5. Strategic capability

Question 1

Define Strategic Capability?

Answer 1

Strategic capability is the term used to describe the strengths and weaknesses of an organisation.

An organisation’s ability to survive and prosper depends on its strategic capability.

Question 2

Describe the following words:-

Threshold Resources

Threshold Competences

Core Competences

Unique Resources:

Competitive Advantage

Answer 2

1. Threshold Competences – Processes needed to meet the customers minimum requirements.
2. Threshold Resources – Resources needed to meet the customers minimum requirements.
3. Core Competences – Activities through which resources are deployed in a way to achieve competitive advantage.
4. Unique Resources – Resources that critically underpin competitive advantage and that others can not easily be imitated or obtained by competitors. (can be tangible or intangible)
5. Competitive advantage – ability to generate greater returns than the competitor in the long term.

Question 3

What are the 4 qualities sustainable competitive advantage?

and

Define Dynamic capabilities?

Answer 3

• Value
• Rarity
• Inimitability
• Organisational support

Dynamic capabilities:‘Are an organisation’s abilities to develop and change competences to meet the needs of rapidly changing environments.’

Question 4

How can a company manage its Strategic Capabilities?

Hints*

Limitations

Process improvements

Improvement sought through H.R

Answer 4

limitations to managing strategic capabilities

• • Difficult to truly understand them, top managers may not even understand core Competencies or even be able to value them.
• • Trying to formalise could restrict the benefits from the flexible approaches
• • Attempts to improve core competencies could be highly disruptive

Ways to improve them.

1. Competences can be Extended to equally relevant new activities
2. Cease non-essential activities to make savings
3. Best Practices Extended
4. Activities added and existing ones improved
5. Restructure activities to stop system overlaps and inconsistencies.
6. Weaknesses can be remedied
7. External capabilities introduced

Development of Competences through H.R

• Recruitment and selection of staff with specific aptitudes sough-after such as leadership style and innovation
• Training and development to generate specific requirement rather than just general
• Individual strategic awareness of the staff and how they enhance strategic capabilities

Question 5

What are Organisational Knowledge and the learning organisation?

Answer 5

The rise of knowledge work (Problem-solving type jobs vs systematic processes driven) has become a major part of developed countries. More independent thinking to drive disruptive business practices to the market.

Theory of “the Learning Organisation” is that organisational knowledge can be a key major factor for competitive advantage and business knowledge is an important resource.

Organisational Learning needs a manager to promote:-

• • Culture that values intuition
• • Discussion of conflicts and Ideas
• • Experinmentation

Question 6

What is Organisational Knowledge Management?

Answer 6

Management of knowledge aims to exploit current knowledge and expanded.

Tacit knowledge (Stuck in the minds of individuals) is useless to the wider organisation, so managing this knowledge so it can easily access.

• Data – specific facts. e.g CSV file of transaction data
• Information – organised data in some useful way. e.g Total sales table and identifying key customers.
• Knowledge – using the information to building understanding outside its original context. e.g Identifying trends and patterns in information, e.g Brick and Mortar store sales declining while online sales are increasing.

Question 7

What types of Knowledge Management Tech is available?

Answer 7

• - Office automation systems – to increase productivity e.g Receipt Bank
• - Groupware e.g. SLACK or Practice management software
• - Intranet
• - Expert systems, captures human expertise to capture data and give an answer back e.g Banks use Loan software to capture data, which forms the basis of a judgment for approvals on loans.
• • Data Warehouse
• - Data Mining, helps discover the previously unknown relationship.

Question 8

What is a porters value chain?

Answer 8

Porter’s (1985) value chain model is a useful framework for assessing the strategic capabilities of an organisation as it offers a bird’s eye view of the firm.

• Primary Activities – Directly related to producing goods or delivering services to the end-user.
• Support Activities – Business functions that support primary activities.
• Margin - What consumers are willing to pay above the actual cost to deliver goods or service

Linkages connect activities: -

1. Activities affect one another. e.g High investment into product design leads to better quality products and there’s less need for marketing and sales.
2. Linkages require co-ordination. e.g Just In Time Manufacturing line, Prepacked sandwiches need to have inbound, operations, outbound logistics and sales to all function together In a smooth fashion otherwise it will lead to large wastages.

Value chain and competitive advantage

• Clearly identify activities particularly important to customers with the value they want.
• Value chain analysis can be extended to the assessment of costs and benefits of various value activities.

Question 9

What is a Value Network?

and

Why are relationships important in the value network?

Answer 9

The value network:‘Is the set of inter-organisational links and relationships that are necessary to create a product or service.’

Relationships in the value network are important and can be used to build a competitive advantage

e. g
* Large organisations with strong bargaining power can achieve preferential prices from there suppliers.
* Careful management of relationships a promote innovation and the creation of knowledge between organisations

Question 10

What is SWOT Analysis used for?

Answer 10

SWOT analysis: Summarises the key issues from the business environment and the strategic capability of an organisation that is most likely to impact on strategy development. It Identifies the: -

• Strategic Capabilities
  
  • Strengths
  • Weaknesses.
• External Environment
  
  • Opportunities
  • Threats

The results from the SWOT analysis ultimately drive the viability of the strategic options available to an organisation.

Question 11

What is the TOWS Matrix and how can it be used?

Answer 11

TOWS matrix emphasises the importance of threats and opportunities. it is inherently positioning approach to strategy. It can be used to help identify strategic options and is particularly useful when evaluating strategies.

SO - strategies use strengths to seize opportunities - (Generate profits in the short term.)

ST - strategies employ strengths to counter or avoid threats

WO - strategies address weaknesses so as to be able to exploit opportunities

WT - strategies are defensive, aiming to avoid threats and the impact of weaknesses

Question 12

What are the 6xM’s

Answer 12

1. money
2. machinery
3. manpower
4. markets
5. materials
6. make-up

The typical questions, which you would ask against each of these resource constraints, would be as follows:

1. Money
   
   • How much do we have?
   • What is the current cost of our capital?
   • Is the company excessively geared or are there any opportunities for raising additional finance?
2. Machinery -This would refer to machinery in the broadest sense of the word, and typical questions one might ask would include:
   • How technically up to date is the machinery?
   • Is there a danger of obsolescence?
   • Has it been poorly maintained over the years?
3. Manpower
   
   • How expensive is our workforce?
   • How efficient are our employees?
   • Is the business overstaffed?
   • Is it understaffed?
   • What is the labour turnover rate?
   • What is the absence rate?
   • Are there good structures to allow management succession?
4. Markets - There is a danger of overlapping with the external environment here, so try to keep to such questions as:
   
   • Are the markets declining/growing?
   • Where are new markets emerging?
   • How strong are our brands in the current market?
5. Materials
   
   • How expensive are our materials compared to our competitors?
   • Do our suppliers have excessive control of materials?
   • Do we have favourable access to materials?
   • Are our raw materials becoming exhausted?
6. Make-up
   
   • What type of structures do we have and are they likely to limit future growth?
   • What is the culture of the organisation and will it stifle or fuel future developments