Week 3 - Internal Analysis Flashcards
What is the VRIO model of sustainability?
Are the Resources or capabilities
Valuable- Worth or utility
Rare - to be uncommon, not available to other competitors
Inimitability - An attribute of a resource that describes the degree of difficulty a competitor would face in copying, imitating or mimicking the value of that resource
Organized to Exploit - The degree to which the legal, administrative and operating structure of the firm allows it to capture the rents generated by resources
What is a Value Chain?
A sequence of all activities that are performed by a firm to turn raw materials into the finished product that is sold to the buyer
Has key functions of the company linked to each stage and functions that span its productive activities.
What is the resource-based view?
Assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance
Define capabilities
The procedures, processes, and routines firms employ in their
activities
Operating capabilities
Procedures, processes, or routines for delivering
value to customers, employees, suppliers, or investors.
Dynamic capabilties
Procedures, processes, or routines that
continuously **expand existing resources or improve operating capabilities
Three main types of data to gather information for competitive advantage?
Archival data: Written or numeric information can be found in the library or on the internet
Interviews: Interviews can range from personal questions to impersonal surveys
Observation: Your own experiences, such as visits or use of products or services, are also valuable
How can a value chain help you do internal analysis?
It shows the operations and activities of the organization and the different administrative parts responsible in each step.
This can help with internal analysis because it determines which points are the strongest and what points are important for the specific part of the process that gives them a competitive advantage.
What is an internal analysis for?
So a firm can know what their strengths and weaknesses are
- What resources and capabilities are sources of competitive advantage?
- What strategies that will exploit any sources of competitive advantage?
How do these strengths and weaknesses compare to competitors?
What are the primary activities found on the value chain? explain each briefly.
Inbound logistics - Relationship with suppliers, raw materials, processing control, management
Operations - Any process that turns raw materials to finished product ready for sale. This also includes packaging, labeling, branding.
Outbound logistics - Distribution process, activities with customers, shipping, handling, storage
Marketing and Sales - Sellers attracting customers to the product through different marketing schemes, so that they can buy it
Services - Different activities to maintain products and enhance consumer experience
What are the support activities found on the value chain? explain each briefly.
Procurement - The way to acquire resources and other inputs (raw materials), eg: buying things for a cheaper price etc from vendors. “Purchasing”. Bargaining power. Supply chain team: direct dealing with suppliers
Human resource management - hiring and retaining employees, budgets, negotiating salaries, legal issues, are the employees bringing value
Infrastructure - systems to support and maintain operations
Technological development - very dynamic, high interoperability
What are assets?
Tangible or intangible resources that create economic value for the firm when employed
Physical, financial, human and intangible assets
What are the four categories of resources?
Financial (cash, retained earnings)
Human (skills and abilities of individuals)
Physical (plant + equipment)
Intangible (brands and patents)
What are the two critical assumptions of RBV?
Resource Heterogeneity - Different firms may have different resources
Resource Immobility - It may be costly without certain resources, not easy to transfer from firm to firm
So if a firm has valuable resources that are hard to imitate by other competitors then the firm possessing the valuable resources will likely gain a sustained competitive advantage
Using the competitive advantage pyramid tool, 3 sections, what are the questions?
Activities > resources, capabilities and organization > values and priorities
What is the company good at?
What activities create value for customers?
What resources and capabilities drive those activities?
How rare are these resources and capabilities
How difficult are they to imitate?
In what ways is the company organized to capture value?
What priorities support and sustain those resources and capabilities?
