6. Strategic capability

Question 1

What does internal analysis consist of?

Answer 1

• Critical success factors and competences
• Resources
• Value chain
• Supply chain
• Product/service portfolio

Question 2

Define critical success factors (CSFs).

Answer 2

Are a small number of key goals vital to the success of an organisation ie, ‘things that must go right’.

Question 3

According to MIT, what are five areas in which CSFs should be identified?

Answer 3

• The structure of the particular industry
• Competitive strategy and position
• Environmental factors
• Temporal factors
• Functional managerial position

Question 4

What are the factors needed to achieve a sustainable competitive advantage (SCA) over competitors?

Answer 4

No SCA:

• Threshold resources
• Threshold competencies

SCA:

• Unique resources
• Unique competencies

Question 5

According to Kay, what are the three sources of core competencies?

Answer 5

1. Competitive architecture

• Internal architecture – relationships with employees.
• External architecture – relationships with suppliers, intermediaries and customers.
• Network architecture – relationships between collaborating businesses.

2. Reputation
3. Innovative ability

Question 6

What is a resource audit?

Answer 6

A resource audit catalogues the assets by considering physical resources, intangibles, human resources, technological resources and financial resources.

Question 7

What are factors that need to be considered when auditing physical resources?

Answer 7

• Physical assets should be audited reviewing how cost-effectively they are used.
• Inventories and working capital are also resources, but they have to be financed.
• Raw materials
• Limiting factors

Question 8

What does an audit of human resources typically include?

Answer 8

• Headcount
• Skills base
• Culture
• Workforce structure
• The right mix of labour and capital
• Service levels
• Intellectual property and knowledge

Question 9

What are some practical ways to enhance human capital?

Answer 9

• Education and training
• Allowing creativity
• Infrastructure
• Recognising the intellectual property within the workforce
• Motivation
• Competition
• Participation in activities
• Workforce flexibility / Flexible workplace arrangements / Home working

Question 10

Define crowdsourcing and crowdfunding.

Answer 10

• Crowdsourcing: The process of getting work or funding, usually online, from a network of people
• Crowdfunding: Is a way of raising finance by asking a large number of people for a small amount of money

Question 11

What are the Vs of Big Data?

Answer 11

Volume
Velocity
Variety
Veracity

Question 12

What are some practical considerations regarding Big Data?

Answer 12

• Are there workers within the organisation or in the job market with the required skills capable of analysing large data sets?
• Storing vast quantities of data places a greater emphasis on organisations having robust data security measures in place.
• Does the organisation have the financial resources and time available to invest in or upgrade IT/IS?
• Furthermore, the issue of data ownership is likely to present challenges for organisations, ultimately who owns the data held?

Question 13

Define intelligent system?

Answer 13

A computer-based system that can represent, reason about, and interpret data. In doing so it can learn about the structure of the data, analyse the data to extract patterns and meaning, derive new information, and identify strategies and behaviours to act on the results of its analysis

Question 14

What are some key considerations involving the effective use of developing technologies?

Answer 14

• Impact on human resources
• Costs
• Speed of change and competitive advantage
• Impact on customers

Question 15

Define Digital assets.

Answer 15

Assets which are held in digital form, that is to say assets which are not available in physical form. Common examples of digital assets include: PDF files, images, audio and video files.

Question 16

What are some features of digital asset management systems?

Answer 16

• Digital assets are saved centrally to avoid the need for multiple network locations;
• Access rights can be set so that only individuals with appropriate authorisation can access and amend digital content;
• Digital assets can be saved according to their file type which is designed to support ease of use;
• A search function which allows users to search for digital assets in the event that the asset name cannot be recalled (ie the file name)
• Many digital asset management systems are integrated with cloud-based technologies so that the organisation’s digital assets can be securely stored and can be accessed around the world.

Question 17

What are some practical issues that need to be considered when implementing a digital asset management strategy?

Answer 17

• Infrastructure capabilities and storage needs
• Management support
• Selection of supplier
• Project team

Question 18

Define cryptocurrency.

Answer 18

A form of decentralised, digital currency, designed to facilitate the virtual exchange of transactions. Cryptocurrency is encrypted through the use of cryptography.

Cryptocurrencies allow users to pay for items purchased online, and to receive payments in anonymity.

Unlike traditional currencies, cryptocurrencies are not controlled by a central banking mechanism, and as such the value of cryptocurrencies has been known to fluctuate dramatically.

Question 19

What are the 9Ms in the 9Ms model to summarise the resources and sources of competences to be evaluated?

Answer 19

• Machinery
• Make-up
• Management
• Management information
• Markets
• Material
• Men and women
• Methods
• Money

Question 20

What are the bases of benchmarking?

Answer 20

1. Internal benchmarking
2. Competitive benchmarking
3. Activity (or best in class) benchmarking
4. General benchmarking

Question 21

What is Porter’s value chain?

Answer 21

Porter’s value chain encourages management to perceive of the business as a sequence of activities that add value to inputs so that the final good or service shall command a profitable price on the market.

Question 22

What are the crucial activities that sustain competitive advantage, according to Porter?

Answer 22

The crucial activities that sustain competitive advantage are called cost drivers and value drivers.

Competitive advantage can be created and sustained by linkages in the value chain which help to co-ordinate and optimise activities.

Question 23

What is the value chain process?

Answer 23

Inputs from suppliers –> Value - creating activities (Firm) –> Outputs to customers

Question 24

What are primary activities in Porter’s value chain?

Answer 24

Primary activities relate to production, sales, marketing, delivery and service, in other words anything directly relating to the process of converting resource inputs into outputs.

• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• After sales service

Question 25

What are support activities in Porter's value chain?

Answer 25

Support activities provide purchased inputs, human resources, technology and infrastructural functions to support the primary activities. - Procurement - Technology development - Human resource management - Management planning and firm infrastructure

Question 26

What are the role of Linkages in VCA?

Answer 26

Activities in the value chain affect one another. Linkages connect the activities in the value chain. They have two roles. 1. They optimise activities by enabling trade-offs. 2. Linkages reflect the need to co-ordinate activities.

Question 27

What is the value system?

Answer 27

A firm’s value chain is connected to what Porter calls a value system, ie, activities that add value that extend beyond the organisation’s boundaries.

Question 28

What are the uses of the Value Chain in strategic planning?

Answer 28

- Identify strategically significant activities (the value activities) as an aid to targeting capital investment. - Compare with the value chains of competitors, to identify sources of differentiation. - Identify opportunities for synergy between the firm and a potential acquisition - Assist managers in identifying competitive forces in the system, and targeting potential vertical integration prospects.

Question 29

What are the issues to be considered in whether to outsource?

Answer 29

- The firm’s competence in carrying out the activity itself. - Whether risk can be managed better by outsourcing - Whether the activity can be assured and controlled - Whether organisational learning and intellectual property is being transferred.

Question 30

What are the issues to be considered in deciding whom to outsource?

Answer 30

- The track record of the provider and its experience of similar partnerships. - The quality of relationship on offer - The strategic goals of the provider - The economic cost of using them - Their financial stability.

Question 31

Define the Harmon's process-strategy matrix.

Answer 31

Is used in the analysis of business processes. It assesses the strategic importance of a process as well as its complexity and dynamics to determine how that process should be managed. - Low process complexity/dynamic and low strategic importance: Automate/outsource - Low process complexity/dynamic and high strategic importance: Automate - high process complexity/dynamic and low strategic importance: Outsource - high process complexity/dynamic and high strategic importance: Improve

Question 32

Define shared service centre.

Answer 32

A number of internal transaction processing activities which had previously been conducted in a number of different departments, or business units, are brought together into one site within an organisation. Shared service centres provide large organisations with an alternative to outsourcing activities.

Question 33

What are the advantages of shared service centres?

Answer 33

- Cost savings from reduced headcount and the realisation of the associated economies of scale resulting from operating from a single location. - Knowledge between those based in the shared service centre can be more easily shared than when activities were embedded in different parts of the organisation. - The use of standard processes by shared service centres ensures that all departments or business units in receipt of these services are treated consistently.

Question 34

What are the disadvantages of shared service centres?

Answer 34

- Department or business specific knowledge may be lost. - Closely connected to the previous point is that staff based in shared service centres are often removed from the day-to-day realities facing the departments or business units that they serve. - The physical distance between the shared service centre and the business areas that it serves may weaken the relationships that exist between the two.

Question 35

Define supply chain management (SCM)

Answer 35

The management of all supply activities from the suppliers to a business through to delivery to customers. The main themes are: - Responsiveness - Reliability - Relationships

Question 36

What technology applications have facilitated SCM?

Answer 36

* Email. * Web-based ordering and tracking. * Electronic data interchange (EDI) of invoices and payments, ordering and sharing of inventory information. * Satellite systems able to track positions of trucks. * Radio data tags fixed to pallets or boxes of valuable items to enable them to be located in the supply chain (including within a warehouse). This has led to: • Reductions in costs. • Better outsourcing opportunities. • Increased product and service innovation. • Mass-customisation of products: ie, customised products made by mass production methods, eg, Dell computers, superior car marques.

Question 37

What does supply chain management involve?

Answer 37

Supply chain management involves optimising the activities of companies working together to produce goods and services. It can involve the following: • Closer partnership relationships with a reduced number of suppliers. • Reduction in customers served • Price and stock co-ordination • Linked computer systems • Early supplier involvement in product development and component design. • Logistics design • Joint problem solving among supply chain partners. Supplier representative on site.

Question 38

Define network architecture.

Answer 38

The network of relational contracts, within or around, the firm. A relational contract contains parties doing business with each other in a long term relationship. Networks can be both internal and external. Drivers of collaboration strategies that result in network arrangements can be characterised as follows: - Blurring of market boundaries - Escalating customer diversity - Skills and resource gaps

Question 39

Define asset specificity.

Answer 39

Where investments are made to support the relationship which have the effect of locking parties into a relationship to some degree.

Question 40

What are the types of possible relationships between firms in a network?

Answer 40

- Outsourcing - Partnership - Alliance - Ownership

Question 41

What factors should be considered when choosing alliance partners?

Answer 41

- Drivers - Partners - Facilitators - Components - Effectiveness - Market-orientation

Question 42

What is the BCG matrix?

Answer 42

The Boston Consulting Group matrix (BCG matrix) is a technique to assist management to visualise their portfolio and to manage it to improve the financial performance of the corporation as a whole. - Low % rate of market growth and low relative market share: Dog - Low % rate of market growth and high relative market share: Cash cow - High % rate of market growth and low relative market share: Question mark - High % rate of market growth and high relative market share: Star Stars: High growth rates will however attract newcomers/competition. Cash cows: Low growth make attacks by new firms wishing to enter the market unlikely.