Bus 400 Chapter 3 Internal Environment

What is internal analysis?

Looking inside a firm at what it does well or poorly.

Example: Studying its resources and skills.

What is value-chain analysis?

Studying the activities a firm uses to create value and what buyers are willing to pay for what the firm provides.

Example: Making, selling, delivering, and servicing a product

What are the five primary activities?

Primary activities are the activities directly connected to creating the product or service, selling and transferring it to the customer, and servicing it afterward

Inbound logistics, operations, outbound logistics, marketing & sales, and service.

What is inbound logistics?

Receiving, storing, and managing inputs coming into the business.

Example: A factory receivies multiple items and has to store and inspect everything.

What are operations?

Turning inputs into the final product or service.

Example: Assembling parts into a finished car.

What is outbound logistics?

Getting finished products to buyers.

Example: Shipping online orders from a warehouse to customers.

What are marketing and sales?

Activities used to persuade customers to buy.
Example: Advertising, pricing, promotions, and salespeople.

What is the service primary activity?

Helping maintain or increase the value of the product after the sale.
Example: Offers repairs and customer support of trucks compared to another truck company that doesn’t

What are the four support activities?

procurement, technology development, human resource management, and general administration. They support the primary activities and help the entire company operate effectively.

What is procurement?

Procurement is the process of buying the inputs the company needs. Good procurement isn't just about finding the cheapest supplier; it also considers quality, reliability, speed, and supplier relationships.

Example: Choosing a supplier that provides high-quality materials at a good price and reliably delivers them on time.

What is technology development?

Technology development involves using technology, knowledge, research, and innovation to improve products or business processes. Technology can improve almost every part of the value chain.

Example: Using data analytics to predict customer demand or using automation to improve manufacturing

What is human resource management?

Human resource management involves recruiting, hiring, training, developing, compensating, and retaining employees. Employees are important because even great technology and equipment are useless if the company doesn't have people who can use them effectively.

Example: Hiring skilled engineers and giving them training and incentives to stay with the company.

What is general administration?

General administration includes activities that support the entire organization, such as planning, finance, accounting, legal matters, information systems, and management. Strong administration helps coordinate all the other parts of the value chain.

Example: Management recognizing a change in the market and adjusting the company's strategy before competitors react.

What is the Resource-Based View of the Firm (RBV)?

RBV says that a firm's competitive advantage can come from the resources and capabilities it possesses. The key is not simply having resources, but having resources that competitors cannot easily match.

What are the three major categories in RBV?

Firms possess tangible resources, intangible resources, and organizational capabilities. Together, these help determine what a company is able to do and whether it can outperform competitors.

What are tangible resources?

Tangible resources are assets that are relatively easy to identify or measure. They often include things the company owns or controls.
Example: Cash, buildings, factories, machinery, patents, or planning systems.

The four types are financial, physical, technological, and organizational.

What are intangible resources?

Intangible resources are harder to see, measure, and copy. Because they are often developed over time, they can sometimes be more valuable strategically than physical assets.
Example: Brand reputation, employee experience, trust, company culture, or technical knowledge.

What is an organizational capability?

• A capability is what the company is able to do with its resources. It usually comes from combining multiple resources effectively over time.
  Example: A firm might have skilled employees, technology, and data, but its capability is being able to use those resources to develop successful new products quickly.

What four characteristics can lead to sustainable competitive advantage along with resources?

A resource or capability should be valuable, rare, difficult to imitate, and difficult to substitute. If it meets all four tests, competitors will have a much harder time matching the firm's advantage.