Chapter 04- Managing Company Resources

The ________ of a company’s resources is an important consideration within resource-based theory

tangibility

Tangible resources

Resources that can be readily seen, touched, and quantified, such as physical assets, property, plant, equipment, and cash

Intangible resources

Resources that are quite difficult to touch, see, or quantify, such as the knowledge and skills of employees, a company’s reputation, and a company’s culture

Capabilities

refers to what the organization can do

• Capabilities tend to arise over time as a company takes actions that build on its strategic resources

Dynamic capability

is one that is skilled at continually updating its array of capabilities in order to keep pace with changes in its environment

VRIN

Valuable, Rare, Imitability, Non-substitutable

Valuable

people are willing to pay for it

Rare

possessed by few or no competitors

Imitability (Difficult to Imitate)

ensures that no one can copy and it is sustainable (has monopoly power)

Distinctive competence

a set of activities that an organization performs especially well

• Possessing a distinctive competency creates a competitive advantage for a company

Resource-based theory

builds on past ideas about resources, but it represents a big improvement on past ideas in at least two ways

• offers a complete framework for analyzing organizations, not just snippets of valuable wisdom

• The ideas offered have been developed and refined through scores of research studies involving thousands of organizations

Marketing Mix

Product, price, place, promotion

Product

what it sells to customers

Price

should provide a good match with the value offered

Place

can refer to the physical purchase point as well as a distribution channel

Promotion

consists of the communications used to market a product, including advertising, public relations, and other forms of direct and indirect selling

Intellectual property

refers to creations of the mind, such as inventions, artistic products, and symbols- a variety of formal and informal methods are available to protect a company’s intellectual property from imitation by rivals

Ways to protect intellectual property

Patents, trademarks, copyrights, trade secrets

Patents

legal decrees that protect inventions from direct imitation for a limited period of time

Trademarks

Phrase, picture, name, or symbol used to identify a particular organization

Copyrights

provides exclusive rights to the creators of original artistic works such as books, movies, songs, and screenplays

Trade secrets

formulas, practices, and designs that are central to a company’s business and that remain unknown to competitors

Enactment

a theoretical perspective that contends that an organization can, at least in part, create an environment for itself that is beneficial to the organization by putting strategies in place that reshape competitive conditions by putting strategies in place that reshape competitive conditions in a favorable way

Environmetnal determinism

a theoretical perspective that organizations are very limited in their ability to adapt to the conditions around them

Institutional theory

examines the extent to which companies copy each other’s strategies

Transaction cost economics

a theory that centers on whether it is cheaper for a company to make or buy the products that it needs

Backward integration strategy

occurs when a company enters the business of one of its suppliers

Value chain

A tool that charts the path by which products and services are created and eventually sold to customers

Primary activities (value chain)

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

Inbound logistics

refer to the arrival of raw materials

Operations

refer to the actual production process

Outbound logistics

the departure of finished goods

Marketing and Sales

activities used to attract potential customers and convince them to make purchases

Service

refers to the extent to which a company provides assistance to their customers

Support activities definition (value chain)

action not not directly involved in the evolution of a product but that instead provides important underlying support for primary activities

Support activities (value chain)

Company infrastructure, human resource management, technological development, procurement

Primary activities definition (value chain)

actions that are directly involved in the creation and distribution of goods and services

Company infrastructure

refers to how the company is organized and led by executives

Human resources management

involves the recruitment, training, and compensation of employees

Technological development

refers to the use of computerization and telecommunications to support primary activities

Procurement

the process of negotiating for and purchasing raw materials

Supply chain

A system of people, activities, information, and resources involved in creating a product and moving it to the customer. It is a broader concept than a value chain

Best value supply chains

focus on the total value added to the customer. Require four components

Strategic supply chain management

refers to the use of supply chains as a means to create competitive advantages and enhance company. Strive to excel along four measures

1. Speed

2. Quality

3. Cost

4. Flexibility

Speed (strategic supply chain)

the time duration from initiation to completion of the production and distribution process

Quality (strategic supply chain)

refers to the relative reliability of supply chain activities

Cost (strategic supply chain)

Supply chain efforts at managing cost involve enhancing value by either reducing expenses or increasing customer benefits for the same cost level

Flexibility (strategic supply chain)

refers to a supply chain’s responsiveness to changes in customers’ needs

Agility

the supply chain’s relative capacity to act rapidly in response to dramatic changes in supply and demand

• Can be achieved through the use of buffers.

• Excess capacity, inventory, and management information systems all provide buffers that better enable a best value supply chain to service and be more responsive to its customers.

• It can also be improved and achieved by colocating with the customer.

Adaptability

refers to a willingness and capacity to reshape supply chains when necessary

Alignment

refers to creating consistency in the interests of all participants in a supply chain. In many situations, this can be accomplished through carefully writing incentives to contracts

SWOT Analysis

a technique for understanding a company’s situation that considers its strength and weaknesses along with the opportunities and threats that exist in the company’s environment

Import cautions need to be offered about SWOT analysis:

• Internal and external factors should not be confused with each other.

• Opportunities should not be confused with the strategic moves that are designed to capitalize on these opportunities.

• Results of SWOT analysis should not be overemphasized.