Chapter 3 - Internal Environment Flashcards
- Value-chain analysis
a strategic analysis of an organization that uses value-creating activities
o Primary activities:
sequential activities of the value chain that refer to the physical creation of the product or service, its sale and transfer to the buyer, and its service after sale, including inbound logistics, operations, outbound logistics, marketing and sales, and service.
o Support activities:
activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities, including procurement, technology development, human resource management, and general administration.
Interrelationships:
collaborative and strategic exchange relationships between value-chain activities either (a) within firms or (b) between firms. Strategic exchange relationships involve exchange of resources such as information, people, technology, or money that contribute to the success of the firm.
o Resource-based view of the firm (RBV):
perspective that firms’ competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.
Tangible resources:
organizational assets that are relatively easy to identify, including physical assets, financial resources, organizational resources, and technological resources.
Intangible resources
organizational assets that are difficult to identify and account for and are typically embedded in unique routines and practices, including human resources, innovation resources, and reputation resources. Culture, knowledge, brand equity, reputation, intellectual property.
o The VRIS Framework:
Valuable: attractive features, lower costs and price (higher profits),
Rare: only a few firms posses
Costly to imitate: unable to develop or buy at a reasonable price
Difficult to substitute: no equivalent strategic resources or capabilities
o Sources of inimitability:
Physical uniqueness, path dependency, casual ambiguity, social complexity
Physical uniqueness
difficult to copy.
Path dependency:
a characteristic of resources that is developed and/or accumulated through a unique series of events. Firm’s past has impact on what it is doing now.
Casual ambiguity
a characteristic of a firm’s resources that is costly to imitate because a competitor cannot determine what the resource is and/or how it can be re-created.
Social complexity
a characteristic of a firm’s resources that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers.
o Environmental scanning:
surveillance of a firm’s external environment to predict environmental changes and detect changes already under way.
o Environmental monitoring
a firm’s analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities.
o Competitive intelligence
a firm’s activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors’ strengths and weaknesses.
- Environmental Forecasting:
the development of plausible projections about the direction, scope, speed, and intensity of environmental change.
- How can managers create value by establishing important relationships among the value-chain activities both within their firm and between the firm and its customers and suppliers?
a. 1. interrelationships among activities within the firm
2. relationships among activities within the firm and other stakeholders that are part of the firm’s expanded value chain
- Briefly explain the four criteria for sustainability of competitive advantages.
a. 1. resource must be valuable in that it exploits opportunities and neutralizes threats
2. must be rare among the firm’s current and potential competitors
3. difficult for competitors to imitate
4. must have no strategically equivalent substitutes
Core Competencies
a firm’s strategic resources that reflect the collective
learning in the organization.
Core competencies reflect the collective learning
in a firm:
- How to coordinate diverse production skills
- How to integrate multiple streams of
technologies - How to market diverse products and services
Three criteria of core competencies
- enhance competitive advantages
- different business in firm must be similar in at least one way
- difficult to imitate or substitute
