Lecture 3 - Internal Analysis Flashcards
What is the resource-based view (RBV)?
Theoretical framework for understanding how competitive advantage within firms is achieved and sustained, inside-out view of strategy
How does RBV help explain performance differences between firms in the same industry?
- unequal distribution of resources across firms
- Some resources difficult to transfer between firms
- Firms collect unique resources to generate returns in competitive context
What are resources?
Inputs into the production of a good or service
What are examples of tangible resources?
- Financial and physical assets
- Machinery, plant, factories
- Disney’s movie library
- Often mis-valued
What are examples of intangible resources?
- Brands & IP: trademarks, patents, secrets
- Relationships: network resources, information channels
- org culture: shared beliefs and values
- Training, education, human capital
- Reputation
- Often undervalued
What are capabilities?
- The capacity/ability to integrate resources to achieve a desired objective (make them valuable)
- responsiveness, ability to identify transferrable strengths and resources in face of change
- Developed over time from complex interaction between tangible and intangible resources
What is the process analysing capabilities?
- Classify capabilities: Function/ Value Chain
- Appraising Resources & Capabilities: strategic importance / strength
- Exploiting Key Strengths/ managing weaknesses
What is the purpose of RBV?
To help orgs understand how and why they have developed in the way they have
What is the VRIO framework?
Resource-based view of strategy
- Valuable
- Rare
- Imitable
- Organisation
VRIO: What does valuable mean?
- Does it add value by enabling a firm to exploit opportunities or defend against threats
- financial value (cost)
- increased perceived customer value (differentiation or price)
VRIO: What does rare mean?
- Can it be acquired by one or few companies
- Can grant temporary CA
- Patents, intellectual capital, prime real estate
- How sustainable is it
VRIO: What does imitable mean?
- Can it be imitated easily (duplication and substitution)
- Reasons for difficult imitability:
- historical conditions
- Casual ambiguity
- Social complexity
VRIO: what does organisation mean?
- Resources alone do not confer advantage
- Org must be able to capture value from them
- Management, processes, policies, structure, culture
VRIO: What are some potential issues with this framework?
- Must be constantly updated with changing business environment
- Over time sources of CA may become obsolete, irrelevant or disadvantageous
- Sometimes difficult to determine ‘true’ source of competitive advantage
-e.g. opacity/lack of info or based on skills and relationships
What are some obscure sources of CA?
- High quality managerial decisions
- Swift recognition of danger or threats
- Quick adaptation
- Politically astute
- Agility
- Resilience
What are some methods of uncovering obscure sources of CA?
- Historical data of firm
- Industry analysis reports
- Financial press
- academic articles on firm
What is Grant’s Strategic Importance Framework?
- Establishing competitive advantage
- Relevance (value)
- Scarcity (rare)
- Sustaining CA
- Durability
- Transferability*
- Replicability*
- Appropriating CA
-Appropriability (org)
*(imitable)
What are some critiques of RBV?
- no managerial implications
- Implies infinite regress
- Applicability too limited
- SCA not achievable
- Not a theory of the firm
- VRIO neither necessary nor sufficient for SCA
- Value of resources is indeterminate
- Definition of resource unworkable
What are Dynamic capabilities?
capacity of an org to purposefully create, extend or modify its resource base, especially important for rapidly changing environemnts
What are the stages of Dynamic capabilities?
- Sensing and shaping opportunities and threats
- Seizing opportunities
- Managing competitiveness through enhancing, combining, protecting and reconfiguring intangible and tangible assets
What is SWOT analysis?
Looking at the internal and external factors of a company
- Strengths
- Weaknesses
- Opportunities
- Threats
SWOT: What are S-O strategies?
Use strengths to take advantage of opportunities
SWOT: What are S-T strategies?
Take advantage of strengths to avoid threats
SWOT: What are W-O strategies?
Use opportunities to overcome weaknesses
SWOT: What are T-W strategies?
Defensive strategies to minimise weaknesses and avoid threats
