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Ch3-3 How do we assemble bundles of Resources, Capabilities and Core Competencies to create VALUE for customers? Will environmental changes make our core competencies obsolete? And... Are substitutes available for our core competencies? Are our core competencies easily imitated? Key Questions for Managers in Internal Analysis Key Questions for Managers in Internal Analysis
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Ch3-1
The Internal Environment: Resources, Capabilities and
Core Competencies
Ch3-2
External EnvironmentWhat the Firm Might Do
Internal EnvironmentWhat the Firm Can Do
SustainableCompetitiveAdvantage
Ch3-3
How do we assemble bundles of Resources, Capabilities and Core Competencies to create VALUE for customers?
Will environmental changes make our core competencies obsolete?
And...
Are substitutes available for our core competencies?
Are our core competencies easily imitated?
Key Questions for Managersin Internal Analysis
Ch3-4
Conditions Affecting Managerial Decisions About Resources, Capabilities and Core Competencies
Uncertaintyregarding characteristics of the general and the industry environments, competitor’s actions, and customer’s preferences.
Complexityregarding the interrelated causes shaping a firm’s environments and perceptions of the environments
Intraorganizational Conflictsamong people making managerial decisions and those affected by them
Ch3-5
What a firm has to work with:
its assets, including its people and the value of its brand name
What a firm Has...Resources
Ch3-6
Tangible ResourcesFinancial*Physical*Human Resources*Organizational*
What a firm Has...What a firm has to work with:
its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers
Intangible ResourcesTechnological*
Innovation*
Reputation*
“Some genius invented the Oreo. We’re just living off the inheritance.”
F. Ross Johnson,Former President & CEO, RJR Nabisco
Resources
Ch3-7
What a firm Does...
Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Capabilities represent:the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Capabilities
Ch3-8
What a firm Does...that is Strategically
Valuable
“…are the essence of what makes an organization unique in its ability to provide value to customers.”
Leonard-Barton, Bowen, Clark, Holloway & Wheelwright
McKinsey & Co. recommends identifying three to four competencies to use in framing strategic actions.
Core Competencies
Ch3-9
Core Competencies must be:
NonsubstitutableCapabilities that do not have strategic equivalents, such as firm-specific knowledge or trust-based relationships
What a firm Does...that is Strategically
Valuable
Core Competencies
Valuable
Rare
Costly to ImitateCapabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Capabilities that are possessed by few, if any, current or potential competitors
Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment
Ch3-10
Core Competencies
Resources• Inputs to a firm’s
production process
Core Competence• A strategic capability
The source of Capability• Integration of a
team of resources
Does the capability satisfy the criteria of sustainable competitive advantage?
YES
NO
Capability• A nonstrategic team
of resources
Ch3-11
SupportActivities
Primary Activities
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inbo
und
Log
istic
s
Ope
ratio
ns
Out
boun
dL
ogis
tics
Mar
ketin
g &
Sal
es
Serv
ice
MARGIN
MARGIN
Value Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
Ch3-12
Resources* Tangible* Intangible
CapabilitiesTeams of Resources
Sources of
CoreCompetencies
CompetitiveAdvantage
StrategicCompetitiveness
Above-AverageReturns
CompetitiveAdvantage
Gained throughCore Competencies
DiscoveringCore
Competencies
ValueChain
Analysis
ValuableRareCostly to ImitateNonsubstitutable
****
* Outsource
Criteria ofSustainableAdvantages
Discovering Core Competencies
