Strategic Management. Internal Organizations

Front 1

List tangible resources

Back 1

1. FINANCIALRESOURCES - thefirm’s capacity to borrow and generate internal funds

2. ORGANIZATIONALRESOURCES - formalreporting structures

3. PHYSICALRESOURCES - sophisticationand location of a firm’s plant and equipment; distribution facilities; productinventory

4. TECHNOLOGICALRESOURCES - stockof technology, such as patents, trademarks, copyrights, and trade secrets

Front 2

List intangible resources

Back 2

1. HUMAN RESOURCES - knowledge;trust; skills; collaborative abilities

2. INNOVATIONRESOURCES -scientific capabilities; capacity to innovate

3. REPUTATIONALRESOURCES - brandname; perceptions of product quality, durability, and reliability; positivereputation with stakeholders, e.g., suppliers/customers

Front 3

Name 2 tools firms use to identify and build core competencies

Back 3

1. Four specific criteria of Sustainable Competitive Advantagethat can be used to determine which capabilities are corecompetencies

2. Value Chain Analysis - this tool helps select the value-creating competencies that shouldbe maintained, upgraded, or developed and those that should be outsourced

Front 4

The Four Criteria of Sustainable Competitive Advantage

Back 4

Capabilities must fulfillfour specific criteria in order to be CORE COMPETENCIES:

1. Valuable

2. Rare

3. Costly-to-imitate

4. Non-substitutable

Front 5

Valuable capabilities

Back 5

Help a firm neutralizethreats or exploit opportunities

Front 6

Rare capabilities

Back 6

Are not possessed by manyothers

Front 7

Costly-to-imitate capabilities

Back 7

1. Historical: A unique and avaluable organizational culture orbrand name

2. Ambiguous cause: The causes and uses of acompetence are unclear

3. Social complexity: Interpersonalrelationships, trust, and friendship among managers, suppliers, and customers

Front 8

Non-substitutable capabilities

Back 8

1. No strategicequivalent

2. Firm-specific knowledge

3. Organizational culture

4. Superior executionof the chosen business model

Front 9

When does sustainable competitive advantage exist?

Back 9

1.Exists only when competitors cannot duplicate a firm’s strategy orwhen they lack the resources to attempt imitation

2.Exists until competitors can successfully imitate a good, service,or process

3.Lasts for a relatively long period of time if all four of the criteria discussed aresatisfied

Front 10

Competitive consequences

Back 10

Focus on capabilities thatyield competitive parity and either temporary or sustainable competitiveadvantage

Front 11

Performance implications

Back 11

Parity = average returns

Temporaryadvantage = average to above average returns

Sustainableadvantage = above average returns using valuable, rare, costly-to-imitate,and nonsubstitutable capabilities

Front 12

Why do firms use Value Chain Analysis?

Back 12

•Understand their cost position

•Facilitate the implementation of a chosen business-level strategy

Front 13

Name the main requirements of the Value Chain Analysis

Back 13

- Both value chain (primary) andsupport activities should be analyzed

- Competitive landscape demands thatvalue chains and supply chains be examined in a global context

- Each activity should be examinedrelative to competitor’s abilities and rated as superior, equivalent, orinferior

Front 14

Under which circumstances the capability can become a core competence and a source of competitive advantage

Back 14

1. to perform an activity in amanner that provides superior value relative to competitors, or 2.to perform a value-creating activity that competitors cannot perform

Front 15

Value chain activities

Back 15

Activities the firm completes inorder to produce products and then sell, distribute, and service those productsin ways that create value for customers

Front 16

Support functions

Back 16

Activities the firm completes inorder to support the work being done to produce, sell, distribute, and servicethe products the firm is producing

Front 17

List Support Functions

Back 17

1. Finance

2. Human Resources

3. Management Information System

Front 18

List Value Chain Activities

Back 18

1. Supply-Chain Management

2. Operations

3. Distribution

4. Marketing (Including Sales)

5. Follow-Up Service

Front 19

Outsourcing

Back 19

Purchase of a value-creatingactivity or support function from an external supplier

Front 20

Name the strategic rationals of the outsourcing

Back 20

1. Few organizations arecompetitively superior in all valuechain activities and support functions

2. By outsourcing activities where it lackscompetence, the firm can fully concentrate on those areas in which it cancreate value

3. Freeing resources for other purposesredirects efforts from non-coreactivities toward those that serve customers more effectively

4. Specialty suppliers can perform outsourced capabilities moreefficiently.

5. Sharing risks - reduces investment requirements and makes firm more flexible,dynamic, and better able to adapt to changing opportunities

6. Providing access to world-class standards –the specialized resources ofoutsourcing providers makes world-class capabilities available to firms

Front 21

The main rule of the outsourcing

Back 21

Outsourcethose value chain activities and support functions that are NOT a source ofcore competence

Front 22

Conclusion:

How an internal organization influence a company?

Back 22

It answers the question: What a firm can do?

It helps to determine company's resources, capabilities and core competencies

Front 23

Conclusion:

How an external environment influence a company?

Back 23

It answers the question: What a firm might do?

It helps to determine function ofopportunities in the firm’s external environment