Chapter 4 - Resources and Capabilities Flashcards
Position Audit
Planning process to examine: resources of in-/tangible assets and finance products, brands and markets operating sys (prod and distr) internal org current results stockholders returns
Resource audits limiting factors (M’s)
machinery make-up (culture and structure of Co) Management Info Markets Materials Men and women Methods Money
Competitive resources
market share market growth product quality leadership purpose and objectives management and workers financial position profit performance investment practice R+D / Innovation
Strategic capabilities
Suitable business model?
People, process, resources in place?
Limiting factors definition
Anything which limits the activity of an entity. An entity seeks to optimise the benefit from the limiting factor.
Efficiency vs Effectiveness
Efficient: how well resources have been utilised
Efficient: deploying resources in the best possible way.
Value drivers
tangible and intangible
TANGIBLE increase sales increased profit margin reduce cash tax rate reduce incremental capex reduce working capital increase competitive advantage timelines reduce cost of capital
INTANGIBLES superior management employees skills and knowledge brand and reputation IP networks and linkages quality management first mover advantage
Value chain
sequence of business activities by which in the perspective of the end-user value is added.
Porter Value Chain
Support: infra, HR, Tech Dev, Procure
Primary: inbound, ops, outbound, Marketing, Service
Using the value chain for:
new or better ways to perform activity
combine activities in new or better ways
manage linkages to increase efficiency
manage value system to increase efficiency
Value system
series of value chains (of supplier, own, distributor, customer)
Value chain costing challenges
Structural decision drive costs (scale, scope, etc)
lack of data precision
subjectivity of a customer benefit
Value chain needs ABC
Value shop
Problem finding, evaluate solving, choice, solution implementation, feedback and control
3 main supply chain themes
Responsiveness
Reliability
Relationships
Push vs pull model
Push according to schedules
Pull according to demand
Drivers of supply chain performance
facilities inventory transportation information sourcing pricing
Supply Chain Management (SCM)
Planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities.
SCM covers:
aim to have a network from raw material to final product
SCM Service level agreement (SLA) covers
explanation of service
benchmarks to measure performance
procedures for dealing with complaints
procedure for cancelling
Partnership approach
need for essential suppliers
supplier should have a similar quality concept
Problems: each partner needs to remain competitive danger of loss of flexibility relative bargaining power arguments about profit sharing
EDI
ERP
RFID
SCM
Electronic data interchange
Enterprise resource planning
Radio frequency identification
Supply chain management
Choosing supplier criterias
price quality quantity (capacity) flexibility speed (how quickly) reliability customer service location number of suppliers credit terms financially security relative size
e-procurement components
e-sourcing (identifying new suppliers)
e-purchasing (product selection and order)
e-payment
Benefits: cost reduction lower inventory control wider choice of suppliers quicker ordering staff focus - transperancy lower admin burden
Risks: control (authorization, quality) implementation risks data security perceived risk of authority loss new speed my offset workflow
5 rights for purchasing
time quantity quality price vendor
Product life cycle
introduction
growth
maturity
decline
Portfolio planning
Build
Hold
Harvest
Divest
BCG matrix
stars (build) questions marks (build, harvest, divest) dogs (divest, hold) cash cows (hold, harvest)
Shoot the dog, build a star, milk the cow, ask questions.
- too simple
- high market share might not mean competitive strength
- high growth might require large investments
- differentiation or niche strategies not considered
- ignores synergies across products
GEBS (General Electric Business Screen)
market vs. business strength
Shell directional policy matrix
Competitive capabilities vs prospects for the sector
Double or quit Growth Custodial Try harder Cash generator Phased withdrawal Divest Leader
Difficulties in portfolio planning
Innovation is ignored
Completeness of product range is important
Ignores other rivals which might grow market share
Unclear desired market share improvement
What mix of cow, ?, * are good
Questionable how cow, ?, * can be shifted
Direct product profitability (DPP) definition
Involves the attribution of purchase price and the indirect costs to each product. Thus net profit can be identified. Indirect costs are attributed.
Issues with DPP
Brand expenditure can be spread
DPP ignores customer needs
Cross- subsidization ignored.
New products - Benefit and challenges of innovation
attracts early adopters
early adopters might have high switching costs
learning curve might bring cost advantage
1st mover might define industry standard
enables skimming
IP might bring revenue
Difficult gaining regulatory approval Uncertain demand High R&D costs Threat of low cost imitators cost of introduction
New products - strategies
leader
follower
No tech change: remerchandising or New Market issue
Improved tech: Reformulation, Improved Prod, Market extension
New tech: Replacement, Product line extentsion, diversification
R+D categories
Product research (Idea and strat generation, value engineering, life cycle enhancements, backwards compatibility)
Process research (Processes, Productivity, Planning, Quality mgmt)
R+D challanges
Org: strategic and technical
Fin: not easily planned
Evaluation and control: lack obvioius payoff
Staff problems: highly qualified, hard supervision and renumeration expectation
Drivers for innovation
Market pull: provide what market wants
Technology push: introduction of tech without initial market signal
Collaboration: between supplier and customer
Benchmarking - Definition
Gathering of data from targets or comparators to asses performance. Aims to improve performance.
Types of benchmarking
Internal
Competitive
Functional (comparing internal functions)
Process or activity
Steps of benchmarking: 8
Mgmt support Determine areas and objectives Understand process and KPI Choose benchmark Org Measure performance Compare and Discuss Improvement program Monitor
Benchmarking questions to ask
Why are these products or services provided at all?
Why in this way?
What are other best practices?
How should activity get reshaped?
Levels of benchmarking
Resources (revenue, employees, capital, qualifications, age of machinery, patents)
Competences: sales calls per salesman, output per employee, materials wasted
Linked activities: market share, profitability, productivity
Benefits and issues with benchmarking
position audit carried out by managers subject to change focuses on improvements and targets helps to innovate improves performance early performance warning
doing things right instead doing the right things
yesterday’s solution to tomorrow’s problem
catch up exercise
depends on accurate comparators data
not free and can divert mgmt attention
sharing information with other companies can be a burden or even a risk
might result in lower motivation
