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
Strategy must . . .
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
Numerous environmental opportunities
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 threats
Human resource management
Research, technology, and systems development
Perspectives to use in evaluating how a firm stacks up based on its internal capabilities
1. Comparison with past performance
2. Stages of industry evolution
3. Benchmarking - Comparison with competitors
4. Comparison with success factors in the industry