6. Strategic capability Flashcards
What are critical success factors?
A small number of key goals vital to the success of an organisation
What are threshold resources?
The basic resources needed by all firms in the market
What do you use a 9Ms model for?
To identify the resources which are available to the business
What are the 9Ms?
Men
Machines
Money
Materials
Markets
Management
Methods
Management information systems
Make-up
Men
Skills, motivation, attitude of staff
Machines (9ms)
Productive capacity, age of machinery
Money
Access to future funding and finance
Materials
Relations with suppliers
Markets
Existing customers, location in comparison to customers
Management
Skills, leadership style, Quality
Methods
Activities and processes that the business has adopted
MIS (Management information system)
Quality of systems
Make-up
Attitudes, culture, structure
What is human capital?
Collective attributes of an organisations human resources
What are the core competences?
Critical activities and processes which enable the firm to meet the critical success factors
What are Kays three main sources of competences? (KRIC)
Reputation
Competitive architecture
Innovative ability
Reputation
The reason that customers are attracted to organisation
The reason that employees are attracted to work
Competitive architecture
The network of relationships within and around a business
Innovative ability
The ability to develop new products and services
What is the start point for value chain analysis?
Identify whether the organisation is going to be a cost leader or a differentiator
What is cost leadership?
Seeking to be the lowest producer in the industry
Cost advantage
What is differentiation?
Creating tangible and intangible product features that the customer is willing to pay more for
Quality advantage
What are the primary activities that create value?
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service
Types of linkages?
Internal - linkages where two or more activities in the chain impact other
External - businesses chain should link to customer chain and supplier chain
How can an organisation strengthen their value chain?
Outsource
Automate
Shared service centre
What is Harmon’s process strategy matrix?
Business processes and how they should be managed
Low importance and low complexity
Simple and straightforward (automate or outsource)
High important and high complexity
Core competence to the organisation, therefore improve as much as possible
Low important and high complexity
Processes add little value but are too complex for automation (outsource)
High important and high complexity
Processes are a core competence and should be improved not automated or outsourced
What are the key analytical tools for performing a portfolio analysis?
Product life cycle
Boston Consulting Group
What are the stages of the product life-cycle?
Development
Introduction
Growth
Maturity
Decline
Development (product lifecycle)
Market research
Negative cash flows - heavy investments in marketing
Introduction (product lifecycle)
Initial demand - will determine pricing policy
Continued cash outflows - marketing costs may outweigh intital sales
Growth(product lifecycle)
New competition - quality improvements may be needed to compete
Economies of scale -may begin to emerge through mass production
Maturity
Critical mass - starts becoming successful
Positive cash flow - maximum sales with minimum marketing
What are unique resources?
Resources which are better than those of the competition and difficult to replicate
What is Kays core competence model used for?
It is used to assess the core competencies of an organisation.
What is the Porters value chain analysis used for?
Analyse the sequence of a business activity which adds value to the products or services
&
Examine linkages between activities and processes where value can be created
What are the supporting activities of the value chain?
Procurement
Technology development
Human resource management
Infrastructure
Why do linkages create a competitive advantage?
Competitors will struggle to identify and copy a linkage unlike a single activity
What are the key types of linkages?
Co-ordination - activities should be consistent with one another
Optimisation - strength in one area may enable firm to commit to fewer resources in another area
What are the key analytical tools for performing a portfolio analysis?
Product life cycle
Boston Consulting Group
What is the product life cycle?
Same theory as industry life cycle but products or services instead
What are the stages of the product life cycle?
Development
Introduction
Growth
Maturity
Decline
What is the Boston Consulting Group matrix?
Assist companies in deciding where to allocate their resources
(ie,with problem child, should the compant invest further to gain market share)
How to calculate the relative market share?
Your sales/ largest competitor sales
Which two dimensions does the BCG model use to analyse its own position?
Market attractiveness (market growth)
Competitive strength (relative market share)
High market share (competitive strength)/ high market growth (market attractiveness)?
Star
High market share/ low market growth?
Cash cow
Low market share/ high market growth?
Problem child
Low market share/ low market growth?
Dog
Problem child
Invest heavily to increase sharea
Or
Consider whether to diversify
Star
Dominant position in an attractive market
Maintain market share by reinvesting
Little cash surplus
Cash cow
Dominant position in a low growth market
Competitors will decide not to attack our market share as the market does not warrant the investment
Dog
Low share of an unattractive market
“Put the dog down” by divesting
Or hold on to the product as part of the overall portfolio
