Strategy Integrates STRATEGY Environment Firm Search for resources and capabilities that provide the...
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Transcript of Strategy Integrates STRATEGY Environment Firm Search for resources and capabilities that provide the...
Strategy Integrates
STRATEGY
Environment
Firm
Search for resources and capabilities that provide the firm with sustainable competitive advantage
Assumptions
All firms are alike and all firms are different Success of individual firms depends on the
differences – the strength of the unique set of skills,resources and organizational capabilities the firm has developed over time
• align with external conditions• provide value for the market• satisfy their stakeholders• create barriers to competitors
Internal Analysis
Internal Analysis has two parts1. Evaluation of the firms strategy to
determine how well the strategy integrates the firm with the external environment.
2. Systematic analysis of the resources, capabilities, and competencies the firm utilizes to support its strategy
Internal Analysis
The objective of the analysis is to 1. Examine the firm’s business strategy
Addresses conditions in the external environment
Creates value for the market and profits for the firm
Deters competitors
2. Identify the firm’s core competencies3. Evaluate the effectiveness of the core
competencies to support strategy and create sustainable competitive advantage
Internal Analysis
External Environment
ActivitiesActivities
ResourcesResources
Strategy
Identify the strategy approach Rational v. emergent Low cost leader v. differentiator v.
integrated Evaluate the effectiveness of the
strategy Financial Balanced Scorecard Stakeholder
Models of Business and Strategic Management
Traditional or IO Model
Stakeholder Model
Value Chain Model
Resource-Based View (RBV)
Guerilla View
IO Model
Views the firm as an economic actor responding to market forces
The external environment is the primary determinant of success
Strategic decisions involve choosing products and markets
Primary Tools: Environment Analysis Financial Ratios
Stakeholder Model
Views firm as an extended network of relationships and dependencies
Key stakeholders determine sustainability Primary Tools
Stakeholder Analysis
Views firm as a set of linked value creating activities that transform inputs into outputs
Customers determine success Strategic decisions involve creating
superior value at lowest cost Primary Tools:
External Analysis Value Chain Analysis
Value Chain Model
The Value Chain
General administration
Human resource management
Technology development
Procurement
Inbound logistics
OperationsOutbound logistics
Marketing and sales
Service
Value-Chain Analysis
Value chain analysis involves identifying key activities that support
the firm’s strategy evaluating the effectiveness of key
activities Compare the costs and value added of key
activities in the value chain Benchmarking to compare key activities to
competitors VRIN
Resource Based View
Views firm as a unique collection of resources and competencies
Unique characteristics of the firm determine success
Strategic decisions involve creating and sustaining competitive advantage through core competencies
Primary Tools: VRIN Analysis Financial Ratios
Resource Based Model
Firm converts inputs into outputs usingResources: the assets available to a firm to develop and implement value creating strategies
Tangible: assets the firm uses to create value financial, physical, technological, organizational
Intangible: unique routines and practices that are developed over time
human, creative, reputation, cultureCapabilities: the procedures and processes the
firm has developed to use its resources effectively to achieve desired ends; the ability to put resources to productive use
Core Competencies
Competitive advantage is derived from unique resources and capabilities.
Firms distinguish themselves from competitors by developing Core Competencies The resources of a firm that allow it to
differentiate it products or services from competitors
Core competencies are the basis for competitive advantage
Core competencies are most effective when they are based on intangible resources and organizational capabilities
VRIN Analysis
To be a source of sustainable competitive advantage, a resource must have four attributes:
• Valuable: Allows the firm to differentiate products/services and create unique value
• Rare: Competitors do not have access to the resource
• Inimitable: Competitors cannot easily copy or reproduce the resource
• Nonsubsitutable: Equivalent resources that may allow similar strategy are not readily available
VRIN Analysis
Identify key competencies Construct a VRIN Table
Competency
Valuable Rare Inimitable
Non- Sub
Conclusion
Superior Engineering
Yes No No Yes Comp. Parity
Automated Production
Yes Yes No No Temp. comp. adv.
Integrated Design
Yes Yes Yes Yes Sustainable comp. adv.• Look for combinations of capabilities
• Assess strategic implications for success
Guerilla Strategy
Internal ResourcesMarket Position
CompetitorFirm
Internal ResourcesMarket Position
Perceived Opportunity
Competitive Action
Competitive Interaction
Response
Competitive Uncertainty
Competitive Uncertainty
Perceived Weakness