Lecture 9 Flashcards
What is strategic fit
External analysis of industry and rivalry tell little about what our opportunities and threats are
Doesn’t provide a focus on what needs to change in your firm in order to pursue a strategy that increases CA
How is competitive advantage created
Better linking the organisation to consumers and suppliers
Effectively integrating the organisations primary value adding activities
Defining strategic capabilities require an understanding of these unique resources
What does penrose argue
We an think of the firm as a bundle of resources
Explains heterogeneity
What is resource immobility
Some resources are extremely costly to copy or inelastic in supply
What are the different resource groups
Financial
Physical
Human
Organisational
What is the value component of Barneys VRIO
Does the resource enable the firm to exploit environmental opportunities or defend itself against threats?
Can help increase customer perceived value
Can increase product differentiation or decrease price
Value could also be changing because of rival activity e.g Microsoft and Netscape
Important to review the value of the resources because they are constantly changing
What is rarity
Rare if it can only be acquired by one of very few firms
If it’s absolutely unique then CA
How rare is rare enough
When a few companies hold the same resource we have competitive parity
Are there alternate ways that lead to the same product?
If competitive parity is present what should a firm not do
Neglect resources that are valuable but common. These may be essential for staying in the market
What are costly to imitate
If other orgs don’t have it, can imitate it, buy or substitute it at a reasonable price
In general imitation occurs either directly duplicating the resource or providing a compatible product or service
Consider reverse engineering
Sony worked around RCA TV patent
What are the three reasons resources are costly to imitate
Historical conditions and path dependency
Casual ambiguity - can’t identify the resource and second guess why they did it
Social complexity- resources and capabilities are based on companies culture and interpersonal relationships
E.g Google
Can patents protect against imitation
No firms can still work around
Sony triniton worked around and improved the RCA patent
What is organised to capture value
A firm must organise management systems, policies, processes, org structures and culture to fully realise the resource potential
Complementary resource capabilities- limited ability to creat a CA in isolation but can when combined with other resources and capabilities
What are core competencies
Skills and abilities by which resources are deployed through an organisations activities and processes to achieve CA in ways other cannot imitate
What are the three tests for core competencies
Makes a significant contribution to customer perceived value ( or significant process and manufacturing cost advantage)
Provides access to a wide variety of existing and new markets
Is difficult for the competitors to imitate (complex harmonisation of production technologies and skills)
What are the strengths of the RBV
Recognised the importance of internal attributes
Brings focus on the sources of SCA
Brings insight to the characteristics of SCA
Offers some insight into the means of creating SCA
RBV may help decide whether to license or produce internally
Explains long lived differences in form profitability
Pataraf
What are the limitations of RBV
Managers have real problems identifying VRIO resources in practice
Tauntological
- a resource that creates SCA is valuable
- resources that are by definition rare of valuable
Black box- no insight as to how to create SCA
Static- a resource that was valuable in the past may have become deadweight - ccs can become core ridgidities -mitzberg test
IBM
What are dynamic capabilities
Help a firm change over time
Focus on the issue of competitive survival in response to rapidly changing market conditions
What are the 3 dynamic capabilities that are necessary for an organisation to meet new challenges
The ability of employees to learn quickly and build new strategic assets
The integration of these new strategic assets into company processes
The transformation of reuse of existing assets that have depreciated
What is Barneys definition of firm resources
Includes all assets, capabilities, organisational processes, firm attributes, info, knowledge etc controlled by a firm that enables the firm to conceive of and implement strategies that improve its efficiency and effectiveness
What is Barneys definition of a competitive advantage
Implementing a value creating strategy not simultaneously being implemented by another competitor
What is Barney definition of a sustainable competitive advantage
Implementing a value creating strategy not simultaneously being implemented by any other competitor but other firms are unable to duplicate the benefits of this strategy
What does barney say about resource homogeneity and mobile
In these industries it is not possible to sustain a competitive advantage
For there to be SCA firms must be heterogeneous in the resources they control
What does Leonard Barton say about core competencies
Considered core if they differentiate a company strategically
Core capabilities are this constantly evolving and corporate survival depends on successfully managing their evolution
Can simultaneously enhance or prohibit development (incumbent inertia)
How does Leonard Barton define CC and what are the 4 dimensions
Knowledge set that distinguishes and provides CA
Content embodied in Employees Technical systems Managerial systems Values and norms