3 - Resources & capabilities Flashcards
the analysis of resources and capabilities is as applicable to
not‐for‐profit organizations as it is to business enterprises
resources are
the productive assets owned by the firm
capabilities are
what the firm can do
Individual resources do not
confer competitive advantage; they must work together to create organizational capability.
Once we have identified the KSFs in an industry,
it is a short step to identifying the resources and capabilities needed to deliver those success factors.
To take a wider view of a firm’s resources it is helpful to identify three principal types of resource:
tangible, intangible and human resources.
Tangible resources are
financial resources and physical assets are identified and valued in the firm’s financial statements.
the primary goal of resource analysis is not to value a company’s assets but
to understand their potential for creating competitive advantage.
Once we have fuller information on a company’s tangible resources we explore how we can create additional value from them. This requires that we address two key questions:
- What opportunities exist for economizing on their use?
2. What are the possibilities for employing existing assets more profitably?
intangible resources are
more valuable than tangible resources.
Among the most important of the undervalued or unvalued intangible resources are
brand names.
Intellectual property are
patents, copyrights, trade secrets and trademarks
Human resources of the firm comprise
the expertise and effort offered by employees.
Many organizations have established assessment centres specifically for the purpose of
providing assessments of skills & attributes of employees, and increasingly appraisal criteria are based upon research into superior job performance
Competencies modelling
identifying the set of skills, content knowledge, attitudes and values associated with superior performance within a particular job category
Interest in emotional intelligence reflects
the recognition of the importance of interpersonal skills and emotional awareness
Organizational culture is
a firm resource of great strategic importance that is potentially very valuable
organizational capability definition
a firm’s capacity to deploy resources for a desired end result
distinctive competence is used to describe
those things that an organization does particularly well relative to competitors
Core competences are those that:
- make a disproportionate contribution to customer value, or to the efficiency with which that value is delivered; and
- provide a basis for entering new markets
functional analysis identifies
organizational capabilities in relation to each of the principal functional areas of the firm
value chain analysis…
separates the activities of the firm into sequential chain & explores linkages between activities to gain insight into the firm’s competitive position
Routinization…
is an essential step in creating organizational capability
organizational routines are…
regular & predictable behavioral patterns comprising repetitive patterns of activity
viewed as the fundamental building blocks of what firms do & who they are
the hierarchy of organizational capabilities…
- cross-functional capabilities
- broad functional capabilities
- activity, related capabilities
- specialized capabilities (manufacturing related)
- single-task capabilities
what are the cross-functional capabilities
- new product development
- customer support
- quality management
what are the broad functional capabilities
- operations
- R&D & design
- MIS (management information systems)
- marketing & sales
- HR management
what are the activity-related capabilities
- manufacturing
- materials management
- process engineering
- product engineering
- test engineering
what are the specialized capabilities
- printed circuit-board assembly
- telset assembly
- system assembly
what are the single-task capabilities
- automated through-hole component insertion
- manual insertion of components
- surface mounting of components
For a resource or capability to establish a competitive advantage, two conditions must be present:
- Scarcity
2. Relevance: A resource or capability must be relevant to the KSFs in the market.
3 characteristics of resources & capabilities determine the sustainability of the competitive advantage they offer:
- durability: the more durable the resource, the greater its ability to support a competitive advantage in the long-term
- transferability: competitive advantage is undermined by competitive imitation. If resources & capabilities are transferable – they can be bought and sold – then any competitive advantage that is based upon them will be eroded
- replicability: capabilities based on complex organizational routines are less easy to copy.
benchmarking is…
the process of identifying, understanding practices to help your organization improve its performance
The most decisive, and often most successful, solution to weaknesses in key functions is
to outsource.
What about superfluous strengths? What about those resources and capabilities where a company has particular strengths that don’t appear to be important sources of sustainable competitive advantage?
It is possible to develop innovative strategies that turn apparently inconsequential strengths into key strategy differentiators.
choice of industry context:
In general, it is best to define industry context broadly;
