Interne Analyse en Kerncompetenties Flashcards
Why is it important to also perform an internal analysis?
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
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?
Strengths and Weaknesses
What are the 4 items to investigate when using “a resource typology”
RESOURCES
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V
CAPABILITIES
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V
(Discovering) core competences
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V
Competitive advantage
When looking at the resources (in a resource typology), we see that there are tangible and intangible resources. What are tangible resources?
- 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?
When looking at the resources (in a resource typology), we see that there are tangible and intangible resources. What are intangible resources?
(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, …)
When looking at “a resource typology”, define capabilities
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
What is a distinctive competence? Quote Selznick!
A distinctive competence is a competitively valuable activity a company performs better than its rivals
What is a core competence? Quote Prahalad & Hamel!
A core competence is a well-performed internal activity central to a company’s competitiveness (strategy) and profitability. Moreover, it creates (superior) customer value.
Where do we use the VRIO tool for?
A company is a ‘resource configuration’
–> The VRIO tool helps you define whether the company’s resources can lead to a sustained competitive advantage
What do the letters in VRIO stand for?
- Valuable
- Rare
- Inimitable
- Original (sometimes Organization)
What does “Valuable” mean in the VRIO tool?
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
Define ‘valuable’ from the VRIO tool regarding resources/capabilities
Increase effectivity/efficiency AND customer value => the resources/capabilities are valuable for the market
What does ‘rare’ mean in the VRIO tool?
That few, if any, competitors possess the resource (capability)
-> key question: how many rivals possess this resource (capability)?
Define ‘rare’ from the VRIO tool regarding the market
Difficult to buy/obtain in the market => the resources / capabilities are “unique”
What does ‘inimitable’ mean in the VRIO tool?
- That the resource (capability) is costly to imitate
- That other firms cannot easily develop the resource (capability)
Why would a firm be able to develop difficult-to-imitate capabilities?
- 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
Define ‘inimitable’ regarding resources and capabilities
Entry barriers/experience => there are high costs involved for the imitation of the resources/capabilities
What does ‘original’ mean in the VRIO tool?
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)
What does strategically equivalents mean?
each can be separately exploited to implement the same strategies
Why do we include ‘Organisation’ in the VRIO tool?
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
What are the three steps to perform an internal analysis?
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)
The first step to perform an internal analysis is identifying the resource configuration. How can we do this and with which possible tools?
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
What is Porter’s value chain?
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)
Give me all the S’s in the 7-S model
- Strategy
- Structure
- Systems
- Skills
- Shared Values
- Style
- Staff
What are hard elements and which of the S’s in the 7-S model is hard?
Hard elements = easier to identify or define, and management can directly influence them
–> Strategy, Structure and Systems
What are soft elements and which of the S’s in the 7-S model are soft?
Soft elements = more difficult to describe, mostly intangible
–> Shared values, Skills, Style, Staff
What does Strategy mean in the 7-S model?
= The ways a competitive advantage will be achieved; which actions the company undertakes to gain a sustained competitive advantage over the competition
What does ‘structure’ mean in the 7-S model?
= 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
What does ‘System’ mean in the 7-S model?
= formal processes and procedures used to manage the organization. Important for the company to manage themselves on a daily basis
What does ‘staff(ing)’ mean in the 7-S model?
= The people, their backgrounds, and competencies + the organization’s approaches to recruitement, selection and socialization
What does ‘Skills’ mean in the 7-S model?
= 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
What does ‘Style’ mean in the 7-S model?
= 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
What does ‘shared values’ mean in the 7-S model?
= the core of fundamental set of values that are widely shared in the organization and serve as guiding principles of what is important
How do you define a hierachy of capabilities?
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
Step 2 to perform an internal analysis was defininig the external value of the organization’s competences. How do you do this?
Through a VRIO analysis but with a market filter!!
–> competences/capabilities assure quality, sustainability, cost reduction, … for buyers/clients
Who gains the returns generated by superior resources & capabilities?
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!
