Session 8. Internal Analysis. Session Topics. Resource-Based View of the Firm Three Basic Resources What Makes a Resource Valuable? Using the Resource-Based View in Internal Analysis SWOT Analysis The Functional Approach Value Chain Analysis
Be consistent with conditions in the competitive environment
Place realistic requirements on the firm’s resources
Firms differ in fundamental ways because each firm possesses a unique “bundle” of resources - tangible and intangible assets and organizational capabilities to make use of those assets.
1. Competitive superiority:Does the resource help fulfill a customer’s need better than those of firm’s competitors?
2. Resource scarcity:Is the resource in short supply?
3. Inimitability:Is the resource easily copied or acquired?
4. Appropriability:Who actually gets the profit created by a resource?
5. Durability:How rapidly will the resource depreciate?
6. Substitutability:Are other alternatives available?
Based on assumption an effective strategy derives from a sound “fit” between a firm’s internal resources and its external situation
A major favorable situation in a firm’s environment
A major unfavorable situation in a firm’s environment
A resource advantage relative to competitors and the needs of markets firm serves
A limitation or deficiency in one or more resources or competencies relative to competitors
Cell 3: Supports a turnaround-oriented strategy
Cell 1: Supports an aggressive strategy
Critical internal weaknesses
Substantial internal strengths
Cell 4: Supports a defensive strategy
Cell 2: Supports a diversification strategy
Major environmental threatsSWOT Analysis Diagram
Human resource management
Research, technology, and systems development
Primary ActivitiesThe Value Chain
Perspectives to use in evaluating how a firm stacks up based on its internal capabilitiesInternal Analysis: Making Meaningful Comparisons
1. Comparison with past performance
2. Stages of industry evolution
3. Benchmarking - Comparison with competitors
4. Comparison with success factors in the industry