The document discusses analyzing an organization's core competencies and sustainable competitive advantages. It explains that core competencies are unique skills that enable an organization to deliver value to customers. Understanding core competencies allows a company to focus its investments and strategies. A sustainable competitive advantage exists when a company consistently outperforms competitors in profits over a long period of time. The document then provides an example comparing two cupcake shops, one with a sustainable advantage through higher quality ingredients.
The document discusses analyzing an organization's core competencies and sustainable competitive advantages. It explains that core competencies are unique skills that enable an organization to deliver value to customers. Understanding core competencies allows a company to focus its investments and strategies. A sustainable competitive advantage exists when a company consistently outperforms competitors in profits over a long period of time. The document then provides an example comparing two cupcake shops, one with a sustainable advantage through higher quality ingredients.
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This presentation helps you understand about Internal Analysis
The document discusses analyzing an organization's core competencies and sustainable competitive advantages. It explains that core competencies are unique skills that enable an organization to deliver value to customers. Understanding core competencies allows a company to focus its investments and strategies. A sustainable competitive advantage exists when a company consistently outperforms competitors in profits over a long period of time. The document then provides an example comparing two cupcake shops, one with a sustainable advantage through higher quality ingredients.
The document discusses analyzing an organization's core competencies and sustainable competitive advantages. It explains that core competencies are unique skills that enable an organization to deliver value to customers. Understanding core competencies allows a company to focus its investments and strategies. A sustainable competitive advantage exists when a company consistently outperforms competitors in profits over a long period of time. The document then provides an example comparing two cupcake shops, one with a sustainable advantage through higher quality ingredients.
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Internal Scanning:
Organizational Analysis Core Competencies
-a deep proficiency that enables a company to
deliver unique value to customers. It embodies an organization’s collective learning, particularly of how to coordinate diverse production skills and integrate multiple technologies. Core Competency
-creates sustainable competitive advantage for
a company and helps it branch into a wide variety of related markets.
Understanding Core Competencies allows
companies to invest in the strengths that differentiate them and set strategies that unify their entire organization. Sustainable Competitive Advantage
Competitive advantage exists when a
particular company consistently outperforms other companies in the same industry. Sustainable Competitive Advantage
Competitive advantage exists when a
particular company consistently outperforms other companies in the same industry. A company is considered to be outperforming others if profits are higher than the competition's profits. The competitive advantage is thought to be stronger when it lasts for a longer period of time. Those companies who are able to maintain a competitive advantage for many years are thought to have a sustainable competitive advantage. For example, if Sally's Cupcake Shop can make a chocolate cupcake for 25 cents and sell it for $1.00, the profit on each cupcake is 75 cents. Sally's customers will pay $1.00 per cupcake because the cupcakes are delicious and made with high quality ingredients. A few blocks away, Bobby's Cupcakes & More spends 40 cents making a chocolate cupcake, but can only sell the cupcake for 50 cents. Bobby's profit is only ten cents per cupcake. Customers will not pay as much money per cupcake, because Bobby's cupcakes are not as tasty and are not made with ingredients that match the quality of Sally's cupcakes. Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers bring together a range of products and present them in a way that's convenient to customers, sometimes supported by services such as fitting rooms or personal shopper advice. The value that's created and captured by a company is the profit margin:
Value Created and Captured
(Cost of Creating that Value) = Margin The more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage. Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. The way in which value chain activities are performed determines costs and affects profits, so this tool can help you understand the sources of value for your organization. Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on systems, and how inputs are changed into outputs purchased by consumers. Porter described a chain of activities common to all businesses, and he divided them into primary and support activities, as shown next. Using Porter's Value Chain
Step 1 – Identify subactivities for each primary activity
Step 2 – Identify subactivities for each support activity. Step 3 – Identify links Step 4 – Look for opportunities to increase value Step 1 – Identify subactivities for each primary activity
Direct activities create value by themselves. For example, in a
book publisher's marketing and sales activity, direct subactivities include making sales calls to bookstores, advertising, and selling online. Indirect activities allow direct activities to run smoothly. Marketing activity, indirect subactivities include managing the sales force and keeping customer records. Quality assurance activities ensure that direct and indirect activities meet the necessary standards. Using Porter's Value Chain
Step 1 – Identify subactivities for each primary activity
Step 2 – Identify subactivities for each support activity. Step 3 – Identify links Step 4 – Look for opportunities to increase value Step 2 – Identify subactivities for each support activity.
For each of the Human Resource Management,
Technology Development and Procurement support activities, determine the subactivities that create value within each primary activity. For example, consider how human resource management adds value to inbound logistics, operations, outbound logistics, and so on. As in Step 1, look for direct, indirect, and quality assurance subactivities. Step 2 – Identify subactivities for each support activity.
Then identify the various value-creating
subactivities in your company's infrastructure. These will generally be cross-functional in nature, rather than specific to each primary activity. Again, look for direct, indirect, and quality assurance activities. Step 2 – Identify subactivities for each support activity.
Then identify the various value-creating
subactivities in your company's infrastructure. These will generally be cross-functional in nature, rather than specific to each primary activity. Again, look for direct, indirect, and quality assurance activities. Step 3 – Identify links
Find the connections between all of the value
activities you've identified. This will take time, but the links are key to increasing competitive advantage from the value chain framework. For example, there's a link between developing the sales force (an HR investment) and sales volumes. There's another link between order turnaround times, and service phone calls from frustrated customers waiting for deliveries. Step 4 – Look for opportunities to increase value
Review each of the subactivities and links that
you've identified, and think about how you can change or enhance it to maximize the value you offer to customers (customers of support activities can be internal as well as external).
