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Chapter 4 -- Internal Analysis: Resources, Capabilities, Competencies, and Competitive Advantage

Chapter 4 -- Internal Analysis: Resources, Capabilities, Competencies, and Competitive Advantage. Text by Charles W. L. Hill Gareth R. Jones. Multimedia Slides by Milton M. Pressley Univ. of New Orleans. Preview. Competitive Advantage Generic Building Blocks of Competitive Advantage

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Chapter 4 -- Internal Analysis: Resources, Capabilities, Competencies, and Competitive Advantage

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  1. Chapter 4 -- Internal Analysis: Resources, Capabilities, Competencies, and Competitive Advantage Text by Charles W. L. Hill Gareth R. Jones Multimedia Slides by Milton M. Pressley Univ. of New Orleans

  2. Preview • Competitive Advantage • Generic Building Blocks of Competitive Advantage • Business Functions and the Value Chain • Distinctive Competencies, Resources, and Capabilities • Durability of Competitive Advantage • Why Do Companies Fail? • Avoiding Failure and Sustaining Competitive Advantage

  3. Competitive Advantage: Value Creation, Low Cost, and Differentiation • Competitive Advantage • Sustained Competitive Advantage

  4. 1994 Figure 4.1: PC Firms: Return on Capital Employed Relative to Industry Means

  5. V-P V P-C V=Value to Consumer P=Price C=Costs of Production V-P=Consumer Surplus P-C=Profit Margin P C C Figure 4.2: Value Creation

  6. Figure 4.3: Generic Building Blocks of Competitive Advantage • Competitive • Advantage: • Low Cost • Differentiation Superior Efficiency

  7. Figure 4.3: Generic Building Blocks of Competitive Advantage Superior Quality • Competitive • Advantage: • Low Cost • Differentiation Superior Efficiency

  8. Increased Reliability Increased Quality Increased Productivity Figure 4.4: The Impact of Quality on Profits

  9. Increased Reliability Higher Prices Increased Quality Increased Productivity Lower Costs Figure 4.4: The Impact of Quality on Profits

  10. Increased Reliability Higher Prices Increased Quality Higher Profits Increased Productivity Lower Costs Figure 4.4: The Impact of Quality on Profits

  11. Superior Quality • Competitive • Advantage: • Low Cost • Differentiation Superior Efficiency Superior Innovation Figure 4.3: Generic Building Blocks of Competitive Advantage (Continued)

  12. Superior Quality • Competitive • Advantage: • Low Cost • Differentiation Superior Efficiency Superior CustomerResponsiveness Superior Innovation Figure 4.3: Generic Building Blocks of Competitive Advantage (Continued)

  13. Efficiency Lower Unit Costs Figure 4.5: Summary of the Impact of Efficiency, Quality, Innovation, and Customer Responsiveness on Unit Costs and Prices

  14. Efficiency Lower Unit Costs Quality Higher Unit Prices Figure 4.5: Summary of the Impact of Efficiency, Quality, Innovation, and Customer Responsiveness on Unit Costs and Prices

  15. Efficiency Lower Unit Costs Quality Higher Unit Prices Customer Responsiveness Figure 4.5: Summary of the Impact of Efficiency, Quality, Innovation, and Customer Responsiveness on Unit Costs and Prices

  16. Efficiency Lower Unit Costs Innovation Quality Higher Unit Prices Customer Responsiveness Figure 4.5: Summary of the Impact of Efficiency, Quality, Innovation, and Customer Responsiveness on Unit Costs and Prices

  17. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Research and Development Inputs Outputs Primary Activities

  18. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Research and Development Produc- tion Inputs Outputs Primary Activities

  19. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Research and Development Marketing and Sales Produc- tion Inputs Outputs Primary Activities

  20. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Research and Development Marketing and Sales Produc- tion Inputs Service Outputs Primary Activities

  21. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Materials Management Support Activities Research and Development Marketing and Sales Produc- tion Inputs Service Outputs Primary Activities

  22. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Human Resources Materials Management Support Activities Research and Development Marketing and Sales Produc- tion Inputs Service Outputs Primary Activities

  23. Business Functions, The Value Chain, and Value Creation Figure 4.6: The Value Chain Company Infra-Structure Human Resources Materials Management Support Activities Research and Development Marketing and Sales Produc- tion Inputs Service Outputs Primary Activities

  24. CEO Corporate Headquarters Staff Business Functions, The Value Chain, and Value Creation • Cross Functional Goals* *More Detail in Chapter 11

  25. Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage DistinctiveCompetencies

  26. Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage Resources DistinctiveCompetencies

  27. Resources Are: Tangible Land Buildings Plant Equipment Intangible Brand Names Reputation Patents Technical or Marketing Know-How Distinctive Competencies, Resources, and Capabilities

  28. Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage Resources DistinctiveCompetencies Capabilities

  29. Resources • Superior • Efficiency • Quality • Innovation • Customer Respon- siveness DistinctiveCompetencies Capabilities Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage

  30. Resources Differentia-tion • Superior • Efficiency • Quality • Innovation • Customer Respon- siveness DistinctiveCompetencies Low Cost Capabilities Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage

  31. Resources Differentia-tion • Superior • Efficiency • Quality • Innovation • Customer Respon- siveness DistinctiveCompetencies Value Creation Low Cost Capabilities Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage

  32. Resources Differentia-tion • Superior • Efficiency • Quality • Innovation • Customer Respon- siveness DistinctiveCompetencies Value Creation Higher Profits Low Cost Capabilities Distinctive Competencies, Resources, and Capabilities Figure 4.7: The Roots of Competitive Advantage

  33. Distinctive Competencies, Resources, and Capabilities (Continued) • Strategy and Competitive Advantage Figure 4.8: The Relationship Between Strategies Shape Resources & Capabilities (Competencies) Strategies Build

  34. Distinctive Competencies, Resources, and Capabilities (Continued) • The Role of Luck

  35. The Durability of Competitive Advantage • Barriers to Imitation • Imitating Resources • Imitating Capabilities • Capability of Competitors • Strategic Commitment • Industry Dynamism

  36. Why Do Companies Fail? • Inertia

  37. Why Do Companies Fail? • Inertia • Prior Strategic Commitments

  38. Why Do Companies Fail? • The Icarus Paradox

  39. Avoiding Failure and Sustaining Competitive Advantage • Focus on the Building Blocks of Competitive Advantage • Institute Continuous Improvement and Learning • Track Best Industrial Practice and Use Benchmarking • Overcome Inertia

  40. Competitive Advantage Generic Building Blocks of Competitive Advantage Business Functions and the Value Chain Distinctive Competencies, Resources, and Capabilities Durability of Competitive Advantage Why Do Companies Fail? Avoiding Failure and Sustaining Competitive Advantage Chapter Summary Copyright 1998 by Houghton Mifflin Company. All rights reserved.

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