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Strategic Innovation Management > Lecture 9 > Flashcards

Lecture 9 Flashcards

1
Q

What is strategic fit

A

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

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2
Q

How is competitive advantage created

A

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

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3
Q

What does penrose argue

A

We an think of the firm as a bundle of resources

Explains heterogeneity

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4
Q

What is resource immobility

A

Some resources are extremely costly to copy or inelastic in supply

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5
Q

What are the different resource groups

A

Financial
Physical
Human
Organisational

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6
Q

What is the value component of Barneys VRIO

A

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

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7
Q

What is rarity

A

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?

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8
Q

If competitive parity is present what should a firm not do

A

Neglect resources that are valuable but common. These may be essential for staying in the market

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9
Q

What are costly to imitate

A

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

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10
Q

What are the three reasons resources are costly to imitate

A

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

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11
Q

Can patents protect against imitation

A

No firms can still work around

Sony triniton worked around and improved the RCA patent

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12
Q

What is organised to capture value

A

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

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13
Q

What are core competencies

A

Skills and abilities by which resources are deployed through an organisations activities and processes to achieve CA in ways other cannot imitate

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14
Q

What are the three tests for core competencies

A

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)

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15
Q

What are the strengths of the RBV

A

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

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16
Q

What are the limitations of RBV

A

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

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17
Q

What are dynamic capabilities

A

Help a firm change over time

Focus on the issue of competitive survival in response to rapidly changing market conditions

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18
Q

What are the 3 dynamic capabilities that are necessary for an organisation to meet new challenges

A

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

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19
Q

What is Barneys definition of firm resources

A

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

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20
Q

What is Barneys definition of a competitive advantage

A

Implementing a value creating strategy not simultaneously being implemented by another competitor

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21
Q

What is Barney definition of a sustainable competitive advantage

A

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

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22
Q

What does barney say about resource homogeneity and mobile

A

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

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23
Q

What does Leonard Barton say about core competencies

A

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)

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24
Q

How does Leonard Barton define CC and what are the 4 dimensions

A

Knowledge set that distinguishes and provides CA

Content embodied in 
Employees 
Technical systems 
Managerial systems 
Values and norms
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25
Q

What is the heterogeneity element of prataraf

A

Resource bundles underlying production are heterogeneous across firms
Firms with marginal resources can only expect to break even
Firms with superior resources will earn rents

26
Q

What does pataraf say about ex post limits

A

There must be post limits to competition- subsequent to a firm gaining a competitive advantage there must be forces that limit competiton for those rents

Substitutes reduce rents by making demand curves more elastic

Imperfect imitability and imperfect substituiinability

Isolating mechanisms refer to phenomena that protect individual firms from imitation and preserve their rent streams e.g property right

Casual ambiguity can protect firm heterogeneity

27
Q

What does pataraf say about imperfect mobility

A

Perfectly immobile if they cannot he traded
Conceptualised assets
Sunk costs

28
Q

What are ex ante limits to competition

A

Prior to any firms establishing a superior resource advantage there must be limited competition for that position
Profits come from ex ante uncertainty

29
Q

What does Leonard Barton say about capabilities enhancing development?

A

The closer the alignment of a new project to a core knowledge set the stronger the enabling influence

30
Q

How does Leonard Barton say the 4 categories link to enhancing capabilities

A

Skills

  • excellence in dominant discipline
  • pervasive technical literacy

Technical systems
- project managers tap into this embedded knowledge

Management system
Blend of skills and and beneficial behaviours

Values dimension

  • empowerment of project members
  • high status for the dominant discipline
31
Q

How does Leonard Barton say core rigididites get established

A 
Skills 
- less strength in non dominant 
disciplines 
- knowledge sets may be missing 
Technical system 
- can become easily outdated

Management system
- highly skills managers are reluctant to apply their skills to an undervalued project

Values
Lower status for non dominant discipline

32
Q

What does Leonard bartonnidentify as the effects of the paradox

A

Abandonment
Recidivism- return to CC
Reorientation
Isolation

33
Q

What do Pragalad and Hamelnidentify as the roots of CA

A

In the long run competitiveness derives from the ability to build at lower cost and more speedily, the core competiencies that spawn unanticipated products

The real source of advantage is managements ability to consolidate corporate wide technologies and production skills into competencies that empower business to adapt to changing environments

E.g Sony’s capcity to minimise
Phillips optimal media expertise

34
Q

What do Prahalad and Hamel say about CC’s

A

Unlike physical assets competencies do not deteriorate as they are applied and shared they grow
Cc involves many levels of people and functions
Need to be nurtured and protected

35
Q

What do prahalad and games say about how not to think of CC

A

Does not mean outspending rivals on R+D

36
Q

What do prahalad and hamel say about losing CCs

A

Too many companies lose CCs through outsourcing e.g Chrysler
Japanese have learnt from western partners who have not been committed to protecting their own competencies

Can forgo opportunities to establish competencies that are evolving e.g GTE exiting colour TV thinking it was mature - closed. The door on future opportunities that were reliant on video based competencies

37
Q

What are the two key lessons prahalad and hamel identify

A

The costs of losing Cc can only be partially calculated in advance
A company that fails to invest in CC building may find it difficult to expand into emerging markets

38
Q

What do prahalad and hamel say about core products

A

Components of sub assemblies that contribute to the value of the end products
Maintain world manufacturing dominance in core products and you reserve the power to shape the evolution of end products

E.g cannon 84% market share in desktop laser printing but brand share in minuscule

39
Q

What do prahalad and hamel say about developing strategic architecture

A

Should build architecture for CC building
Competence carriers should be regularly brought together from across the corporation to trade notes on idea
The task of creating strategic architectures will force the organisation to identify and commit technical and production linkages across SBUs that provide a distinct CA

Provides a logic for diversification

40
Q

What does Barney say about resources being imperfectly imitable?

A

Historical conditions
Some firms ability to exploit resources depends upon their place time and space
Firms with a unique and valuable culture to that emerged in early stages of a firms history

Casual ambiguity
All competing firms must have an imperfect understanding

Social complexity
Interpersonal relations
Reputation

41
Q

What do prahalad and hamel identify got the 3 cc tests

A

A cc should provide access to a wide variety of markets e.g Casio’s expansion into hand held TV market was predictable because of their competence in display systems

Cc should make a significant contribution to perceived customer benefits e.g Honda

Cc should be difficult for a competitor to imitate
Difficult if it’s a complex harmonisation of individual technology’

42
Q

What are core products

A

The components or sub assemblies that actually contribute to the value of end products

43
Q

Tell me about GTE v NEC

A

1980s GTE well positioned to become a major player in the evolving IT industry
Activities spanned multiple industries
9.8 b sales v 3.8 NEC

1988 NEC bigger
NEC world leader in semiconductors
NEC conceived itself in terms of CC
Entered SAS focused on competence building

GTE did not have this clarity
Deventralisation made ot difficult for GTE to define CC

44
Q

What are some examples of ccs that grant identifies

A

Honda - expertise in the development and manufacture of engines
Cannon- precision mechanics, micro electronics and fine optics (operate on fax, calculators, copy machines, printers)

3M - 30,000 products
Outstanding capacity in the development and launch of new products

45
Q

What is a monopoly rent

A

Profit arising from market power

46
Q

What is Ricardian rent

A

Profit arising from superior resources

47
Q

What does grant say about resources

A

Productive assets owned by the firm
Tangible
Intangible
Human

48
Q

What does grant say about capabilities

A

Firms capacity to deploy resources for a desired end result
Prahalad and hamel criticise US companies for emphasising product management over competence management

Classify capabilities through functional analysis or value chain analysis

49
Q

What does grant say about putting resource and capability analysis to work

A

Identify resource and capabilities

Appraise resources and capabilities
Assess importance
Assess relative strength
Bring together importance and relative strength

Develop strat implication
Exploit strength

50
Q

Tell me about Kodak v fujifilm

A

Kodak field for bankruptcy in 2012
Failed to adapt its purpose according to changes in its external environment
Lack of adaptability
Didn’t stick to knowledge in chemical imaging, could this competence have been used elsewhere?

Fujifilm recognises chnage and went for JV with xerox and sold high quality cameras

51
Q

What do prahalad and hamel say about redeploying to exploit competencies

A

Once top management has indentified overarching competencies, it must ask businesses to identify the projects and people closely connected with them

E.g when cannon went into digital laser printers it gave SBU mangers the right to raid other SBUs to pull together the required pool of talent

52
Q

What is the example of Google

A

Said it’s culture is a CC

Workspace is all about interaction

53
Q

What are the implications of VRIO

A

None- disadvantage
V- parity
VR- temp
VRIO - sustained

54
Q

What is Dr Pepper and example of

A

Dr Pepper wanted to create a strategic alliance with Pepsi
Rivals agreed would cause monopoly - so couldn’t do it
Dr Pepper doesn’t have global distribution aspect - so not unique and valuable
So then acquired Schweppes - so they had global distribution - so could compete with Pepsi and Coca Cola

55
Q

What does prahalad and hamel define CCs as

A

Bundle of skills and technologies that enables a company to provide a particular benefit

Collective learning in the org, especially how to coordinate diverse production skills and integrate multiple streams of technology

56
Q

What is a resource audit

A

Identifies and classifies the resources that an org owns or can access to support strategies

Physical
Human
Financial
Intangible

57
Q

What are the effects of the paradox on core capabilities

A

Pages way for org change by highlighting core rigidities and introducing new capabilities

E.g chaparral steel made use of development projects as agents of renewal and org learning

58
Q

How do we assess a core competence

A 
Need to assess assets including 
People 
R+D 
Business systems and IT
Monitoring KPIs is crucial
59
Q

Why is Microsoft and example of dynamic capabilities.

A

Had to maintain capability on office and windows operating system while simultaneously developing new capabilities in new internet based hardware and software technologies

60
Q

What are the cornerstones of CA pataraf

A

Heterogeneity- creates Ricardian and monopoly rents
Ex post limits competition and the rents being competed away
Imperfect mobility- ensures valuable factors stay in the firm
Ex ante - keeps the cost from offsetting the rent

Strategic Innovation Management (5 decks)

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