Internal Analysis: Resources, Capabilities and Core Competencies Key Questions • What is a resource? • What is a capability? • What’s the difference: – Potential vs.
Download ReportTranscript Internal Analysis: Resources, Capabilities and Core Competencies Key Questions • What is a resource? • What is a capability? • What’s the difference: – Potential vs.
Internal Analysis: Resources, Capabilities and Core Competencies Key Questions • What is a resource? • What is a capability? • What’s the difference: – Potential vs. Kinetic energy? • How do resources and/or capabilities contribute to competitive advantage? Resources Resources What a firm Has... Resources represent inputs into a firm’s production process... such as capital equipment, skills of employees, brand names, finances and talented managers Capabilities What a firm Does... Capabilities represent... the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective. What a firm Does... Core Competencies that is Strategically Core Competencies must be: Valuable Valuable Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment What a firm Does... Core Competencies that is Strategically Core Competencies must be: Valuable Valuable Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment Rare Capabilities that are possessed by few, if any, current or potential competitors What a firm Does... Core Competencies that is Strategically Core Competencies must be: Valuable Valuable Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment Rare Capabilities that are possessed by few, if any, current or potential competitors Costly to Imitate Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity What a firm Does... Core Competencies that is Strategically Core Competencies must be: Valuable Valuable Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment Rare Capabilities that are possessed by few, if any, current or potential competitors Costly to Imitate Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity Nonsubstitutable Capabilities that do not have strategic equivalents, such as firmspecific knowledge or trust-based relationships Value Chain Analysis To identify which resources and capabilities can add value Support Activities Primary Activities Value Chain Analysis helps to identify which resources and capabilities can add value Inbound Logistics Support Activities Primary Activities Value Chain Analysis helps to identify which resources and capabilities can add value Operations Inbound Logistics Support Activities Primary Activities Value Chain Analysis helps to identify which resources and capabilities can add value Outbound Logistics Operations Inbound Logistics Support Activities Primary Activities Value Chain Analysis helps to identify which resources and capabilities can add value Primary Activities Marketing & Sales Outbound Logistics Operations Inbound Logistics Support Activities Value Chain Analysis helps to identify which resources and capabilities can add value Primary Activities Service Marketing & Sales Outbound Logistics Operations Inbound Logistics Support Activities Value Chain Analysis helps to identify which resources and capabilities can add value Support Activities Primary Activities Service Marketing & Sales Outbound Logistics Operations Inbound Logistics Procurement Value Chain Analysis helps to identify which resources and capabilities can add value Technological Development Primary Activities Service Marketing & Sales Outbound Logistics Operations Procurement Inbound Logistics Support Activities Value Chain Analysis helps to identify which resources and capabilities can add value Human Resource Management Technological Development Primary Activities Service Marketing & Sales Outbound Logistics Operations Procurement Inbound Logistics Support Activities Value Chain Analysis helps to identify which resources and capabilities can add value Firm Infrastructure Human Resource Management Technological Development Primary Activities Service Marketing & Sales Outbound Logistics Operations Procurement Inbound Logistics Support Activities Value Chain Analysis helps to identify which resources and capabilities can add value Firm Infrastructure Human Resource Management Technological Development Primary Activities Service Marketing & Sales Outbound Logistics Operations Procurement Inbound Logistics Support Activities Examples • What are key sources of competitive advantage for following companies: • Honda • McDonald’s • ESPN • Dell • Procter & Gamble • Steinway Pianos • Wal-Mart • The Grateful Dead • Toyota