UNIT 5- The Organization

Question 1

Strategic capability

Answer 1

The resources and competences that an organization need to survive and prosper.

• resources (unique)- tangible or intangible
• core competences
• dynamic capabilities
• cost efficiency

Question 2

Competitive advantage

Answer 2

based on: value, rarity, inimitability, and non substitutability

Question 3

Tools

Answer 3

• value chain analysis,
• activity mapping
• benchmarking
• SWOT analysis

Question 4

Core concepts- strategic capability

Answer 4

1. Foundations- resources and competences
2. Cost efficiency- ability to achieve and improve
3. Sustainability- capability to sustain competitive
4. Organizational knowledge- hoot generate competitive advantage
5. Analysis- value chain, benchmarking, activity maps, SWOT
6. Development- how generate strategic capabilities

Question 5

Core competences

Answer 5

Core Competences are skills and abilities by which resources are deployed to achieve competitive advantage in ways that others cannot imitate or obtain.

• What is the core competence of Sony? Or apple?
• what makes your competence unique
• Problem with verticalizing your company- losing your core competences, lose your focus on what you are good at

Question 6

Sources of cost efficiency

Answer 6

1. Economies of scale- In production, marketing, or distribution
2. Experience
3. Product/process design
   - Process optimization: capacity-fill, labor productivity, material yield, working capital utilization
   - Product design: distribution or after-sales service (Eg.: Canon eroded Xerox’s advantage (which was built on service and a support network) by designing a copier that needed far less servicing.
4. Supply costs- Achieve lower costs of supply than competitors. Should I own my supplier? Should I be close to my supplier or my client?

Question 7

The experience curve

Answer 7

How?
- cost should decline year by year;
- not economy of scale
- tend to reduce my cost as time goes by
- How can I be more cost competitive? - economy of scale and experience
- Advantage of being the first to move- the advantage is usually related to the experience curve, you are ahead of your competitors

Question 8

Capabilities - achieving and sustaining competitive advantage

Answer 8

1. Value
2. Rarity
3. Inimitable
4. Substitution
5. Dynamic

Question 9

Value

Answer 9

Which activities are important for providing value for the strategic capabilities?

Models to help on the analysis:
- value chain,
- activity mapping

Question 10

Rarity

Answer 10

Unique or rare capability (prime locations, patent, intellectual capital)

Competitive advantage:
-easy of transferability (who owns and how easily to transfer it)
- sustainability (temporary rarity),
- core rigidities (dangerous rigid capabilities).

Question 11

Inimitable

Answer 11

Capabilities:
- complexity,
- organization’s culture,
- casual ambiguity (difficult to discern cause and effect)

Question 12

Substitution

Answer 12

Might be a victim of substitution:
- in products
(goods and services),
- in competences or skills
(replaced by systems)

Question 13

Dynamic

Answer 13

Ability to renew and recreate its strategic capabilities to meet the need of a changing environment.

Question 14

Analyzing internally/ diagnosing strategic capability

Answer 14

1. swot- a mix of internal and external
2. value chain/value network
3. activity mapping
4. benchmarking= comparing yourself to the best reference in your sector

Question 15

What is value chain?

Answer 15

The categories of activities within and around an organization, which together create a product or service.

The value chain consists of five primary activities (which are directly concerned with the creation or delivery of a product or service) and four support activities (which help to improve the effectiveness or efficiency of primary activities).

• primary activity and support activity
• focus it to my strategy- low cost etc

Question 16

The value network

Answer 16

The network of all the value chains

A value network is the set of inter-organizational links and relationships that are necessary to
create a product or service.

Question 17

Uses of the value chain

Answer 17

• A generic description of activities–understanding how the discrete activities (or clusters of linked activities) contribute to consumer benefit
• Identifying activities where the organisation has particular strengths or weaknesses
• Analysing the competitive position of the organisation using the VRIO criteria – thus identifying sources of sustainable advantage
• Looking for ways to enhance value or decrease cost in value activities (e.g. outsourcing)

Question 18

Uses of the value system

Answer 18

*Understanding cost/ price structures across the value system – analysing the best area of focus and the best business model

• Identifying “profit pools” (i.e.The levels of profit in different parts of the system) – seeking ways to use existing capabilities in order to exploit these
• The “make or buy” decision–which activities to do “in-house” and which to outsource
• Partnering–deciding who to work with and the nature of these relationships.

Question 19

Mapping activity systems

Answer 19

• Identify “higher order strategic themes” that is,
  how the organisation meets the critical success factors in the market

*Identify the clusters of activities that underpin these themes and how they fit together

• Map this in terms of how activity systems are interrelated.

Question 20

Lessons from activity maps

Answer 20

1. Consistency and reinforcement- identify activities that create value to customers, pulling in the same direction and reinforcing the business performance
2. Difficulties of imitation- it is more difficult to imitate a mix of linked activities (Ex. Plasco)
3. Trade-offs- if imitation is possible- generate another difficult for the competitor

Question 21

Approaches to benchmarking

Answer 21

1. Historical benchmarking
2. Industry/sector benchmarking
3. Best-in-class benchmarking