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INTERNAL ANALYSIS. How can we assess the resource capabilities? Resource Based View Each firm has three basic kinds of resources Tangible assets Ford’s Cash Reserves 3 Ms Patents Georgia Pacific Land holdings Coca’s cola’s formula Intangible assets Nike - Brand Name Dell – Reputation
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INTERNAL ANALYSIS • How can we assess the resource capabilities? • Resource Based View • Each firm has three basic kinds of resources • Tangible assets • Ford’s Cash Reserves • 3 Ms Patents • Georgia Pacific Land holdings • Coca’s cola’s formula • Intangible assets • Nike - Brand Name • Dell – Reputation • GE- Welch’s Leadership • Organizational capabilities • Dell’s customer Service • Sony’s Product Development • 3 Ms Innovation
How resources become valuable • Competitively Superior • Walmart’s Logistics – Allowed better pricing • Resource Scarcity • OPEC’s Oil Reserves – Finite oil reserves • Appropriability • Who profits from a resource? • “Mickey Mouse does not have an agent”
How resources become valuable • Inimitability • Priceline’s pricing for air tickets • Wendy’s Drive Through • Path dependency - Steinway with Pianos • Causal ambiguity – South West Airlines • Economic Deterrence • Durability • How long will the competitive advantage last? • Patentable products – longer durabilitiy
Evaluation of resources • Disaggregate resources • Marketing • Advertising, promotion, Better Celebrities • Utilize a functional perspective • Examine different Functional Areas • Look at organizational processes • Use the Value Chain Approach • SWOT Analysis
SWOT Analysis • Strength: Resource Advantage or a Distinctive competence • Value Chains • Functional Areas • Financials • Organizational capabilities • Weakness: Resource Limitation or deficiency • Opportunities: Market or Product opportunity • Product Extensions • Market Extensions • Geographic Expansion • Diversification using existing skills, resources • Threat: Unfavorable situation in the market • Regulatory • General Environment • Industry and Operating Environment
How to use SWOT as a Technique Env. Opportunities Turnaround Strategy Aggressive Strategy Internal Strength Internal Weakness Diversification Defensive Strategy Major Threats
Value Chain Analysis • Disaggregates a business into sets of activities • Primary Activities – Inbound logistics --- Operations ----Outbound logistics ---- marketing and Sales and service • Support activities – General Administration, HRM, R&D, Systems Development • How to do a VCA • Identify key activities • Allocate costs to each activity • Identify the activities that differentiate the firm • Examine the Value Chain • Different activities may be important – industry and strategy • Importance of activities can vary based on a company position in a larger scheme of activities
Making meaningful comparisons • Comparison with past performance • Trend analysis – Where are you relative to the past. • Stages of Industry Evolution • Emergence, Growth, Maturity and Decline • Strengths or competencies needed at each stage are different • Benchmarking with the competitors • Key competitors • Best practices irrespective of industry
Stages of Product Life Cycle Emergence phase of the industry • Minimal sales growth • Rapid technological growth and uncertainty • Many companies with operating losses • Growth phase of the industry • Rapid market expansion • Need to build brands and a marketing set up • Financial resources for expansion • Maturity phase of the industry • Competition becomes more intense • Shakeout in the industry • Emphasis on cost reduction through process innovations
