Strategy Planning
amhs2000
chapter_03.pptxChapter 3
Resources and Capabilities
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©2012 Robert M. Grant & Judith Jordan
Learning Objectives
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By the time you have completed this topic you will be able to:
Appreciate the role of a firm’s resources and capabilities as a basis for formulating strategy;
Identify and appraise the resources and capabilities of a firm;
Evaluate the potential for a firm’s resources and capabilities to confer sustainable competitive advantage;
Use resource and capability analysis to formulate strategies that exploit internal strengths while defending against internal weaknesses;
Identify the means through which a firm can develop its resources and capabilities;
Recognise the difficulties that managers face in developing the resources and capabilities of the organisation.
©2012 Robert M. Grant & Judith Jordan
Structure of the session
The role of resources and capabilities in strategy formulation
Identifying the organisation’s resources
Identifying the organisation’s capabilities
Appraising resources and capabilities
Putting resources and capabilities analysis to work
Developing resources and capabilities
©2012 Robert M. Grant & Judith Jordan
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Analysing resources and capabilities: the interface between strategy and the firm
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©2012 Robert M. Grant & Judith Jordan
When the external environment is subject to rapid change, internal resources and capabilities offer a more secure basis for strategy than market focus.
Resources and capabilities are the primary sources of profitability
Rationale for the Resource-based
Approach to Strategy
©2012 Robert M. Grant & Judith Jordan
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The links among resources, capabilities and competitive advantage
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©2012 Robert M. Grant & Judith Jordan
Appraising resources
| RESOURCE | CHARACTERISTICS | INDICATORS | |
| Tangible Resources | Financial | Borrowing capacity Internal funds generation | Debt/Equity ratio Credit rating Net cash flow |
| Physical | Plant and equipment: Size, location, technology flexibility. Land and buildings Raw materials | Market value of fixed assets. Scale of plants Alternative uses for fixed assets | |
| Intangible Resources | Technology | Patent, copyrights, know-how, R&D facilities Technical and scientific employees | Number of patents owned Royalty income R&D expenditure R&D staff |
| Reputation | Brands, customer loyalty, company reputation (with suppliers, customers, government) | Brand equity Customer retention Supplier loyalty | |
| Human Resources | Training, experience,adaptability, commitment and loyalty of employees | Employee qualifications, Pay rates, turnover |
©2012 Robert M. Grant & Judith Jordan
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| Company | Valuation Ratio | Country | Company | Valuation Ratio | Country | |
| Yahoo! Japan | 72.0 | Japan | Coca-Cola | 7.8 | US | |
| Colgate-Palmolive | 20.8 | US | Diageo | 7.4 | UK | |
| Glaxo Smith Kline | 13.4 | UK | 3M | 7.3 | US | |
| Anheuser-Busch | 12.6 | US | Nokia | 6.7 | Finland | |
| eBay | 11.2 | US | Sanofi-Aventis | 6.3 | France | |
| SAP | 10.8 | Germany | AstraZeneca | 5.9 | UK | |
| Yahoo! | 10.7 | US | Johnson & Johnson | 5.7 | US | |
| Dell Computer | 10.0 | US | Boeing | 5.7 | US | |
| Sumitomo Mitsui Financial | 8.8 | Japan | Eli Lily | 5.6 | US | |
| Procter & Gamble | 8.4 | US | Cisco Systems | 5.5 | US | |
| Qualcomm | 8.3 | US | Roche Holding | 5.5 | Switz. | |
| Schlumberger | 8.2 | US | L’Oreal | 5.3 | France | |
| Unilever | 8.1 | Neth/UK | Altria | 5.2 | US | |
| PepsiCo | 8.0 | US | Novartis | 5.1 | Switz. |
Major firms with the highest market to book ratios, December 2006
©2012 Robert M. Grant & Judith Jordan
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Fare clic per modificare stili del testo dello schema
Secondo livello
Terzo livello
Quarto livello
Quinto livello
The world’s most valuable brands, 2010
n
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| Rank | Brand | Brand Value $ Billion | Change from 2009 (%) | Country of Origin |
| 1 | Coca-Cola | 70.4 | +2 | USA |
| 2 | IBM | 64.7 | +7 | USA |
| 3 | Microsoft | 60.9 | +7 | USA |
| 4 | 43.6 | +36 | USA | |
| 5 | GE | 42.8 | -10 | USA |
| 6 | McDonald’s | 33.6 | +4 | USA |
| 7 | Intel | 32.0 | +4 | USA |
| 8 | Nokia | 29.5 | -15 | Finland |
| 9 | Disney | 28.7 | +1 | USA |
| 10 | Hewlett-Packard | 26.9 | +12 | USA |
| 11 | Toyota | 26.2 | -16 | Japan |
| 12 | Mercedes-Banz | 25.2 | +6 | Germany |
| 13 | Gillette | 23.3 | +2 | USA |
| 14 | Cisco | 23.2 | +5 | USA |
| 15 | BMW | 22.3 | +3 | Germany |
| 16 | Louis Vuitton | 21.9 | +4 | France |
| 17 | Apple | 21.1 | +37 | USA |
| 18 | Marlboro | 20.0 | +5 | USA |
| 19 | Samsung | 19.5 | +11 | South Korea |
| 20 | Honda | 18.5 | +4 | Japan |
Source: Interbrand
A functional classification of organizational capabilities
| FUNCTION | CAPABILITY | EXEMPLARS |
| CORPORATE FUNCTIONS | Financial control Management development Strategic innovation Multidivisional coordination Acquisition management International management | ExxonMobil, PepsiCo General Electric, Shell Google, Haier Unilever, Shell Cisco Systems, Luxottica Shell, Banco Santander |
| MANAGEMENT INFORMATION | Comprehensive, integrated MIS network linked to managerial decision making | Wal-Mart, Capital One, Dell |
| R&D | Research Innovative new product development Fast-cycle new product development | IBM, Merck 3M, Apple Canon, Inditex (Zara) |
| OPERATIONS | Efficiency in volume manufacturing Continuous improvements in operations Flexibility and speed of response | Briggs & Stratton, YKK Toyota, Harley-Davidson Four Season Hotels |
| PRODUCT DESIGN | Design capability | Nokia, Apple |
| MARKETING | Brand management Building reputation for quality Responsiveness to market trends | Procter & Gamble, Altria Johnson & Johnson MTV, L’Oreal |
| SALES AND DISTRIBUTION | Effective sales promotion and execution Efficiency and speed of order processing Speed of distribution Customer service | PepsiCo, Pfizer L. L. Bean, Dell Amazon.com Singapore Airlines, Caterpillar |
©2012 Robert M. Grant & Judith Jordan
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Porter’s value chain
©2012 Robert M. Grant & Judith Jordan
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Appraising the strategic importance of resources and capabilities
©2012 Robert M. Grant & Judith Jordan
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Putting resource and capability analysis to work: a practical guide
Step 1: Identify the key resources and capabilities
Step 2: Appraising resources and capabilities
Assessing importance
Assessing relative strength
Step 3: Developing strategy implications
Exploiting key strengths
Managing key weaknesses
What about superfluous strengths?
©2012 Robert M. Grant & Judith Jordan
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Developing resources and capabilities
Some basic issues:
Path dependency and role of early experience
Linkages between resources and capabilities
Are organizational capabilities rigid or dynamic?
Approaches to capability development
Acquiring capabilities: mergers, acquisitions and alliances
Internal development: focus and sequencing
©2012 Robert M. Grant & Judith Jordan
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Distinctive capabilities as a consequence of
childhood experiences: the oil majors
©2012 Robert M. Grant & Judith Jordan
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Summary: a framework for analyzing resources and capabilities
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