individual assignment

Today’s learning objectives

· Understanding the firm’s internal organisation

· Define, describe and analyse resources, capabilities and core competencies

· Understand how to use the VRIO model

· Understand value chain analysis

Agenda

· External environment and internal organisation

· Resources

· Capabilities

· Core competencies

· Value chains analysis

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External environment and internal organisation

What a firm can do:

Function of resources, capabilities and

core competencies

INTERNAL

ORGANISATION

What a firm might do:

Function of opportunities/threats in the

firm’s external environment

EXTERNAL

ENVIRONMENT

Matches

Industries matter to business performance

Porter (2008)

Industry and business performance

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Value – what is it?

· What do you associate with ‘value’ in the context of a business?

· Products/services/activities that fulfil (unmet) customers wants/needs (Customer jobs)

· Create gains

Discussion

· Remove pains

· Customer’s willingness to pay

· Firms need to create value to be viable (in the medium to longer

term)

· Firms create value by bundling, leveraging, and exploiting resources, capabilities and core competencies in unique ways

Resources

CORE COMPETENCIES

· Inputs/assets used to produce products/deliver services

· Very broad in scope

· Control vs ownership

CAPABILITIES

· Tangible

· Financial

· Organisational

· Physical

· Technological

· Intangible

RESOURCES Tangible/Intangible

· Human

· Innovation

· Reputation

Resource categories

Category Includes: Financial Money, assets and financial stocks: they are generally the company’s borrowing capacity, the ability to raise new capital and the amount of internal fund generation Physical Tangible property the firm uses in production and administration: examples are plant and equipment, location, the amenities available at the location, minerals, energy resources and land Human Knowledge, training, experience and business ideas of the entrepreneur, team of employees and managers Organisational Firm’s structure, routines, information generation, decision-making and planning systems Technical Laboratories and R&D facilities, testing and quality control technologies, patents, licenses, trademarks and copyrights Reputational Perceptions of the firm by society and its environment: examples are brand loyalty or global image	CORE COMPETENCIES
	CAPABILITIES
	RESOURCES Tangible/Intangible

Capabilities

CORE COMPETENCIES

· The combination, interaction and usage of resources

· Use to complete organisational tasks

· Experience of how to combine these

¾What we have (resources) vs. what we can do with it

(capabilities) > Putting into action

CAPABILITIES

· Collection of processes/routines

· Repetitive activities and how they are done

· A single process can be a resource

· How are things done?

RESOURCES Tangible/Intangible

· Who signs off on what?

· Often exist in specific functional areas: Distribution, HR, marketing, management, R&D, etc.

From resources to capabilities

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1154157

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“Historically the company thought of itself as being at the end of the world, you don't go

through New Zealand to get to anywhere, but South America was one place that could

change that paradigm.

There is a big unserved flow of passengers from Australasia and Southeast Asia to South

America and New Zealand is uniquely positioned geographically for that because it sits

better than Australia

--

it is a more intermediate point.“

Stephen Jones, Chief Strategy, Networks & Alliances Officer

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Criteria in resource/capability analysis

· Value:

· Can the resource/capability be used to exploit an opportunity/neutralise a threat?

· Rare:

· Do competitors have similar/equivalent resources/capabilities? • Imitable:

· Can others easily imitate the resources/capabilities?

· Depends on: Path dependencies (history), casual ambiguity, social complexity

· Organisationally embedded:

· Is the firm organised to leverage the resources/capabilities?

Core competencies

CORE COMPETENCIES

· The capabilities that are central to the success of an organisation

· Those that are built around VRIO/VRIN resources/capabilities

Valuable? Rare? Imitable? Organised? Implications No Competitive disadvantage Yes No Yes Competitive parity Yes Yes Yes Yes Competitive advantage (short term) Yes Yes No Yes Competitive advantage (longer term)	CAPABILITIES
	RESOURCES Tangible/Intangible

Core competencies

https://www.strategyand.pwc.com/gx/en/unique-solutions/capabilities-driven-strategy.html

Firm specific bases of value creation

Based on Prahalad & Hamel (1990)

Value chain

• The chain of activities the organisations engages in when converting inputs to outputs

Supply

Operations

Distribution

Marketing

After sales

IT

Finance

HR

Customer

value

Value chain analysis

· All components in the value chain are assessed in relation to competitors

· Activities should contribute to customer value and should be performed better or on par with competitors

· These may include activities that competitors cannot perform

· Beware of interdependencies and interactions between activities

· Outsourcing can be a way to access value-creating activities that an organisation lacks, but beware of ‘hollowing out’.

Next week

· Business level strategy

· Required reading:

· Chapter 4

· The great repeatable business model

· CASE 8: The movie exhibition industry: 2018 and beyond

· Don’t forget you preparation (poste one comment).

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