Week 4 - Internal enviroment analysis Flashcards
What is a resource based view?
competitive advantage and superior performance of an organisation - explained by the distinctness of its capabilities
- AKA capabilities view
What is a strategic capability
capabilities of the organisation that contribute to its long-term survival or competitive advantage.
- cannot be static - need to change
- Resources ) (What we have) + competences (What we do well)
what is a Dynamic capability?
An organisation’s ability to renew and recreate its strategic capabilities to meet the needs of changing environments. eg: Win tomorrow
Teece’s three generic types of dynamic capabilities .
1) Sensing – organisation must constantly scan, search and explore opportunities across various markets and technologies .
2) Seizing- once opportunities sensed needs to be seized by new products or services,
3) Reconfiguring – to seize opportunity may require renewal and reconfiguration of organisation capabilities and investments in technologies, manufacturing, markets etc
what are Resources, Competences, Capabilities?
- Resources: Assets you have
- Competences: Skills you have
- Capabilities: Adequacy and suitability of resources and competences to enable the organization to survive and prosper
What are some enviromental analysis tools?
- Resources + Competences
- Threshold, distinctive, dynamic
- Value, Rarity, Inimitability, Organisational support
- Value chain/network
What is a core competency?
A core competence is an activity or process that critically underpins competitive advantage and ability to add value
- what is done better
- why these are done better
- why secondary processes are done
examples of core competencies
- Expertise in integrating multiple technologies
- Know-how in creating operating systems
- Speeding new/next-generation products to market
- Better after-sale service capability
- Skills in manufacturing a high quality product
- Capability to fill customer orders accurately and swiftly
What is a threshold capability?
to be able to compete in a market. Qualifying to compete with competitors today.
What is a distinctive capability?
required to achieve competitive advantage
(difficult to immitate). Win today
what are learning effects?
- Source of competitive advantage.
Can lead to cost savings, quality improvements and greater reliability
(a) Employee Learning - Task repetition increases labour productivity
(b) Product Redesign - Redesigned and reduced number of components, and increased reliability
(c) Process Improvement - Lower wastage changing work flow and equipment design
Sustainable competitive advantage are?
Valuable - do capabilities exist that are valued by custimers and enable the organisation to respond to enviromental opportunities or threats?
Rare - Do capabilities exist that no (or few) competitors possess?
inmitability - are capabilities difficult and costly for competitirs to obtain and imitate?
Organisation support - is the organisation appropriately organised to exploit the capabilities?
What are the different types of capabilites an organisation can possess?
Valuable (No), supported by organisation (NO) = competitive disadvantage
Valuable (yes), Rare (no), = competitive parity
Values (yes), rare (yes) inmitatable (no), = Temporary competitive advantage
Valuable (yes), Rare (yes), inimitatable (yes) supported by organisation (yes) = sustainable competitive advatntage.
What is the value chain?
The value chain - describes the categories of activities within an organisation which, together, create a product or service.
- Competitive advantage can be analysed in any of these activities.
Give examples of value chains primary and support activities.
Primary activities: inbound logistics, operations, outbound logistics, marketing and sales, service
Support activities: firm infrastructure, Human resouce management, technological development, procurement.
What are some of the uses of a value chain?
- A generic description of activities – understanding how activities create value
- Identifying activities where the organisation has particular strengths or weaknesses.
- Analysing the competitive position of the organisation using the VRIO criteria
- Looking for ways to enhance value or decrease cost in value activities
Explain some of the uses of the value system
- Understanding cost/price structures across the value system
- Identifying ‘profit pools’ (i.e. The levels of profit in different parts of the system)
- The ‘make or buy’ decision – ‘in-house’ or outsource.
- Partnering – deciding who to work with
What are some of the dangers of SWOT?
- Long lists with no attempt at prioritisation.
- Over generalisation SWOT is used as a substitute for analysis
- SWOT is not used to guide strategy
TOWS Matrix
Strength+Opportunity = using strength to take advantage of opporunity
Opportunity + Weaknesses = using opportunites by minimising threats
Strength + threat = Using strength to minimise threats
Weakness + Threats = Minimising weaknesses and avoiding threats.
what is casual ambiguity?
when it is hard for others to see how an organisation gains its competitive advantage.
How do the dynamic capabilites relate to strategic model?
sensing opportunities = strategic positon.
Seizing opportunities = making strategic choices.
Reconfiguration = strategic in action.
What do strategic capabilites include?
Strategic capabilities include both operational capabilities and dynamic capabilities that can change operational capabilities in case the environment changes.
what is an exploration/ exploitation trade off?
is the trade-off between operational capabilities and dynamic capabilities – makes it difficult to achieve optimal balance
which capabiltiy achieves competitve advantage?
Threshold = DOES NOT Distinctive = DOES
How do competitive competences remain unique?
Remain unique because they comprise a bundle of constituent
skills and technologies
rather than a single, discrete skill or technology.
Give examples of inimitabale of strategic capabilities
1) Complexity – complex and involves linkages
•Internal linkage (activities + process = customer value)
•External linkage (co-specialisation – developing activities with customers or partners)
2)Casual ambiguity – customers cannot pin-point competitive advantage.
•Characteristic ambiguity (tacit knowledge)
•Linkage ambiguity – competitors cannot locate which activities and processes are dependent on which others to form linkages that create distinctive competences.
3) Culture and history – (complex social interactions and interpersonal relationships)
•Path dependency (origins and history by which competency have developed overtime)
•Taken-for-granted activities.
What is tacit knowledge?
Tacit knowledge – more personal, hard to formalise and communicate eg: could be the knowledge of a highly experienced sales force or the experience of a top management team in making many successful acquisition
• Difficult to imitate ( distinctive to organisation)
• Knowledge developed for years through “communities of practice”
what is explicit knowledge?
Explicit (objective) knowledge – is transmitted in formal systematic ways – can take the form of a codified information resource such as a system manual or files of market research and intelligence.
what is benchmarking?
used to show how one organisation can be compared to other
Limitations to benchmarking?
- Surface comparisons - not identification of performance.
- Achieves competitive parity
what are profit pools?
refer to the different levels of profit available at different parts of the value system.
what frameworks can be used to diagnose organisational capabilities?
- VIRO analysis
- Benchmarking
- Analysing value chain and value system.
- Activity mapping
- SWOT analysis
How can managers develop strategic capabilities?
1) Internal capability development
- Building and recombining capabilities
- Leveraging capabilities –
- Stretching capabilities-
2) External capability development eg: developing new capabilities by acquisition or alliance and joint venture.
3) Ceasing activities – focusing on value-adding activities and eliminate activities on areas of cost.
4) Monitor outputs and benefits when it is not possible to fully understand capabilities.
5) Awareness development –
Activity systems map emphasises the importance of different activities that create value to customers - Give two implications of this:
- The danger of piecemeal change with such systems which may damage the positive benefits of the linkage that exist.
- Challenge of mapping change – change to one part of the system will affect another.
What are the benefits of value chain mapping?
- Relationship to VIRO
- The importance of linkage and fit
- Relationship to value chain
what are the disadvantages to value chain mapping?
- Disaggregation – managers may identify capabilities at too abstract a level.
- Superfluous activities – activities that can be eliminated or outsourced to reduce costs (where other companies many have this.
