CE 726

STRATEGIC CAPABILITY

ASSESSMENT OF STRATEGIC CAPABILITY

DETERMINATION OF STRATEGIC CAPABILITY : ”Resources and Competences”

STRATEGY DEVELOPMENT IS CONCERNED WITH CHANGING STRATEGIC CAPABILITY BETTER TO FIT A CHANGING ENVIRONMENT.

STRATEGY DEVELOPMENT IS CONCERNED WITH CREATION OF NEW OPPORTUNITIES BY STRETCHING AND EXPLOITING THE STRATEGIC CAPABILITY.

STRATEGIC CAPABILITY STRATEGIC CAPABILITY IS ABOUT THE

ABILITY TO PROVIDE PRODUCTS/ SERVICES WITH FEATURES THAT ARE VALUED BY THE CUSTOMERS.

STRATEGIC CAPABILITY STARTS WITH THE RESOURCES.

RESOURCES ARE IMPORTANT BECAUSE THEY NEED TO BE DEPLOYED INTO THE ACTIVITIES THAT AN ORGANISATION UNDERTAKES TO CREATE COMPETENCES.

TO TEST THE STRATEGIC CAPABILITY;

WHAT ARE OUR RESOURCES ? WHAT MAKES US DIFFERENT THAN

OUR COMPETITORS? AT WHICH ACTIVITIES WE ARE MOST

SUCCESSFUL? (STRENGTHS) WHAT ARE THE REASONS OF FAILURE/

LOW COMPETITIVE ADVANTAGE? (WEAKNESSES)

WHAT ARE THE SOURCES OF STRATEGIC CAPABILITY ?

THE DIFFERENCES IN PERFORMANCE BETWEEN THE ORGANISATIONS IN THE SAME MARKET IS RARELY EXPLAINABLE BY DIFFERENCES IN THEIR RESOURCE BASE SINCE RESOURCES CAN USUALLY BE IMITATED OR TRADED.

SUPERIOR PERFORMANCE IS DETERMINED BY THE WAY IN WHICH RESOURCES ARE DEPLOYED TO CREATE COMPETENCIES IN THE ORGANISATION’S ABILITIES.

TYPES OF RESOURCES

PHYSICAL RESOURCES HUMAN RESOURCES FINANCIAL RESOURCES INTELLECTUAL CAPITAL

(INTANGIBLE RESOURCES)

RESOURCES IF ORGANISATIONS ARE TO SURVIVE,

THEY MUST BE COMPETENT TO PROVIDE THE PRODUCT FEATURES REQUIRED BY CUSTOMERS AT THE THRESHOLD LEVEL.

IF THEY ARE TO OUTPERFORM COMPETITORS, THEY MUST HAVE UNIQUE RESOURCES AND COMPETENCES.

What is core competency? IT MUST RELATE TO AN ACTIVITY OR

PROCESS THAT FUNDAMENTALLY UNDERPINS THE VALUE IN THE PRODUCT/SERVICE (AS SEEN THROUGH THE EYES OF CUSTOMER)

BETTER THAN COMPETITORS IT SHOULD BE ROBUST (DIFFICULT TO

IMITATE)

ABOUT PORTER’S VALUE CHAIN ANALYSIS

DIFFERENCES BETWEEN VALUE CHAINS ARE A KEY SOURCE OF COMPETITIVE ADVANTAGE BETWEEN THE COMPETITORS

VALUE: WHAT A COMPANY CREATES IS MEASURED BY THE AMOUNT BUYERS ARE WILLING TO PAY FOR A PRODUCT OR SERVICE.

DIFFERENCE BETWEEN VALUE AND COST DETERMINES A COMPANY’S PROFITABILITY.

COMPETITIVENESS STEMS FROM LOWER COSTS OR HIGHER VALUE

HOW TO CREATE VALUE? COMPETENCE IN SEPARATE ACTIVITIES

(PRIMARY ACTIVITIES) COMPETENCE IN LINKING ACTIVITIES

TOGETHER (SUPPORT ACTIVITES)

PRIMARY ACTIVITIES ARE DIRECTLY CONCERNED WITH THE CREATION OR DELIVERY OF A PRODUCT OR SERVICE.

SUPPORT ACTIVITIES HELP TO IMPROVE THE EFFECTIVENESS OF PRIMARY ACTIVITIES.

VALUE CHAIN DESCRIBES THE ACTIVITIES WITHIN AND AROUND AN ORGANISATION WHICH TOGETHER CREATE A PRODUCT/SERVICE.

PRIMARY ACTIVITIES (DIRECTLY CONCERNED WITH THE CREATION OR DELIVERY OF A SERVICE OR PRODUCT):

INBOUND LOGISTICS: ACTIVITIES CONCERNED WITH RECEIVING, STORING, AND DISTRIBUTING THE INPUTS TO THE PRODUCT OR SERVICE.(MATERIALS HANDLING, STOCK CONTROL ETC.)

OPERATIONS: TRANSFORM VARIOUS INPUTS INTO FINAL PRODUCT/SERVICE.

OUTBOUND LOGISTICS: COLLECT, STORE, AND DISTRIBUTE THE PRODUCT TO CUSTOMERS.

MARKETING AND SALES: PROVIDE THE MEANS WHEREBY USERS ARE MADE AWARE OF THE PRODUCT AND ARE ABLE TO PURCHASE IT.

SERVICE: INCLUDES ALL ACTIVITIES WHICH ENHANCE OR MAINTAIN THE VALUE OF THE PRODUCT SUCH AS REPAIR, TRAINING, SPARES ETC.

SUPPORT ACTIVITIES (HELP TO IMPROVE EFFICIENCY OF PRIMARY ACTIVITIES):

PROCUREMENT: PROCESSES FOR ACQUIRING THE VARIOUS RESOURCE INPUTS TO THE PRIMARY ACTIVITIES.

TECHNOLOGY DEVELOPMENT: ALL VALUE ACTIVITIES HAVE A ‘TECHNOLOGY’.

HUMAN RESOURCE MANAGEMENT: CONCERNED WITH RECRUITING, MANAGING, TRAINING, DEVELOPING, AND REWARDING PEOPLE.

INFRASTRUCTURE: SYSTEMS OF PLANNING, FINANCE, QUALITY, INFORMATION MANAGEMENT. IT CONSISTS OF STRUCTURES AND ROUTINES OF THE ORGANISATION WHICH SUSTAIN ITS CULTURE.

VALUE ADDED BY A CONTRACTOR

INPUTS:

RAW MATERIALS

EQUIPMENT

LABOUR

…

CONTRACTOR’S RESOURCES:

EXPERIENCE IN CONSTRUCTION

ABILITY TO PROCURE AND MANAGE RESOURCES

CONTACTS (SUBCONTRACTORS ETC.)

…

OUTPUT:

CONSTRUCTED FACILITY

Organisation adds its value here

VALUE CHAIN IN CONSTRUCTION

FIRM INFRASTRUCTURE

HUMAN RESOURCE MANAGEMENTTECHNOLOGY DEVELOPMENT

PROCUREMENT

INBOUND LOGISTICS

CONSTRUCTION

OUTBOUND LOGISTICS

MARKETING AND SALES

SERVICE

SUPPORT ACTIVITIES : PROJECT MANAGEMENT, CONTRACT MANAGEMENT ETC.

SUBCONTRACTORS, EQUIPMENT PARK ETC.

BUSINESS DEV., BID PREPARATION ETC..

VALUE CHAIN: BID PREPARATION

SUBCONTRACTORS’ OFFERS

COST OF INPUTS (MATERIAL, LABOUR ETC.)

DATA COLLECTION ACTIVITIES

DIRECT COST ESTIMATIONINDIRECT COST

ESTIMATION

TIME-COST DATA

SITE EXPENSES

OVERHEAD

PLANNING ACTIVITIES

IDENTIFICATION OF RISK PREMIUM

IDENTIFICATION OF PROFITABILITY RATIO

BID PREPARATION

REFINING THE BID CONSIDERING COMPETITIVENESS

VALUE CREATION

VALUE CREATION BY PRIMARY ACTIVITIES

VALUE CREATION BY SUPPORT ACTIVITES

VALUE CREATION BY RELATIONS VALUE CREATION BY COMBINING

BUSINESSES

VALUE SYSTEM IS THE SET OF INTER-ORGANISATIONAL LINKS AND RELATIONSHIPS WHICH ARE NECESSARY TO CREATE A PRODUCT OR SERVICE

VALUE CREATION BY COMBINING BUSINESSES

QUARRYING CONCRETE MIX

ASPHALT PLANT

CONSTRUCTION

STEEL FABRICATION

WASTE MANAGEMENT

COMPANY

LandfillAggregate

Materials

Waste

INTEGRATED STRUCTURE

INTERNAL APPRAISAL CORPORATE TRADING PERFORMANCE: REVIEW OF

FINANCIAL PERFORMANCE (BALANCE SHEET INFORMATION)

PERFORMANCE INDICATORS : BID SUCCESS RATIO ETC. CURRENT SERVICES AND PRODUCTS: TRACING

ORIGINS OF COST AND PROFIT ORGANISATIONAL ANALYSIS: IDENTIFICATION OF

AREAS OF SKILL COMPANY POSITION IN MARKETS CONTROL SYSTEMS ASSETS-RESOURCES POLICIES/STRATEGIES

QUESTIONNAIRE FINDINGS (1)

STRENGTHS/WEAKNESSES MEAN STD. DEV.

FINANCIAL RESOURCES/CREDIBILITY 4.22 0.88

TECHNICAL CAPABILITY 4.00 0.76

MANAGERIAL CAPABILITY 3.65 0.71

ORGANISATIONAL STRUCTURE 3.38 0.78

LOW COST CONSTRUCTION 3.57 0.95

QUALITY OF WORK AND SERVICES 4.20 0.66

HUMAN RESOURCES 3.50 0.85

GOOD MARKETING 3.32 0.81

IT DEVELOPMENTS 3.68 0.79

COMPANY IMAGE 4.32 0.77

INNOVATION IN SERVICES 3.38 0.74

EXPERIENCE/KNOWLEDGE 4.33 0.75

RESEARCH AND DEVELOPMENT 2.37 0.86

CLIENT RELATIONS 4.07 0.78

RELATIONS WITH COMPETITORS 3.65 0.73

COST INCREASE DUE TO PRIMARY ACTIVITIES : 60%COST INCREASE DUE TO SUPPORT ACTIVITIES: 40%

COST OF POOR QUALITY (REWORK) = 3COST OF POOR PLANNING (DELAY) = 2COST OF POOR CONTRACT MANAGEMENT (CLAIMS)= 2COST OF POOR INFORMATION FLOW = 2COST OF POOR SELECTION OF RESOURCES = 2Where 1: negligible, 2: considerable, 3: significant

QUESTIONNAIRE FINDINGS (2)

QUESTIONNAIRE FINDINGS: SOURCES OF COMPETITIVE ADVANTAGE IN TURKISH CONSTRUCTION INDUSTRY

CRITERIA MEAN VALUE STD. DEV.

COST-TIME 4.33 0.9

QUALITY 3.47 0.95

CLIENT RELATIONS 4.33 0.73

FINANCIAL CAPABILITY

4.00 0.71

TECHNICAL COMPETENCY

3.78 0.9

MANAGERIAL COMPETENCY

3.50 1.03

EXPERIENCE 3.80 0.88

INNOVATION 3.13 1.19

POLITICAL POWER 4.47 0.83