McGraw-Hill/Irwin Copyright © 2011 The McGraw-Hill Companies, All Rights Reserved.

Chapters 4 & 7Chapters 4 & 7

The Resource-Based The Resource-Based View of the Firm (RBV), View of the Firm (RBV),

Value Chain Value Chain Benchmarking, Benchmarking,

Leveraging International Leveraging International Competitiveness, & Competitiveness, &

SWOT AnalysisSWOT Analysis

4-2

Resource-Based Strategies Resource-Based Strategies

Resource-based strategies attempt to exploit a company’s valuable and rare resources and competitive capabilities to deliver value to customers in ways rivals find it difficult to match

4-3

Identifying Competitively Important Identifying Competitively Important Resources and CapabilitiesResources and Capabilities

Common types of valuable resources and competitive capabilities includeSkills or specialized expertise in a

competitively important capabilityValuable physical assetsValuable human assets or intellectual capitalValuable organizational assetsValuable intangible assetsCompetitively valuable alliances or

cooperative ventures

4-4

Determining the Competitive Determining the Competitive Power of a Company ResourcePower of a Company Resource

Is the resource really competitively

Valuable?

Is the resource Rare and something rivals lack?

Is the resource hard to copy or Imitate?

Is the company Organized to take advantage of its resource strengths?

4-5

RBV – Case Analysis ToolRBV – Case Analysis Tool

COMPANY: RESOURCE:

Resource Features

Yes/ Somewhat/ No

Comments

Valuable

Rare

Hard to Imitate

Well-Organized

4-6

Value Chain BenchmarkingValue Chain Benchmarking

Focuses on cross-company comparisons of how certain activities are performed and costs associated with these activities

Purchase of materialsPayment of suppliersGetting new products to marketPerformance of quality controlFilling and shipping of customer orders

4-7

Company Value ChainCompany Value Chain

4-8

Value Chain Benchmarking – Case Value Chain Benchmarking – Case Analysis ExampleAnalysis Example

4-9

Establishing International Establishing International OperationsOperations

Choosing between localized multicountry strategies or a global strategyDeciding upon the degree to vary

competitive approach country by country depends on cross-country differences in buyer preferences and market conditions

4-10

Strategy Options for Entering and Strategy Options for Entering and Competing in Foreign MarketsCompeting in Foreign Markets

General strategic options for expanding outside a company’s domestic market include:Exporting

Licensing

Franchising strategy

Strategic alliances or joint ventures

Multi-country vs. global strategy

4-11

Location-Based Revenue DriversLocation-Based Revenue Drivers

Consumer tastes and preferences

Consumer purchasing power

Consumer buying habits

Distribution channel emphasis

Demands for localized products

The strength of competitive rivalry

4-12

Location-Based Cost DriversLocation-Based Cost Drivers

Manufacturing costs vary from country to country based onWage ratesWorker productivityGovernment regulations and industry

subsidiesInflation/exchange ratesEnergy costsTax rates

4-13

Using Value Chain Improvements to Using Value Chain Improvements to Build Competitive AdvantageBuild Competitive Advantage

Multinational and global companies are able to coordinate activities across borders to achieve competitive advantage by

Transferring knowledge and skills developed in one location to a location in another country

Shifting production to locations having excess capacity or underutilized personnel

Shift production between plants in different countries to take advantage of shifting exchange rates, energy costs, or changes in tariffs and quotas

4-14

Using Profit Sanctuaries to Wage a Using Profit Sanctuaries to Wage a Strategic OffensiveStrategic Offensive

Profit sanctuaries are protected markets that provide multinational companies with substantial profitsA company’s domestic market is most likely

its chief profit sanctuary

Profit sanctuaries can give a multinational company added financial resources to wage a market offensive against a domestic-only competitor in its home market

4-15

Leveraging Intl. competitiveness Leveraging Intl. competitiveness – Case Analysis Tool– Case Analysis Tool

COMPANY:

Location Advantages Comments

Value Chain Improvements Comments

Profit Sanctuaries Comments

4-16

Taking Inventory of a Company’s Taking Inventory of a Company’s Strengths, Weaknesses, Strengths, Weaknesses, Opportunities and ThreatsOpportunities and Threats

S W O T represents the first letter inS trengths

W eaknesses

O pportunities

T hreats

For a company’s strategy to be well-conceived, it must be Matched to its resource strengths and

weaknesses Aimed at capturing its best market opportunities

and defending against external threats to its well-being

4-17

Identifying Resource WeaknessesIdentifying Resource Weaknessesand Competitive Deficienciesand Competitive Deficiencies

A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage in the marketplace

Resource weaknesses relate to Inferior or unproven skills,

expertise, or intellectual capital

Deficiencies in competitively important physical, organizational, or intangible assets

Missing or competitive inferior capabilities in key areas

4-18

Identifying External Threats to Identifying External Threats to Profitability and CompetitivenessProfitability and Competitiveness

Technological change Entry of new competitors Burdensome regulations Unfavorable demographic shifts Rise in interest rates Adverse shifts in foreign exchange rates

4-19

RBV – Case Analysis ToolRBV – Case Analysis Tool

COMPANY:

Strengths Weaknesses

Opportunities Threats