The document discusses internal capabilities and competitive advantage. It defines strategic competitiveness as successfully formulating and implementing a value-creating strategy. Competitive advantage occurs when a firm implements a strategy that creates superior value for customers that competitors cannot duplicate or imitate.
Internal capabilities are a function of a firm's resources, including tangible resources like physical assets and financial resources, as well as intangible resources like reputation, organizational capabilities, intellectual property, and technical skills. These resources and capabilities represent a firm's unique set of core competencies. Core competencies allow firms to develop sustainable competitive advantages. However, competitive advantages cannot last forever as environments and competitors change.
The document outlines models and frameworks for assessing internal capabilities
The document discusses internal capabilities and competitive advantage. It defines strategic competitiveness as successfully formulating and implementing a value-creating strategy. Competitive advantage occurs when a firm implements a strategy that creates superior value for customers that competitors cannot duplicate or imitate.
Internal capabilities are a function of a firm's resources, including tangible resources like physical assets and financial resources, as well as intangible resources like reputation, organizational capabilities, intellectual property, and technical skills. These resources and capabilities represent a firm's unique set of core competencies. Core competencies allow firms to develop sustainable competitive advantages. However, competitive advantages cannot last forever as environments and competitors change.
The document outlines models and frameworks for assessing internal capabilities
The document discusses internal capabilities and competitive advantage. It defines strategic competitiveness as successfully formulating and implementing a value-creating strategy. Competitive advantage occurs when a firm implements a strategy that creates superior value for customers that competitors cannot duplicate or imitate.
Internal capabilities are a function of a firm's resources, including tangible resources like physical assets and financial resources, as well as intangible resources like reputation, organizational capabilities, intellectual property, and technical skills. These resources and capabilities represent a firm's unique set of core competencies. Core competencies allow firms to develop sustainable competitive advantages. However, competitive advantages cannot last forever as environments and competitors change.
The document outlines models and frameworks for assessing internal capabilities
The document discusses internal capabilities and competitive advantage. It defines strategic competitiveness as successfully formulating and implementing a value-creating strategy. Competitive advantage occurs when a firm implements a strategy that creates superior value for customers that competitors cannot duplicate or imitate.
Internal capabilities are a function of a firm's resources, including tangible resources like physical assets and financial resources, as well as intangible resources like reputation, organizational capabilities, intellectual property, and technical skills. These resources and capabilities represent a firm's unique set of core competencies. Core competencies allow firms to develop sustainable competitive advantages. However, competitive advantages cannot last forever as environments and competitors change.
The document outlines models and frameworks for assessing internal capabilities
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HI6006
Competitive Strategy
Lecture 3: Internal Capabilities
An Overview The Quest for ROI
•What a firm can do:
Function of resources, INTERNAL capabilities and core ORGANISATION competencies
•What a firm might do:
Function of opportunities in the EXTERNAL firm’s external environment ENVIRONMENT Terminology
• Strategic competitiveness is achieved when a
firm successfully formulates and implements a value-creating strategy. • Strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. • Competitive advantage occurs when a firm implements a strategy that creates superior value for customers, which competitors are unable to duplicate it or find too costly to imitate it. Internal Analysis Process Resource-Based View
An organisation has its resources and capabilities
When combined these represent a unique set of
‘core competencies’
Those ‘core competencies’ allow a firm to compete
and develop ‘sustainable competitive advantage’ Competitive Advantage
• No competitive advantage can expect to last
forever. • Environment changes AND rivals use their own unique resources, capabilities and core competencies to match, leap-frog, or overtake each other. • With globalization, achieving a sustainable competitive advantage is especially challenging Activity: Discuss how globalization is impacting firms. A Model of Assessing Internal Capability Look at the resources our company has: P – physical resources R - reputation O – organizational capability F – financial resources I – intellectual property / innovation T – technical According to Jay Barney, circa 1988, P F T are necessary tangible resources but will NOT create sustainable competitive advantage; R O I (the intangible resources) will give our firm the edge in the long term. Tangible Resources Intangible Resources How strong are we (relative to others)?
For each resource:
1. How valuable is it? 2. How rare is it? (if every firm in our industry has this resource, then it has little ‘relative value’ 3. Can it be copied? 4. Can it be substituted? If we have resources that are valuable, rare, hard to copy and non-substitutable, then we may have a relative competitive advantage within our industry. Four Criteria of Sustainable Competitive Advantage Core Competence
• Can exist if all four criteria are satisfied.
• Can exists when competitors cannot copy a firm’s
strategy
• Can exist when competitors don’t have the
resources to do the same as us
• Can come to an end when external environmental
changes occur and/or rivals overtake us Watch out for Inertia
• Core competencies should not become core
rigidities, (as we have seen in long-lived firms that have become over-focused on their historic strengths) …… consider examples • Core rigidities generate inertia and stifle innovation. • A firm must adjust as the world changes by adjusting as External Environmental Conditions change Competitive Advantage
To become a core competence and a source of
competitive advantage, a capability must allow a firm to do one of the following: • perform an activity in a manner that provides superior value relative to competitors; OR • perform a value-creating activity that competitors cannot perform. Value Chain Analysis
• Value chain activities:
• Completed by a firm in order to produce products and then sell, distribute and service those products in ways that create value for customers, • Support functions: • Completed by a firm in order to support the work being done to produce, sell, distribute and service the products the firm is producing. The Value Chain Elements of the Value Chain How do Support Activities help create Value? Outsourcing
The purchase of a value-creating activity or support
function from an external supplier
Firms outsource activities when they cannot create
value themselves and are therefore at a substantial disadvantage compared to their competitors.
If done skillfully, outsourcing can be effective as it
negates capital investment. (lower fixed costs, although higher variable costs) Rationale for Outsourcing
• Specialty suppliers can typically perform
outsourced capabilities more efficiently.
• by negating the investment requirement, a firm is
more flexible and therefore better able to adapt to changing opportunities.
• The specialised resources of outsourcing
providers allows small firms to also access world- class capabilities available to firms Introduction to Case Analysis
Read the Case – looking to identify (highlight)
key strategic issues Decide which Strategy Model or theoretical concepts are relevant to this case Use the model as your ‘template’ to summarise the key issues identified in the case Form a picture of how this company (case) applies the strategy model or theoretical concepts Evaluate how well the company (case) has applied Strategy Theory Tutorial Activity in small groups
Examine the Zara mini-case (p73) and identify their
Tangible and Intangible resources Case Study
Analyse the Kindle Case (Case 6, p460) to
determine how core competencies were used to create competitive advantages for Kindle Fire