Ch.6 - Strategic capability

Question 1

What types of resources are there?

Answer 1

1. Threshold resources – basic resources needed by the firm
2. Unique resources – resources that are better than those of the competition and difficult to replicate, giving the firm sustainable competitive advantage

Question 2

How can resource audit be performed?

Answer 2

1. 9Ms model – Men, machines, money, materials, markets, management, methods, management information systems, make-up
2. Human capital – considers collective attributes of an organisation’s human resources, including capabilities, creativity, skills and knowledge of the workforce (includes education, training, allowing creativity, infrastructure, motivation, competition, …)
3. Core competencies – critical activities and processes which enable the firm to meet the critical success factors and therefore sustainable competitive advantage

Question 3

What is Kay’s core competencies model?

Answer 3

1) Reputation – reason why customers are attracted to the organisation

2) Competitive architecture
- internal architecture – relationships with employees
- external architecture – relationships with suppliers, customers and intermediaries
- network architecture – relationship between collaborating businesses

3) Innovative ability – ability to develop new products and services

Question 4

How can we analyse which business activities add value to the product/service?

Answer 4

• using Porter’s Value chain analysis

Question 5

What is Porter’s Value chain analysis?

Answer 5

• analyses the sequence of business activities which add value (margin) to the products or services
• starting point is the generic strategy of the company

Question 6

What are primary and secondary activities of value chain?

Answer 6

1. primary activities - inbound logistics, operations, outbound logistics, marketing and sales, service
2. support activities - firm infrastructure, human resources, technology development, procurement

Question 7

What types of generic strategies are there?

Answer 7

1. cost leadership (lowest cost)

2. differentiation (creating product features)

Question 8

What are linkages?

Answer 8

o Internally – through co-ordination or optimisation (strength in one are may enable the firm to commit fewer resources to another area)
o Externally – internal value chain will link to the customer’s chain and supplier’s chain

Question 9

How can we analyse portfolio or products/services?

Answer 9

• using product life cycle

- using BCG matrix

Question 10

What is BCG matrix?

Answer 10

• analyses the balance of business’s product portfolio based on combination of market growth and market share

High growth/Low share = Problem child
High growth/High share = Star
Low growth/High share = Cash cow
Low growth/Low share = Dog

Question 11

What is definition, implications, decision and product life cycle of problem child?

Answer 11

Definition - attractive market, not enough market share

Implications - lack of economies of scales

Decision - harvest or invest/build (negative CF)

Product Life Cycle - development

Question 12

What is definition, implications, decision and product life cycle of star?

Answer 12

Definition - dominant position in attractive market

Implications - high threat of new entrants requires continuing investment

Decision - harvest or continue to build (neutral CF)

Product Life Cycle - growth

Question 13

What is definition, implications, decision and product life cycle of cash cow?

Answer 13

Definition - dominant position in low growth market

Implications - competitors will decide not to attack the market share

Decision - hold or harvest (positive CF)

Product Life Cycle - maturity

Question 14

What is definition, implications, decision and product life cycle of dog?

Answer 14

Definition - low share in unattractive market

Implications - lack of economies of scale,market is not attractive enough to seek growth

Decision - hold or divest (moderate positive CF)

Product Life Cycle - decline