MAN Ch3, Internal Analysis

Resource-Based Theory

The possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages for the firm.

• Strategic resources are not common

Resource Based View (RBV)

A model that sees certain types of resources (VRIO) as key to superior firm performance.

Assumptions of a resource based view

• Resource Heterogeneity

• Resource Immobility

Resource Heterogeneity

A firm has a bundle of resources and capabilities that differ across firms.

Resource Immobility

A firm has resources that tend to be sticky and that do not move easily from firm to firm

Types of resources

• Tangible Resources

• Intangible Resources

• Capabilities

• Dynamic Capabilities

• Core Competencies

Tangible Resources

resources that can be readily seen, touched, and quantified

Intangible Resources

Quite difficult to see, touch, or quantify. More likely to help a firm gain a competitive advantage

Capabilities

What a firm can do. How organizations capture the potential that resource offer.

Dynamic Capabilities

Unique capability of creating new capabilities or upgrading/re-configurating new ones.

• Helps prevent a core rigidity

Core Rigidity

A competency that’s turned into a liability due to changes in the environment.

Core Competencies

Unique strengths embedded deep within a firm allowing them to differentiate its products and service from those of its rivals.

• Creates higher value for the customer.

• Allows firms to offer products and services at lower costs.

• Resources + capabilities = core competency

Porters Value Chain

Internal activities a firm engages in when transforming inputs into outputs.

Porters Value Chain Analysis: Primary Activities

Directly adds value

• Inbound Logistics

• Operations

• Outbound Logistics

• Marketing and Sales

• Service

Inbound Logistics

activities relating to receiving, storing, and disseminating inputs internally

Operations

Inputs are converted into the final product form

Outbound Logistics

Activities deliver your product or service to your customer

Marketing and Sales

Associated with getting buyers to purchase the products

Service

Maintains and enhances your product

Porters Value Chain Analysis: Support Activities

Adds value indirectly

• Firm Infrastructure

• Human Resource Management

• Technology Development

• Procurement

Firm Infrastructure

organizational structure, control systems, company culture, etc.

Procurement

function of purchasing the raw materials and other inputs. Ultimate goal is to create a competitive advantage

VRIO Framework

A checklist for a core competency:

• Valuable

• Rare

• Costly to imitate

• Organized to capture value

Valuable

Does the core competency add value to the product/service our client sells?

• Attractive features, lower costs, higher profits

• If NO, you're at a competitive disadvantage.

Rare

Is the core competency relatively scarce?

• Only a few firms possess

• If No, you are at competitive parity

Costly to Imitate

Unable to develop or buy at a reasonable price

• If no, you have a temporary competitive advantage

Isolating Mechanisms

Barriers to imitation that protect resources, capabilities, or competencies that underlie a firms competitive advantage.

• Better expectations of future resource value

• Path dependence: explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past.

• Casual ambiguity

• Social complexity

• Intellectual property protection.

Organized To Capture Value

• Exploits competitive potential

• Structure and coordinating systems

  • If NO, temporary competitive advantage

SWOT Analysis

A framework that allows managers to synthesize insights obtained from an internal and external analysis to derive strategic implications.

Purpose of a SWOT Analysis

leverage internal strengths to exploit external opportunities

• Strengths

• Weaknesses

mitigate internal weakness and external threats.

• Opportunities

• Threats

Strategic SWOT Questions:

• How can the firm use strengths to take advantage of opportunities?

• How can the firm use strengths to reduce the likelihood and impact of threats?

• How can the firm overcome weakness that prevent the firm from taking advantage of opportunities?