slides strategic management class resources capabilities ife

8/2/2019 Slides Strategic Management Class Resources Capabilities IFE

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Organizational Analysis

Resource and CapabilitiesAnalysis

The Resource-Based View

Approach


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The Firm

Goals and Values

Resources &

The Industry

Environment

Analysing Resources and Capabilities:

the Interface between strategy and the Firm

CapabilitiesStructure & Systems

Competitors

Customers

SuppliersSTRATEGY

STRATEGY

The Firm-Strategy

Interface

The environment-

Strategy Interface


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Basing Strategy on Resouces andCapabilities

When the external environment is in a state offlux,

the firm itself, in terms of the bundles of resources

and capabilities, may be a much more stable basis on

which to define its identity and the more likely it is

that internal R & C will provide a secure foundationfor long-term strategy.


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The Evolution of Honda Motor Company

Resource and CapabilitiesHonda

Technical

Research

Institute

founded

1st motorcycle:

98cc, 2-cycle

Dream D

Competes in

Isle of Man TT

motorcycle

races

4-cylinder

750cc

motorcycle

Portable

generator

1st gasoline-powered

car to meet US Low

Emission Vehicle Standard

Civic Hybrid

(dual gasoline/

electric)

Power products:

ground tillers, marine

engines, generators,

pumps, chainsaws

snowblowers

405cc

motor

Civic GS

(natural

gas

powered)

4 cycle

engine

First product:

Model Aclip-on engine

for bicycles

N360 mini

car1000cc

Goldwing

touring

motor cycle

Acura Car

division

Enters Formula 1

Gran Prix racing

Honda

CivicEnters Indy

car racing

Home co-

generationsystem

Honda FCXfuel cell

car

cycle

The 50ccSupercub

1946 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000


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Precision

Mechanics

FineOptics

35mm SLR camera

Plain-paper copier

Canon: Products and Core Technical Capabilities

EOS autofocus cameraDigital camera

Video still camera

Color laser copierLaser copier

Basic faxLaser faxMask aligners

Excimer laser aligners

Stepper aligners

Inkjet printerLaser printer

Color video printer

CalculatorNotebook computer

Micro-

Electronics


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STRATEGY INDUSTRY KEYSUCCESS FACTORSCOMPETITIVEADVANTAGE

ORGANIZATIONAL

The Links between Resources, Capabilitiesand Competitive Advantage

CAPABILITIES

RESOURCESTANGIBLE INTANGIBLE HUMAN

FinancialPhysical

TechnologyReputationCulture

Skills/know-howCapacity forcommunication& collaboration

Motivation


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The key to profitability is NOT throughThe key to profitability is NOT through doing thedoing thesamesame as other firms, but rather throughas other firms, but rather throughexploring differencesexploring differences. Establishing competitive. Establishing competitive

The Resource Based-View

v n nv v rmu n nv n nv v rmu n nimplementing a strategy that exploits theimplementing a strategy that exploits theuniqueness of a firmuniqueness of a firms portfolio of resourcess portfolio of resources

and capabilities.and capabilities.


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ResourceResource areare productiveproductive assetsassets ownedowned byby thethe

Resources and Capabilities (or competences)

firmfirm. In ivi ua. In ivi ua resourcesresources o N To N T conferconfercompetitivecompetitive advantageadvantage..

CapabilitiesCapabilities areare whatwhat thethe firmfirm cancan dodo ororknowsknows howhow to doto do withwith itsits resourcesresources.. CreateCreatesuperior performance.superior performance.


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Appraising Resources

RESOURCE CHARACTERISTICS INDICATORS

Financial Borrowing capacity Debt/ Equity ratio

Internal funds generation Credit rating

Tangible Net cash flow

Resources Physical Plant and equipment: Market value ofsize, location, technology fixed assets.

flexibility. Scale of plants

Land and buildings. Alternative uses for

Raw materials. fixed assets

Technology Patents, copyrights, know how No. of patents owned

R&D facilities. Royalty income

Intangible Technical and scientific R&D expenditure

Resources employees R&D staff

Reputation Brands. Customer loyalty. Company Brand equityreputation (with suppliers, customers, Customer retention

government) Supplier loyalty

Human Training, experience, adaptability, Employee qualifications,

Resources commitment and loyalty of employees pay rates, turnover.

Oraganizational Culture!


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Firm Country Value(USD $ Millions) Rating

Walmart USA 41,365 AA-

Goo le USA 36,191 AAA

Worlds Most Valued Brands (2010)

Coca-Cola USA 34,844 AAAIBM USA 33,706 AA-

Microsoft USA 33,604 AAA

GE USA 31,909 AA

HSBC UK 28,472 AAAHP USA 27,383 AA+

Nokia Finland 19,558 AA+

Citi USA 14,362 A

http://www.brandfinance.com/


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R & DR & D SpeedSpeed ofof distributiondistribution

ResearchResearch

Capabilities: Some examples

NegotiationNegotiation skillsskills FlexibilityFlexibility andand speedspeed ofof responseresponse

ResponsivenessResponsiveness toto marketmarket trendstrends

BrandBrand managementmanagement

CustomerCustomer managementmanagement relationshiprelationship


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Scarcity

Relevance

Durability

THE EXTENT OF THECOMPETITIVE ADVANTAGE

ESTABLISHED

THE PROFIT

The Rent-Earning Potential

of Resources and Capabilities

rans era y

Replicability

Property rights

Relativebargaining power

Embeddedness

COMPETITIVE ADVANTAGE

APPROPRIABILITY

OF A RESOURCE ORCAPABILITY DEPEND ON:


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Approaches to Capability Development

1) Acquire and develop the underlying resources. Especiallyhuman resources

--Externally (hiring)--Internally through developing individual skills

2) Acquire/access capabilities externally through acquisition or

alliance

3) Greenfield development of capabilities in separateorganizational unit (IBM & the PC, Xerox & PARC, GM & Saturn)

4) Build team-based capabilities through training and teamdevelopment (i.e. develop organizational routines)

5) Change management to transform values and behaviors (GE, BP)

6) Knowledge Management (systematic approaches to acquiring,storing, replicating, and accessing knowledge)


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The Internal Factor Evaluation Matrix

(IFE) Weight Rating W*RStrengthsBrand recongnition - high 0.12 4 0.48

Product Flavour high 0.05 4 0.20

Shareholders perception of the company 0.05 4 0.20

Efficiency in productive and logistics proc 0.05 3 0.15

Portfolio value diversified and know 0.10 3 0.30

Know-how of the local market Med-hig 0.08 3 0.24Distribution coverage- high 0.15 4 0.60

Weaknesses

Product independence- low 0.10 1 0.10

Shareholders historical stability - low 0.05 2 0.10

Leadership image med-low 0.10 2 0.20

Distributors independence 0.15 1 0.15

TOTAL 1 2,72MEDIUM-HIGH INTERNAL POSITION 1-4

slides strategic management class resources capabilities ife

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