short reflective essay
alibashir202222
InternalAnalysis_W_5_20.pdf
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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
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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
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• 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)
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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
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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
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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
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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
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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
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OUTCOMES FROM COMBINATIONS OF THE CRITERIA
FOR SUSTAINABLE COMPETITIVE ADVANTAGE
OUTCOMES
FROM
COMBINATIONS
OF THE
CRITERIA FOR
SUSTAINABLE
COMPETITIVE
ADVANTAGE
VRIO analysis Woolworths
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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
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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
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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.
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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
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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.
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Summary
The following concepts have been
discussed in this session :
– competitive advantage
– value chain analysis
– VRIO analysis
– SWOT analysis
