Session4: Organizational Analysis and Competitive Advantage

Question 1

Resource-based View

Answer 1

• Resources
  –> An organization’s assets and are thus the basic building blocks of the organization.(Tangible, intangible)
• Strategic resources
  –> the resources of a company that enable it to attain competitive advantage. Hard to acquire and to copy – they contribute to the uniqueness of the company
• Competency
  –> possession of sufficient knowledge or skill
• Core competency
  –> a collection of competencies that cross divisional boundaries, is wide-spread and is something the corporation does exceedingly well
• Distinctive competency
  –> core competencies that are superior to those of the competition
• Capabilities
  –> A corporation’s ability to exploit its resources.
  –> Business processes and routines that manage the interaction among resources to turn inputs into outputs
• Strategic capabilities
  –> The resources and competences of an organization needed for it to survive and prosper.
• When the industry environment is volatile, internal resources and capabilities offer a more stable basis for strategy than an external market focus
• Resources and capabilities are the primary sources of competitive advantage—and, therefore, profitability
• Advantage –> superiority of position or condition
• Competitive Advantage –> an attribute that allows an organization to outperform its competitors
• Sustained Competitive Advantage –> ability to possess VRIO

Question 2

VRIO framework

Answer 2

• Valuable –> Does it provide customer value and competitive advantage?
• Rareness –> Do no other competitors possess it at the same level?
• Imitability –> the rate at which a firm’s underlying resources, capabilities, or core competencies can be duplicated by others
  1) Transparency –> the speed at which other firms under the relationship of resources and capabilities support a successful strategy
  2) Transferability –> the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
  3) Replicability –> the ability of competitors to use duplicated resources and capabilities to imitate the other firm’s success
• Explicit knowledge: that can be easily articulated and communicated
• Tacit knowledge: that is not easily communicated because it is deeply rooted in employee experience or in the company’s culture
• Organization –> Is the firm organized to exploit the key resource? The organization must be structured and aligned around the true competitive advantages of the business

Question 3

Business Models

Answer 3

• Business model
  –> a company’s method for making money in the current business environment
  –> includes the key structural and operational characteristics of a firm—how it earns revenue and makes a profit
• Composed of five elements:
  1)Who it serves
  2)What it provides
  3)How it makes money
  4)How it differentiates and sustains competitive advantage
  5)How it provides its product/service

Question 4

Value Chain

Answer 4

• Value chain
  –> a linked set of value-creating activities that begin with basic raw materials coming from suppliers moving on to a series of value-added activities involved in producing and marketing a product or service and ending with distributors getting the final goods into the hands of the ultimate consumer.
  (raw materials->primary manufacturing->fabrication->distributor->retailer)
• Primary activities: Inbound logistics, Operations, Outbound logistics, marketing and sales, service
• Support activities: HRM, Firm infrastructure, Technology dvpment, procurement

Question 5

Uses of The Value Chain

Answer 5

• A generic description of activities
  –> understanding the discrete activities and how they both contribute to consumer benefit and how they add to cost.
• Identifying activities
  –> where the organisation has particular strengths or weaknesses
• Analysing the competitive position
  –> using the VRIO criteria, thus identifying sources of sustainable advantage.
• Enhance value or decrease cost
  –> Looking for ways to do so in value activities
• e.g. outsourcing

Question 6

Basic Organizational Structures

Answer 6

• Simple
• Functional
• Divisional
• Strategic business units*
• Conglomerate*

Question 7

Corporate Culture

Answer 7

• Corporate culture
  –> the collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another
• Cultural intensity
  –> the degree to which members of a unit accept the norms, values and other cultural content associated with the unit
  –> shows the culture’s depth
• Cultural integration
  –> the extent of which units throughout the organization share a common culture
  –> culture’s breadth

Question 8

Functions of Corporate Culture

Answer 8

• Conveys a sense of identity for employees
• Generates employee commitment
• Adds to the stability of the organization as a social system
• Serves as a frame of reference for employees to understand organizational activities and as a guide for behavior

Question 9

Strategic Marketing Issues

Answer 9

• Market position
  –> refers to the selection of specific areas for marketing concentration and can be expressed regarding market, product, and geographic locations.
• Marketing mix
  –> the particular combination of key variables under a corporation’s control that can be used to affect demand and to gain competitive advantage
• Product life cycle
  –> a graph showing time plotted against the sales of a product as it moves from introduction through growth and maturity to decline.