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The Internal Environment: Analyzing organizational strengths and weaknesses

The Internal Environment: Analyzing organizational strengths and weaknesses. Resource based view of the firm: firms are viewed as bundles of productive resources. Basic assumptions:. resource heterogeneity. resource immobility. Resource categories. Resource categories.

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The Internal Environment: Analyzing organizational strengths and weaknesses

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  1. The Internal Environment: Analyzing organizational strengths and weaknesses • Resource based view of the firm: firms are viewed as bundles of productive resources. • Basic assumptions: • resource heterogeneity • resource immobility

  2. Resource categories

  3. Resource categories

  4. Capabilities: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective. • Core competenciesare the essence of what makes an organization unique in its ability to provide value to customers.

  5. (4) And the firm must be organized to exploit the full competitive potential of its resources and capabilities. • For a strategic capability to be a Core Competency, it must be: (1) valuable (2) rare (3) costly to Imitate and non-substitutable

  6. The Question of Value Do a firm’s resources and capabilities enable the firm to respond to environmental threats or opportunities? • The question of robust: do the resources retain their value in a changing environment?

  7. The Question of Rareness How many competing firms already possess particular valuable resources and capabilities?

  8. The Question of Imitability Critical resources are accumulated rather than being acquired on a market because they are nontradeable • Are competencies lost when employees leave? What Criteria Make Core Competencies Costly to Imitate?

  9. The Question of Organization • Complementary resources • Is the firm organized to exploit the full competitive potential of its resources and capabilities.

  10. Outcomes from Combinations of the Criteria for Sustainable Competitive Advantage

  11. Some sources of competitive advantages

  12. Developing Competencies that resist imitation Characteristics of resource accumulation process

  13. Building competencies that withstand change Creating competencies that are difficult to duplicate • Soliciting middle managers’ feedback on environmental events and trends • Knowledge retention and storage • Low turnover

  14. Limitations of VRIO

  15. Dynamic capabilities • the firm’s ability to renew competencies in changing environments. • the firm’s processes that integrate, build, and reconfigure internal and external competencies to address rapidly changing environments. • capability that operate to extend, modify or create ordinary capabilities, if we define ordinary or zero-level capabilities as those that permit a firm to ‘make a living’ in the short term

  16. Examples of dynamic capabilities • Dynamic capabilities that integrate resources: • Dynamic capabilities that focus on reconfigure resources within firms • Dynamic capabilities related to the gain and release of resources:

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