Lecture 4 - Internal Analysis Flashcards
What is meant by Internal Analysis?
Analyse how strategic capabilities (internal resources & competences) might provide a sustainable competitive advantage on the basis of their value, rarity, inimitability and organisational support (VRIO)
When using VRIO, what do we analyze and for what purpose?
We Analyse R&C (Resources and Competences) in internal value chain:
1. Which ones provide a competitive disadvantage, competitive parity, a temporary or sustainable competitive advantage.
and,
- Critically enact this analysis: enhance R&C as source of sustainable CA (competitive advantage)
What is the primary source of sustainable competitive advantage?
– Continuously renew own capabilities > temporary advantage industry position
What is meant by Strategic Capability made up of Resources?
Resources are the assets that an organization owns, that is, ‘what we have’. Could be tangible or intangible.
What is meant by Strategic Capability made up of Competences?
Competences are the ways those resources are used or deployed effectively, that is, ‘what we do well’.
In the VRIO-model, there are 4 parts that each have a certain criterion, which ones?
- VALUE - Do resources and competences exist that are valued by customers and enable the organisation to respond to environmental opportunities and threats?
- RARITY - Do resources and competences exist that no (or few) competitors posses?
- INIMITABILITY - Are resources and competences difficult and costly for competitors to obtain and imitate?
- ORGANISATIONAL SUPPORT - Is the organisation appropietly organised to exploit the resources and competences?
In terms of VRIO, what is further meant by the V?
Does the R&C provide:
- Competitive Value?
- At a cost that allows the organisation to make an acceptable return?
In terms of VRIO, what is further meant by the R?
Does the R&C provide:
- Rare CAPABILITIES are those possessed uniquely by one organisation or by a few others only.
- Rarity are often TEMPORARY resources
In terms of VRIO, what is further meant by the I?
Inimitable capabilities are those that competitors find difficult to imitate or obtain.
Sustainable advantage is more often found in competences
The I, in VRIO, depends on 3 criterias to assess the strategic capability, which 3 and what difficulties comes with them, for others?
- Social Complexity - Even if causal relations can be mapped, the external and/or internal linkages entailed in these relations may be so complex that managers could not replicate them now.
- Culture & History - Unique Historical or Cultural conditions. First mover advantage or location.
- Casual ambiguity - causal links between resources/competences & competitive advantage not clear and not understood to the fullest.
In terms of VRIO, what is further meant by the O?
The organisation must be suitably organized to support the valuable, rare and inimitable capabilities that it has.
This includes a qualified, visionary & anticipating top management, and effective execution in management processes and systems.
Also, the collective intelligence and shared experiences within the organisation.
Another question about the I in VRIO is about Patents, what could be said?
Patents are a double-edged sword: They,
• offer protection for a limited time
• required disclosure may facilitate imitation
• emerging countries: weaker Intellectual Property Rights
What are “Threshold resources and capabilities”?
Threshold resources and capabilities are those needed for an organisation to meet the necessary requirements to compete in a given market and achieve parity with competitors in that market. (p. 100)
In terms of V in VRIO, what are the 3 components to consider?
- Taking advantage of opportunities and neutralizing threats
- Value to customers
- Cost
(p. 101)
