Chapter 3: Internal Org. Flashcards
sustainable competitive advantage: 3 factors
- rate of core competency obsolescence
- availability of substitutes for core competencies
- imitability of core competencies
by analyzing internal organization => determine
what can do & what might do -> insights to select strategies
volkswagen “strategy 2008”
international strategy and global mindset
use resources to form technological and innovation capabilities => (2 core competencies) 1. superior customer service 2. product quality
2 most important sources of comp. adv
- cc
- product mkt placement
3 challenges of internal analysis
- decisions = non-routine, ethical implications, influence ability to earn avg. > return
- mistake: thinking a capability is a core competency when its no. (ex. polaroid)
- 3 conditions affect managerial decisions => require judgment (exec -> 1. reputation 2. loyalty)
3 challenges of internal analysis: 3 conditions affect managerial decisions
- uncertainty
- complexity
- intraorg. conflict
3 challenges of internal analysis: 3 conditions affect managerial decisions: uncertainty
increases complexity & range of issues
- new proprietary tech
- rapid changing trends
- transformations in societal values
- shifts in customers demands
plus “5” biases
example: subway and amazon
ABL resources
tangible resources
- hard to leverage
- add’l value
- unique/intangible attributes
4 categories of tangible resources
- financial
- organizational
- physical
- technological
which resource is the superior source
intangible
3 categories of intangible resources
- Human resources/capital
- innovation resources
- reputational resources
3 categories of intangible resources: human resources/capital
- knowledge
- trust
- skills
- abilities to collaborate with others
3 categories of intangible resources: innovation resources
- ideas
- scientific capabilities
- capacity to innovate
3 categories of intangible resources: reputational resources
- brand name
- positive reputation with stakeholders
- perceptions of product quality, durability, reliability
intangible resources
can be leveraged
invisible, unobservable
capabilities - 7 functional areas
- distribution
- HR
- MIS
- MKTG
- MGMT
- manufacturing
- R&D
example: walmart
capabilities: distribution & MIS
example: microsoft
capabilities: HR
example: ralph lauren, mckinsey, P&G, nordstoms, crate and barrel
capabilities: marketing
example: zara, hugo boss
capabilities: management
example: komatsu, witt gas technology, sony
capabilities: manufacturing
example: caterpillar, otis, chaparral steel, thomson consumer electronics
capabilities: R&D
building core competencies (2 tools)
- 4 criteria of sustainable comp adv.
- value-chain analysis
4 criteria of sustainable comp. adv.
- valuable (customer POV)
- rare (customer POV)
- costly to imitate (competitor POV)
- nonsubstitutable (competitor POV)
costly to imitate: 3 reasons
- unique historical conditions
- causually ambiguous
- social complexity
outcomes from combinations of the 4 criteria for sustainable comp adv: competitive consequences
- comp disadvantage
- competitive parity
- temporary comp adv.
- sustainable comp adv.
competitive consequence: competitive disadvantage
NOT: valuable, rare, costly to imitate, nonsubstitutable
=> below average %
competitive consequence: competitive parity
valuable and nonsubstitutable
NOT: rare or costly to imitate
=> average returns
competitive consequence: temporary competitive adv.
valuable, rare, nonsubstitutable
NOT: costly to imitate
=> avg. < or equal returns
competitive consequence: sustainable competitive adv
valuable, rare, costly to imitate, nonsubstitutable
=> avg. < returns
(valuable) capabilities must allow the firm to:
(1) perform any activity in a manner that provides superior value
or
(2) perform VCA that competitors cannot perform
relationships with customers
aka “social capital”
- knowledge transfer
- access to external resources
outsourcing: goals
- increases flexibility
- mitigates risk
- reduces capital investments
outsourcing: only activities where they _________ => outsource
- cannot create value
- where they are at a substantial disadv. compared to competitors
outsourcing: 2 issues to consider
- innovation
- technology uncertainty
external environment conditions -> CCs -> change:
- core rigidities
- generate inertia
- stifle innovation
CCs (internal) + opportunities (external) =>
strategic competitiveness and above avg returns
