lecture 5

Organizational Analysis and focus area

Examines the internal strengths and weaknesses of a company to determine its ability to achieve competitive advantage.

Focus Areas:

• Resources

• Capabilities

• Competencies

• Competitive Advantage

Resources

Tangible and intangible

Definition:
Assets that a company owns or controls to achieve its objectives.

Types:

• Tangible → Physical & financial assets (cash, buildings, equipment)

• Intangible → Non-physical assets (brand, patents, knowledge)

Capabilities

Definition:
The company’s ability to use its resources effectively to perform activities and achieve objectives.

Example: Using skilled employees and technology to deliver excellent customer service.

Hierarchy competency

1. Competency → Coordinating capabilities to perform key activities effectively.

   • Example: Toyota coordinating production and quality control.

2. Core Competency → A competency performed exceptionally well across the organization.

   • Example: Toyota Production System.

3. Distinctive Competency → A core competency that is superior to competitors and creates competitive advantage.

   • Example: Toyota producing high-quality cars at lower cost than competitors.

How to gain competitive adv

1. Identify Resources → Assess strengths & weaknesses in tangible and intangible resources.

2. Develop Competencies → Combine resources to build capabilities and core competencies.

3. Evaluate Advantage → Determine whether competencies are distinctive and superior to competitors.

4. Exploit Opportunities → Select strategies that best leverage organizational strengths.

5. Address Gaps → Invest in resources and capabilities that require improvement.

Sustaining Competitive Advantage

Durability & imitability

Durability

→ The extent to which resources, capabilities, or core competencies remain valuable over time before becoming obsolete.

Imitability

→ The extent to which competitors can copy or replicate a firm’s resources, capabilities, or core competencies.

Key Insight:
A competitive advantage is more sustainable when it is durable (lasts longer) and difficult to imitate (hard to copy).

Explicit knowledge vs tacit knowledge

Explicit Knowledge

→ Knowledge that can be easily documented, codified, and shared.
Example: Manuals, procedures, training materials.

Tacit Knowledge

→ Knowledge that is difficult to articulate or transfer because it is embedded in experience, skills, relationships, and organizational culture.
Example: Employee expertise, company culture.

Key Insight:
Competitive advantages based on tacit knowledge are generally more sustainable because they are harder for competitors to imitate.