chapter 3
Download
Skip this Video
Download Presentation
Chapter 3

Loading in 2 Seconds...

play fullscreen
1 / 44

Chapter 3 - PowerPoint PPT Presentation


  • 168 Views
  • Uploaded on

Chapter 3. Examining the Internal Environment: Resources, Capabilities and Activities. Profitability in the U.S. Retailing Industry, 1996-2001. Why Internal Analysis?. Early strategy theory rooted in industry structural analysis - external focus This approach has lost its appeal because:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Chapter 3' - eldon


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
chapter 3

Chapter 3

Examining the Internal Environment: Resources, Capabilities and Activities

why internal analysis
Why Internal Analysis?
  • Early strategy theory rooted in industry structural analysis - external focus
  • This approach has lost its appeal because:
    • internationalization & deregulation has all but removed safe havens
    • technology and changes in demand have blurred industry lines
evaluation of resources
Evaluation of Resources

Strength or Weakness

  • relative to competitors
  • basic business requirements
  • key vulnerabilities
slide10
Tangible

Resources

Org.

Capabilities

Inputs into Outputs

Intangible

Resources

  • Examples…..
  • Customer Service
  • Product Development
  • Employee Productivity
core competencies
Core Competencies
  • central to the firm’s competitiveness
  • rewarded in market place
  • combination of skills & knowledge, not products or functions
  • flexible, long term platforms
  • embedded in the organization’s systems
  • distinctive competencies are those the firm performs better than rivals
  • All core competencies have the potential to become core rigidities
slide17
Supporting and nurturing more than four core competencies may prevent a firm from developing the focus needed to fully exploit its competencies in the marketplace
tools for building core competencies
Tools for Building Core Competencies
  • Four Criteria of Sustainable Competitive Advantage
  • Value Chain Analysis
sustainable competitive advantage
Sustainable Competitive Advantage

Must be valuable, rare, inimitable, and non-substitutable, exploitable

Sustainability is a function of

  • Durability - how long will it last?
    • Technology? Reputation? Fixed Assets?
  • Imitability - how quickly can it be copied?
    • Transparent - easy to see?
    • Transferable - can it be done elsewhere?
    • Replicable - can we do it here?
factors that limit imitation
Factors that Limit Imitation
  • Physical Uniqueness – location, patents
  • Path Dependency – accumulation effect
  • Causal Ambiguity – unable to disentangle
  • Social Complexity – social interactions are not readily understood nor duplicated
  • Absorptive Capacity – ability to identify, value, assimilate and use knowledge
creating value
Creating Value
  • Key Terms
    • Value – measured by a product's performance characteristics and by its attributes for which customers are willing to pay
what are some of detroit s problem
What are some of Detroit’s Problem?
  • America’s largest purchaser of Viagra – GM
  • GM Pension Plans
  • Salaried Pension Plan
    • 116,000 Salaried Retirees and Survivors receiving payments in the plan – $2.5B in 08 
  • Hourly Pension Plan
    • 377,000 Retirees and Survivors receiving payments in the plan – $6.5B in 08
relative costs and prices
Relative costs and prices

Where do cost/price differences come from?

  • raw materials and components
  • differences in technology, plant, equipment
  • efficiencies, learning, experience, wages, productivity
  • marketing, sales, promotion, warehousing, distribution, administration costs
  • distribution
  • inflation, exchange and tax rates
porter s value chain
Porter’s Value Chain

Views the organization as a series (chain) of activities, which may or may not create value

porter s value chain cont
Porter’s Value Chain (cont.)
  • Primary Activities
    • Inbound logistics – Supply Chain Management
    • Operations
    • Outbound logistics - Distribution
    • Marketing and sales
    • After-sales service
  • Contribute to the physical creation of the product/service, its sale and transfer to the buyer, and its service after the sale
porter s value chain cont1
Porter’s Value Chain (cont)
  • Support Activities
    • Procurement
    • Technological development
    • Human resource management
    • Firm infrastructure
slide32
The Value Chain

S

u

p

p

o

r

t

Firm Infrastructure

HRM

Technological Development

Margin

Procurement

Service

Marketing

& Sales

Inbound

Logistics

Outbound

Logistics

Operations

Margin

Primary

slide33
A low cost strategy…..

Firm Infrastructure

HRM

Technological Development

Margin

Procurement

Service

Marketing

& Sales

Inbound

Logistics

Outbound

Logistics

Operations

Margin

…tries to pull the arrow back…..

slide34
Low Cost - Support Activity examples…...

Fewer layers of management

Policies to reduce turnover

IBM Printer - 150 to 62 parts, 3.5 minutes

Margin

Monitor supplier performance

Service

Marketing

& Sales

Inbound

Logistics

Outbound

Logistics

Operations

Margin

low cost primary activity examples
Low cost - Primary Activity examples….
  • Inbound - Toyota
  • Operations - Subway
  • Outbound - Campbell Soup’ Continuous Replenishment
  • Marketing/Sales - WalMart
  • Customer Service - Federal Express
slide36
A differentiation strategy…..

Firm Infrastructure

HRM

Technological Development

Margin

Procurement

Service

Marketing

& Sales

Inbound

Logistics

Outbound

Logistics

Operations

Margin

….tries to pull the arrow forward...

slide37
Differentiation - Support Activity examples…...

Commitment to quality

Compensation rewarding innovation

Amazon Recommendations

Margin

Purchasing high-quality components

Service

Marketing

& Sales

Inbound

Logistics

Outbound

Logistics

Operations

Margin

differentiation primary activity examples
Differentiation - Primary Activity examples…...
  • Inbound - Dell
  • Operations - Marriott
  • Outbound - WebVan
  • Market/Sales - Nordstrom’s
  • Customer Service - Pirtek
slide39
Your Firm

Buyers

Suppliers

Your Rivals

slide40
Your Firm

Opportunities for

Advantage

Buyers

Suppliers

Your Rivals

slide41
Your Firm

Opportunities for

Adding Value

Opportunities for

Adding Value

Buyers

Suppliers

Your Rivals

outsourcing
Outsourcing
  • Key Terms
    • Outsourcing – purchase of a value-creating activity from an external supplier
outsourcing viability
Outsourcing Viability
  • When a firm does not have the capabilities in the areas needed to succeed
  • When a firm lacks a resource or possesses inadequate skills needed to implement a strategy
  • When few organizations possess the resources and capabilities needed for competitive superiority in all primary and support activities necessary to compete
  • When extensive internal capabilities exist for effectively coordinating external sourcing and internal core competencies
benefits of outsourcing
Benefits of Outsourcing
  • Increased flexibility
  • Mitigation of risks
  • Reduced capital investments
ad