colour kinescopes for TV’s2. Glass techn. for srceens and stacks3. Electronic optical systems

Self-reinforcing dynamics Success (appr. 25% WEurope market for small and medium

colour kinescopes; 70 % of exports; appr. 3-5 mln of kinescopes/year) because of complementary/ learning mechanisms lead to increase investment into present capabilities

Lock-in phase Ekranas efforts employed in lock-

in stage1. Flat’erization of kinescopes2. Cost reduction by economies of

scale3. Protection of European market

by antidumping tariffs

“I don’t say that we has not made mistakes. I doubt that we would achieve something more, if we would behave differently. Of course, we had to think of new technologies more early, but we had no choice. Therefore our strategy was as long as possible to be simple product manufacturing and hope that Lithuanian priorities will change” E.Žvybas, 2007 02 20 Verslo žinios”

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Questions on Capabilities of organization: sets of resources and processes for competitive advantage

Contacts:assoc. prof. Mantas VilkasKaunas University of Technology, Lithuania, mantas.vilkas@ktu.lt

CRT vs LCD tvs