Presentation Transcript

1. Chapter 3

   Examining the Internal Environment: Resources, Capabilities and Activities
2. Profitability in the U.S. Retailing Industry, 1996-2001
3. 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
4. Components of Internal Analysis Leading to Competitive Advantage and Value Creation
5. Tangible Resources
6. Intangible Resources
7. Evaluation of Resources Strength or Weakness relative to competitors basic business requirements key vulnerabilities
8. Tangible Resources Org. Capabilities Inputs into Outputs Intangible Resources Examples….. Customer Service Product Development Employee Productivity
9. Examples of Firm’s Capabilities
10. 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
11. Sony
12. 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
13. Tools for Building Core Competencies Four Criteria of Sustainable Competitive Advantage Value Chain Analysis
14. 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?
15. 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
16. Outcomes from Combinations of the Criteria for Sustainable Competitive Advantage
17. Creating Value Key Terms Value – measured by a product's performance characteristics and by its attributes for which customers are willing to pay
18. Value Creation per Unit
19. Comparing Toyota and General Motors
20. 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
21. 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
22. Porter’s Value Chain Views the organization as a series (chain) of activities, which may or may not create value
23. 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
24. Porter’s Value Chain (cont) Support Activities Procurement Technological development Human resource management Firm infrastructure
25. The Value-Creating Potential of Support Activities
26. 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
27. 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…..
28. 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
29. Low cost - Primary Activity examples…. Inbound - Toyota Operations - Subway Outbound - Campbell Soup’ Continuous Replenishment Marketing/Sales - WalMart Customer Service - Federal Express
30. 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...
31. 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
32. Differentiation - Primary Activity examples…... Inbound - Dell Operations - Marriott Outbound - WebVan Market/Sales - Nordstrom’s Customer Service - Pirtek
33. Your Firm Buyers Suppliers Your Rivals
34. Your Firm Opportunities for Advantage Buyers Suppliers Your Rivals
35. Your Firm Opportunities for Adding Value Opportunities for Adding Value Buyers Suppliers Your Rivals
36. Outsourcing Key Terms Outsourcing – purchase of a value-creating activity from an external supplier
37. 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
38. Benefits of Outsourcing Increased flexibility Mitigation of risks Reduced capital investments