Compared to tangible resources, intangible resources are an inferior source of core competencies.

26/03/2020

1

MGT30005 Strategic Planning in

Dynamic Environment

Internal Analysis: Resource Based View: Resources,

capabilities, core competencies and competitive

advantages

CRICOS 00111D TOID 3059

Learning objectives

• Explain the nature of ‘competitive advantage’

• Discuss the concept of the value chain and its links to competitive advantage

• Describe the role of an organisation's resources and capabilities as a basis of competitive advantage

• Identify the resources and capabilities of an organisation

• Evaluate the potential for an organisation's resources and capabilities to sustain competitive advantage

26/03/2020

2

Competitiveness Coles and Woolworths have long since dominated the supermarket retail

industry, generally being the first-stop shop for Australian's buying their

weekly groceries. The duopoly is about to be challenged however by

foreign entities who want to muscle in on the retail market.

Only five years ago the two retailers added up to about 80% of grocery

sales. That number has dropped in recent times because of ALDI, which

equates to tens of millions of dollars.

What has ALDI done differently?

What are ALDI’s core

competencies?

Resource Based View (RBV)

Core Competence

Distinctive competence

Sustainable Competence

Intangible Resources or Capabilities

Tangible Resources

26/03/2020

3

• Core competencies are resources and

capabilities that serve as a source of competitive

advantage.

• A competitive advantage is more likely to be

sustainable if it is based on organisational

processes rather than products and sets of

assets

• Sustainable competitive advantage refers to

organisational capacity to continuously

outperform its rivals in attracting customers

Competency

Strategic vision

• A vision is a picture of what a firm wants to be

and, in broad terms, what it wants to ultimately

achieve

• Example

– ‘Our purpose is to create long term value

through the discovery, development and

conversion of natural resources and provision

of innovative customer and market-based

solutions.’ (BHP)

– ‘Our vision is to be the world’s best quick

service restaurant.’ (McDonald's)

26/03/2020

4

Strategic mission

The vision is the foundation for a firm’s mission

A firm’s mission is more concrete than its vision

McDonald’s mission statement

–Be the best employer for our people in each community

around the world and deliver operational excellence to

our customers in each of our restaurants

Myer’s Mission statement:

–"At Myer, our aim is to provide you with the highest

standard of service and to ensure that we consistently

meet and exceed your shopping expectations."

Quiz

A firm’s mission tends to be enduring while its vision can change in

view of changing environmental conditions.

• T/F

A statement that articulates the ideal description of an organisation

and gives shape to its intended future is a:

• A. mission

• B. vision

• C. strategic idea

• D. strategic objective

26/03/2020

5

ANALYSING THE INTERNAL ORGANISATION

Creating value

• By innovatively bundling and leveraging their resources and capabilities and by exploiting their core competencies or competitive advantages, firms create value.

• Value is measured by: – product performance characteristics – product attributes for which customers are willing to

pay.

Superior value 

No competitive advantage lasts forever.

COMPONENTS

OF AN

INTERNAL

ANALYSIS

26/03/2020

6

RESOURCES, CAPABILITIES AND CORE COMPETENCIES

Resources: • are the source of a firm’s capabilities • are broad in scope • cover a spectrum of individual, social and

organisational phenomena • represent inputs into a firm’s production

process • do not yield a competitive advantage or

create value that results in above-average returns on their own (e.g. a brand is no use unless you use it).

Core competencies

Capabilities

Resources

• Tangible

• Intangible

RESOURCES, CAPABILITIES AND CORE COMPETENCIES

26/03/2020

7

Compared to tangible resources, intangible resources are a superior

source of core competencies.

RESOURCES, CAPABILITIES AND CORE COMPETENCIES

Capabilities: • emerge over time through complex

interactions among tangible and intangible resources

• stem from employees’ unique skills, knowledge and functional expertise

• are activities that a firm performs exceptionally well relative to its rivals

• are activities through which a firm adds unique value to its goods or services over an extended period.

Core competencies

Capabilities

Resources

• Tangible

• Intangible

RESOURCES, CAPABILITIES AND CORE COMPETENCIES

26/03/2020

8

EXAMPLES OF FIRMS’

CAPABILITIES

BUILDING CORE COMPETENCIES

The four criteria of sustainable

competitive advantage

• Capabilities that fulfil the four criteria of

sustainable competitive advantage are

considered core competencies.

Core

competencies

Capabilities

Resources

• Tangible

• Intangible

26/03/2020

9

OUTCOMES FROM COMBINATIONS OF THE CRITERIA

FOR SUSTAINABLE COMPETITIVE ADVANTAGE

OUTCOMES

FROM

COMBINATIONS

OF THE

CRITERIA FOR

SUSTAINABLE

COMPETITIVE

ADVANTAGE

VRIO analysis Woolworths

26/03/2020

10

BUILDING CORE COMPETENCIES

Value chain analysis

• Both primary and support activities should

be analysed.

• The competitive landscape demands that

value chains and supply chains be examined

in a global context.

• Each activity should be examined relative to

competitor’s abilities and rated as superior,

equivalent or inferior.

Value chain analysis

• Value chain analysis enables organisations to

understand which activities create value and which do

not.

• The value chain is a template used by an organisation to

identify its cost position, and the means that might be

used to facilitate implementation of a chosen business

level strategy.

• A competitive advantage can be created if the

company’s value chain creates additional value without

incurring significant extra costs

26/03/2020

11

Value chain

Primary activities

• Primary activities are actions directly associated with production, delivery, sales and service. The key activities include:

– Inbound logistics: inventory handling, store inputs

– Operations: machining, packaging, assembling

– Outbound logistics: warehousing, order processing

– Marketing and sales: advertising, branding

– Service: after-sales support

26/03/2020

12

Support activities

• Support activities are actions that enable primary activities to take place, including:

– Human resource management: hiring, training

– Procurement: supply chain

– Technology development: research, design

– Organisational infrastructure: planning, financing

• A major department store chain has a strict policy of banning

photographs or videos of its sales floor or back room

operations. It also does not allow academics to conduct

studies of it for publication in research journals. In fact, some

of its own top managers refer to the management’s policies

on secrecy as “verging on paranoid.” These policies indicate

that the top management of the firm believes the

organization’s core competencies are

• a. causally ambiguous.

• b. unobservable.

• c. imitable.

• d. common.

26/03/2020

13

SWOT analysis

SWOT summarises the strengths, weaknesses, opportunities and threats likely to impact on strategy development.

INTERNAL ANAYSIS: STRENGTHS and WEAKNESSES

EXTERNAL ANALYSIS: OPPORTUNITIES and THREATS

Uses of SWOT analysis

26/03/2020

14

Risks in a SWOT analysis • Long lists with no attempt at prioritisation.

• Over generalisation – sweeping statements often

based on biased and unsupported opinions.

• SWOT is used as a substitute for analysis – it

should result from detailed analysis using the

internal and external analyses.

• SWOT is not used to guide strategy – it is seen

as an end in itself.

Final quiz

If a firm has a service that is valuable, rare, and

costly-to-imitate, but a substitute exists for the service,

the firm will

• a. achieve competitive parity.

• b. have a competitive disadvantage.

• c. have a temporary competitive advantage.

• d. gain a sustainable competitive advantage.

26/03/2020

15

Summary

The following concepts have been

discussed in this session :

– competitive advantage

– value chain analysis

– VRIO analysis

– SWOT analysis

Applied Sciences

Architecture and Design

Biology

Business & Finance

Chemistry

Computer Science

Geography

Geology

Education

Engineering

English

Environmental science

Spanish

Government

History

Human Resource Management

Information Systems

Law

Literature

Mathematics

Nursing

Physics

Political Science

Psychology

Reading

Science

Social Science

Home

Blog

Archive

Contact

google+twitterfacebook

Copyright © 2019 HomeworkMarket.com