chapter04 the Inernal envirnment resources, capabilities, competencies and copetitive advantage

1、PART 1: PART 1: Strategic Strategic InputsInputsChapter 3The Internal Environment: Resources, Capabilities, Competencies, And Competitive AdvantagesIRELAND | HOSKISSON | HITTTHE MANAGEMENT OF STRATEGYCONCEPTS AND CASES 10EThe Strategic Management ProcessThe Strategic Management Process Explain why f

2、irms need to study and understand their internal organization. Define value and discuss its importance. Describe the differences between tangible and intangible resources. Define capabilities and discuss their development. Describe four criteria used to determine whether resources and capabilities a

3、re core competencies. Knowledge ObjectivesKnowledge Objectives Explain how firms analyze their value chain for the purpose of determining where they are able to create value when using their resources, capabilities, and core competencies. Define outsourcing and discuss reasons for its use. Discuss t

4、he importance of identifying internal strengths and weaknesses. Discuss the importance of avoiding core rigidities. Knowledge ObjectivesKnowledge ObjectivesDiscussionResources of SWUFE-TF Opening CaseOpening CaseSubway Restaurants: Core Competencies As The Foundation For Success 1965: Subway opened

5、its first shop Current portfolio of almost 35,000 units located in 98 countries More store locations than McDonalds Subways focus on “Eat Fresh,” high-quality foods, continuous training, customer service, and “non-traditional” store locations illustrate Subways core competencies and the foundation f

6、or competitive advantage, underscoring key chapter concepts External Analyses Outcomes External Analyses Outcomes By studying the external environment, firms By studying the external environment, firms identify what they identify what they MIGHT CHOOSE TO DOMIGHT CHOOSE TO DO Internal Analyses Outco

7、mes Internal Analyses Outcomes By studying the internal environment, By studying the internal environment, firms identify what they firms identify what they CAN DOCAN DOWhat a firm can do:What a firm can do: Function of resources, capabilities, and core competenciesInternal Internal OrganizationOrga

8、nizationWhat a firm might do:What a firm might do: Function of opportunities in the firms external environmentExternal External EnvironmentEnvironmentMATCHESMATCHESStrategic Competitiveness And Above-Strategic Competitiveness And Above-average Returns Result When:average Returns Result When:2013 Cen

9、gage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Competitive AdvantageCompetitive Advantage Key Poi

10、nts Key Points No Competitive Advantage Lasts Forever Over Time, Rivals Use Their Own Unique Resources, Capabilities, And Core Competencies To Duplicate The Focal Firms Ability To Create Value For Customers With Globalization, Sustainable Competitive Advantage Is Especially ChallengingCompetitive Ad

11、vantageCompetitive Advantage Key Points Key Points Firms must exploit their current advantages while simultaneously using their resources and capabilities to form new advantages that can lead to future competitive success Innovation and People are critical resources for organizations in their quest

12、for competitive advantage Competitive AdvantageCompetitive Advantage Sustainability SustainabilitySustainability of a competitive Sustainability of a competitive advantage is a function of:advantage is a function of: The rate of core competence obsolescence due to environmental changes The availabil

13、ity of substitutes for the core competence The imitability of the core competenceAnalyzing The Internal Analyzing The Internal OrganizationOrganization The Context of Internal The Context of Internal Analysis Analysis Global EconomyGlobal EconomyTraditional sources of advantages can be overcome by c

14、ompetitors international strategies and by the flow of resources throughout the global economyGlobal MindGlobal Minds setetThe ability to study an internal environment in ways that are not dependent on the assumptions of a single country, culture, or contextAnalysis OutcomeAnalysis OutcomeUnderstand

15、ing how to leverage the firms bundle of heterogeneous resources and capabilitiesCompetitive AdvantageCompetitive AdvantageComponents of Internal Analysis Leading to Competitive Advantage and Strategic Competitiveness FIGURE 3.1 Components of an Internal AnalysisAnalyzing The Internal Analyzing The I

16、nternal OrganizationOrganization By innovatively bundling and leveraging their resources and capabilities; by exploiting their core competencies or competitive advantages, firms create value. Product performance characteristics Product attributes for which customers are willing to paySuperior value

17、Superior value Creating Value Creating Value Value is measured by:Value is measured by:Above-average Above-average returnsreturnsAnalyzing The Internal Analyzing The Internal OrganizationOrganization Strategic decisions Are non-routine Have ethical implications Significantly influence the firms abil

18、ity to earn above-average returnsStrategic leaders make effective decisions regarding the firms resources, capabilities, and core competencies and decide on their use The Challenge of Analyzing The Challenge of Analyzing the Internal Organization the Internal Organization Analyzing The Internal Anal

19、yzing The Internal OrganizationOrganization Managers face uncertainty on many fronts Proprietary technologies Changes in economic and political trends, societal values and shifts in customer demands Environment increasing complexity Intraorganizational conflict Results from decisions about core comp

20、etencies and how to develop them The Challenge of Analyzing The Challenge of Analyzing the Internal Organization the Internal Organization Analyzing The Internal Analyzing The Internal OrganizationOrganization FIGURE 3.2 Conditions Affecting Managerial Decisions About Resources, Capabilities, and Co

21、re CompetencesAnalyzing The Internal Analyzing The Internal OrganizationOrganization Learning Generated by making and correcting mistakes; can be important in creating new capabilities and core competenciesJudgment is required under these conditions Decision makers often take intelligent risks With

22、good judgment, successful strategic leaders achieve strategic competitiveness The Challenge of Analyzing The Challenge of Analyzing the Internal Organization the Internal Organization Resources, Capabilities, And Core Resources, Capabilities, And Core CompetenciesCompetencies Resources Resources and

23、 superior and superior capabilities that are sources capabilities that are sources of competitive advantage over of competitive advantage over a firms rivalsa firms rivalsAn integrated and coordinated An integrated and coordinated set of actions taken to exploit set of actions taken to exploit core

24、competencies and gain core competencies and gain competitive advantagecompetitive advantageProviding value to customers Providing value to customers and gaining competitive and gaining competitive advantage by exploiting core advantage by exploiting core competencies in individual competencies in in

25、dividual product marketsproduct marketsResources, Capabilities, And Core Resources, Capabilities, And Core CompetenciesCompetencies ResourcesResourcesAre the source of a firms capabilitiesAre broad in scopeCover a spectrum of individual, social, and organizational phenomenaRepresent inputs into a fi

26、rms production processAlone, do not yield a competitive advantage, i.e., by themselves do not allow firms to create value that results in above-average returnsResources, Capabilities, And Core Resources, Capabilities, And Core CompetenciesCompetencies Types Of ResourcesTypes Of ResourcesTangible Tan

27、gible ResourcesResourcesAssets that can be seen, touched, and quantifiedIntangible ResourcesIntangible ResourcesAssets rooted deeply in the firms history, accumulated over timeIn comparison to tangible resources, usually cant be seen or touched Compared to tangible resources, intangible resources Co

28、mpared to tangible resources, intangible resources are a superior source of core competenciesare a superior source of core competenciesResources, Capabilities And, Core Resources, Capabilities And, Core CompetenciesCompetencies Types Of ResourcesTypes Of ResourcesTangible ResourcesFINANCIAL RESOURCE

29、S - the firms capacity to borrow and generate internal fundsORGANIZATIONAL RESOURCES - formal reporting structures PHYSICAL RESOURCES - sophistication and location of a firms plant and equipment; distribution facilities; product inventoryTECHNOLOGICAL RESOURCES - stock of technology, such as patents

30、, trademarks, copyrights, and trade secretsResources, Capabilities And, Core Resources, Capabilities And, Core CompetenciesCompetencies Types Of ResourcesTypes Of Resources Intangible ResourcesHUMAN RESOURCES - knowledge; trust; skills; collaborative abilitiesINNOVATION RESOURCES - scientific capabi

31、lities; capacity to innovateREPUTATIONAL RESOURCES - brand name; perceptions of product quality, durability, and reliability; positive reputation with stakeholders, e.g., suppliers/customersResources, Capabilities, And Core Resources, Capabilities, And Core CompetenciesCompetencies CapabilitiesCapab

32、ilities Emerge over time through complex interactions among tangible and intangible resources Stem from employees Unique skills and knowledge Functional expertise Are activities that a firm performs exceptionally well relative to rivals Are activities through which the firm adds unique value to its

33、goods or services over an extended period of timeResources, Capabilities, And Core Resources, Capabilities, And Core CompetenciesCompetencies Capabilities Capabilities (contd)(contd) Exist when resources have been purposely integrated to achieve a specific task or set of tasks Are often developed in

34、 specific functional areasDistributionHuman resourcesManagement information systemsMarketingManagementManufacturingResearch & DevelopmentResources, Capabilities And, Core Resources, Capabilities And, Core CompetenciesCompetencies TABLE 3.3 Examples of Firms CapabilitiesBuilding Core Competencies

35、Building Core Competencies Two Tools Firms Use To Identify And Build Core Competencies: Four Specific Criteria Four Specific Criteria of Sustainable Competitive Advantage that can be used to determine which capabilities are core competencies Value Chain Analysis - Value Chain Analysis - this tool he

36、lps select the value-creating competencies that should be maintained, upgraded, or developed and those that should be outsourcedBuilding Core CompetenciesBuilding Core Competencies The Four Criteria of Sustainable The Four Criteria of Sustainable Competitive AdvantageCompetitive AdvantageCapabilitie

37、s must fulfill four specific criteria in order to be CORE COMPETENCIES 1. Valuable2. Rare3. Costly-to-imitate4. Nonsubstitutable capabilities Building Core CompetenciesBuilding Core Competencies The Four Criteria of Sustainable The Four Criteria of Sustainable Competitive AdvantageCompetitive Advant

38、age Valuable CapabilitiesValuable Capabilities Help a firm neutralize threats or exploit opportunities Rare CapabilitiesRare Capabilities Are not possessed by many others TABLE 3.4 The Four Criteria of Sustainable Competitive AdvantageBuilding Core CompetenciesBuilding Core Competencies The Four Cri

39、teria of Sustainable The Four Criteria of Sustainable Competitive AdvantageCompetitive Advantage Costly-to-imitate CapabilitiesCostly-to-imitate Capabilities Historical: A unique and a valuable organizational culture or brand name Ambiguous cause: The causes and uses of a competence are unclear Soci

40、al complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers TABLE 3.4 The Four Criteria of Sustainable Competitive AdvantageBuilding Core CompetenciesBuilding Core Competencies The Four Criteria of Sustainable The Four Criteria of Sustainable Competitiv

41、e AdvantageCompetitive AdvantageNonsubstitutable CapabilitiesNonsubstitutable Capabilities No strategic equivalent Firm-specific knowledge Organizational culture Superior execution of the chosen business model TABLE 3.4 The Four Criteria of Sustainable Competitive AdvantageBuilding Core Competencies

42、Building Core Competencies The Four Criteria of Sustainable The Four Criteria of Sustainable Competitive AdvantageCompetitive Advantage Sustainable Competitive Advantage1. Exists only when competitors cannot duplicate a firms strategy or when they lack the resources to attempt imitation 2. Exists un

43、til 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 are satisfied Building Core CompetenciesBuilding Core Competencies The Four Criteria of Sustainable The Four Criteria of Sustainable Competitive Ad

44、vantageCompetitive Advantage Competitive ConsequencesFocus on capabilities that yield competitive parity and either temporary or sustainable competitive advantagePerformance ImplicationsParity = average returnsTemporary advantage = average to above average returnsSustainable advantage = above averag

45、e returns using valuable, rare, costly-to-imitate, and nonsubstitutable capabilities BUILDING CORE COMPETENCIESBUILDING CORE COMPETENCIESTABLE 3.5 Outcomes from Combinations of the Criteria for Sustainable Competitive AdvantageBuilding Core CompetenciesBuilding Core Competencies Value Chain Analysis

46、Value Chain Analysis Allows the firm to understand the parts of its operations that create value and those that do not A template that firms use to: Understand their cost position Facilitate the implementation of a chosen business-level strategy BUILDING CORE COMPETENCIESBUILDING CORE COMPETENCIES V

47、alue Chain AnalysisValue Chain Analysis Both value chain (primary) and support activities should be analyzedCompetitive landscape demands that value chains and supply chains be examined in a global contextEach activity should be examined relative to competitors abilities and rated as superior, equiv

48、alent, or inferiorBuilding Core CompetenciesBuilding Core Competencies Value Chain AnalysisValue Chain Analysis To become a core competence and a source of competitive advantage, a capability must allow the firm:1. to perform an activity in a manner that provides superior value relative to competito

49、rs, or 2. to perform a value-creating activity that competitors cannot perform Building Core CompetenciesBuilding Core Competencies Value Chain AnalysisValue Chain Analysis Value Chain Activities:Value Chain Activities: activities the firm completes in order to produce products and then sell, distri

50、bute, and service those products in ways that create value for customers Support Functions:Support Functions: activities the firm completes in order to support the work being done to produce, sell, distribute, and service the products the firm is producingBuilding Core CompetenciesBuilding Core Comp

51、etencies FIGURE 3.3 A Model of the Value ChainBuilding Core CompetenciesBuilding Core Competencies VALUE CHAIN ANALYSISVALUE CHAIN ANALYSIS FIGURE 3.4 Creating Value through Value Chain ActivitiesBuilding Core CompetenciesBuilding Core Competencies FIGURE 3.5 Creating Value through Support Functions

52、Building Core CompetenciesBuilding Core Competencies Value Chain AnalysisValue Chain Analysis Social Capital - when firms have strong positive alliances with suppliers and customersTrust - is required to build social capital whereby resources such as knowledge are transferred across organizations Ju

53、dgment - pivotal in evaluating a firms capability to execute its value chain activities and support functions OutsourcingOutsourcing Definition: purchase of a value-creating activity or support function from an external supplierEffective execution includes an increase in flexibility and risk mitigat

54、ion, and a reduction in capital investmentGlobal industries trend continues at a rapid paceFirms must outsource activities where they cannot create value or are at a substantial disadvantage compared to competitorsOutsourcingOutsourcing Strategic Rationales Few organizations are competitively superi

55、or in all value chain activities and support functions By outsourcing activities where it lacks competence, the firm can fully concentrate on those areas in which it can create value Freeing resources for other purposesredirects efforts from non-core activities toward those that serve customers more

56、 effectively.OutsourcingOutsourcing Strategic Rationales Specialty suppliers can perform outsourced capabilities more efficiently. Sharing risks - reduces investment requirements and makes firm more flexible, dynamic, and better able to adapt to changing opportunities Providing access to world-class standards the specialized resources of outsourcing providers makes world-class capabilities available to firms.OutsourcingOutsourcing Outsource those value chain activities and support functions that are NOT a source of core co