Interne Analyse en Kerncompetenties

Question 1

Why is it important to also perform an internal analysis?

Answer 1

1) To explain why a company is better able to position itself in the industry
–> define the resources/ capabilities necessary to survive & excel on the market!

2) Customer preferences might be volatile
–> the firm itself can provide a stable starting point to define a firm’s long-term strategy

Question 2

A tool for internal analysis is for example the SWOT analysis. We have discussed OT in external analysis. Can you say what the SW stands for?

Answer 2

Strengths and Weaknesses

Question 3

What are the 4 items to investigate when using “a resource typology”

Answer 3

RESOURCES
|
V
CAPABILITIES
|
V
(Discovering) core competences
|
V
Competitive advantage

Question 4

When looking at the resources (in a resource typology), we see that there are tangible and intangible resources. What are tangible resources?

Answer 4

• land, buildings, materials and money

–> financial resources (cash, borrowing capacity,…)

–> physical resources (land, equipment, raw materials,…)

GOAL: do they provide a potential for creating a competitive advantage?

Question 5

When looking at the resources (in a resource typology), we see that there are tangible and intangible resources. What are intangible resources?

Answer 5

(most of the time more valuable than tangible resources)

• Human Resources / Culture (trust, motivation, knowledge,…)
• Technology (patents, copyrights, trade secrets)
• Reputational Resources (brand name, perceptions of quality, durability, reliability, …)

Question 6

When looking at “a resource typology”, define capabilities

Answer 6

When resources have been purposely integrated to achieve a specific task or set of tasks => what the firm can DO

–> a ‘team of resources’ works together

Question 7

What is a distinctive competence? Quote Selznick!

Answer 7

A distinctive competence is a competitively valuable activity a company performs better than its rivals

Question 8

What is a core competence? Quote Prahalad & Hamel!

Answer 8

A core competence is a well-performed internal activity central to a company’s competitiveness (strategy) and profitability. Moreover, it creates (superior) customer value.

Question 9

Where do we use the VRIO tool for?

Answer 9

A company is a ‘resource configuration’

–> The VRIO tool helps you define whether the company’s resources can lead to a sustained competitive advantage

Question 10

What do the letters in VRIO stand for?

Answer 10

• Valuable
• Rare
• Inimitable
• Original (sometimes Organization)

Question 11

What does “Valuable” mean in the VRIO tool?

Answer 11

1) that the resource (capability) provides potential to exploit opportunities in its external environment

OR

2) that the resource (capability) helps the firm to neutralize threats in its external environment

Question 12

Define ‘valuable’ from the VRIO tool regarding resources/capabilities

Answer 12

Increase effectivity/efficiency AND customer value => the resources/capabilities are valuable for the market

Question 13

What does ‘rare’ mean in the VRIO tool?

Answer 13

That few, if any, competitors possess the resource (capability)
-> key question: how many rivals possess this resource (capability)?

Question 14

Define ‘rare’ from the VRIO tool regarding the market

Answer 14

Difficult to buy/obtain in the market => the resources / capabilities are “unique”

Question 15

What does ‘inimitable’ mean in the VRIO tool?

Answer 15

• That the resource (capability) is costly to imitate
• That other firms cannot easily develop the resource (capability)

Question 16

Why would a firm be able to develop difficult-to-imitate capabilities?

Answer 16

• Unique historical conditions
  (firms develop, and while doing so, they acquire resources or capabilities that are unique to them)
• It is unclear for competitors what the causal relation is between the firm’s resource/capability and its competitive advantage
• Social complexity = the firm’s capabilities are the product of complex social phenomena

Question 17

Define ‘inimitable’ regarding resources and capabilities

Answer 17

Entry barriers/experience => there are high costs involved for the imitation of the resources/capabilities

Question 18

What does ‘original’ mean in the VRIO tool?

Answer 18

The resources/capabilities are non-substitutable

-> There must be no strategically equivalent valuable resource
(the capability is difficult to identify and thus difficult to substitute)

Question 19

What does strategically equivalents mean?

Answer 19

each can be separately exploited to implement the same strategies

Question 20

Why do we include ‘Organisation’ in the VRIO tool?

Answer 20

A firm’s competitive advantage potential depends on the value, rareness and imitability of its resources and capabilities. However, to fully realize this potential, a firm must also be organized to exploit its resources and capabilities

Question 21

What are the three steps to perform an internal analysis?

Answer 21

Step 1: Identifying the resource configuration

Step 2: Defining the external value of the organization’s competences => core/distinctive capabilities/competences

Step 3: Assuring potential profit (cfr. value capturing)

Question 22

The first step to perform an internal analysis is identifying the resource configuration. How can we do this and with which possible tools?

Answer 22

1) Analyzing the functional activities
–> Porter’s value chain

2) Analyze hard/soft elements in the organization
–> the 7S model

3) Defining a hierarchy of capabilities

Question 23

What is Porter’s value chain?

Answer 23

A way to analyze the functional activities.

Porter’s chain defines Primary Activities (inbound logistics, operation, outbound logistics, sales & marketing, servicing)
and support activities (administrative, HR, R&D, procurement)

Question 24

Give me all the S’s in the 7-S model

Answer 24

• Strategy
• Structure
• Systems
• Skills
• Shared Values
• Style
• Staff

Question 25

What are hard elements and which of the S’s in the 7-S model is hard?

Answer 25

Hard elements = easier to identify or define, and management can directly influence them

–> Strategy, Structure and Systems

Question 26

What are soft elements and which of the S’s in the 7-S model are soft?

Answer 26

Soft elements = more difficult to describe, mostly intangible

–> Shared values, Skills, Style, Staff

Question 27

What does Strategy mean in the 7-S model?

Answer 27

= The ways a competitive advantage will be achieved; which actions the company undertakes to gain a sustained competitive advantage over the competition

Question 28

What does ‘structure’ mean in the 7-S model?

Answer 28

= The way in which tasks and people are divided and specialized, and authority is distributed. The mechanisms by which the activities of the members of the organization are coordinated

Question 29

What does ‘System’ mean in the 7-S model?

Answer 29

= formal processes and procedures used to manage the organization. Important for the company to manage themselves on a daily basis

Question 30

What does ‘staff(ing)’ mean in the 7-S model?

Answer 30

= The people, their backgrounds, and competencies + the organization’s approaches to recruitement, selection and socialization

Question 31

What does ‘Skills’ mean in the 7-S model?

Answer 31

= the distinctive competencies that reside in the organization. Can be distinctive competencies of people, management practices, systems and/or technology

(see resource topology)

Important: these capabilities/competencies are possessed by the organization, not by an individual

Question 32

What does ‘Style’ mean in the 7-S model?

Answer 32

= the leadership style of top management and the overall operating style of the organization
–> it captures how work actually gets done
–> this will impact how people work and interact with each other and with customers

Question 33

What does ‘shared values’ mean in the 7-S model?

Answer 33

= the core of fundamental set of values that are widely shared in the organization and serve as guiding principles of what is important

Question 34

How do you define a hierachy of capabilities?

Answer 34

The capabilities defined by Porter’s Value chain or the 7-S model are broad.
These broad capabilities can be broken down into more specialist capabilities
= hierarchical analysis
–> hierarchical ‘lower’ competences are integrated and can thus form a new competence

Question 35

Step 2 to perform an internal analysis was defininig the external value of the organization’s competences. How do you do this?

Answer 35

Through a VRIO analysis but with a market filter!!

–> competences/capabilities assure quality, sustainability, cost reduction, … for buyers/clients

Question 36

Who gains the returns generated by superior resources & capabilities?

Answer 36

Owner of the resource/capability
BUT
ownership is not clear-cut!
-> employees provide skills; is the organization the owner or the employee?
-> organizational culture; thanks to creative/innovative employees!