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Strategic Planning and Implementation

This document discusses analyzing a company's internal organization to identify core competencies and competitive advantages. It covers Apple's success stemming from innovation capabilities across products and marketing strength. Managers face uncertainty in decisions about resources, capabilities and competencies. A company's competitive advantage foundation includes tangible and intangible resources bundled into organizational capabilities and core competencies. Tools like value chain analysis and criteria around valuable, rare, costly-to-imitate capabilities can help identify and build core competencies.

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Shiva LKL
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117 views12 pages

Strategic Planning and Implementation

This document discusses analyzing a company's internal organization to identify core competencies and competitive advantages. It covers Apple's success stemming from innovation capabilities across products and marketing strength. Managers face uncertainty in decisions about resources, capabilities and competencies. A company's competitive advantage foundation includes tangible and intangible resources bundled into organizational capabilities and core competencies. Tools like value chain analysis and criteria around valuable, rare, costly-to-imitate capabilities can help identify and build core competencies.

Uploaded by

Shiva LKL
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Strategic Planning and

Implementation
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies
and Competitive Advantages
Innovation in Action: Apple

• Record sales in midst of 2008 global recession


• Attributed to capabilities in innovation across all product lines
• Laptops
• iPhone
• iPod (Shuffle)
• Marketing capabilities
• Advertising
• Point of sale promotion
• Apple stores
• Potential negatives going forward
• Steve Jobs (health issues)
• Top management talent lured away by other firms
Components of Internal Analysis Leading to
Competitive Advantage and Strategic
Competitiveness
Analyzing the Internal Organization (IO) (Cont’d)

• Context of Internal Analysis


• Creating Value
• The Challenge of Analyzing the IO
• Strategic decisions are non-routine, have ethical implications and influence
the organization’s above-average returns
• Involves identifying, developing, deploying and protecting firms’ resources, capabilities
and core competencies
• Managers face uncertainty on many fronts --
• Proprietary technologies
• Changes in economic and political trends, societal values and shifts in customer
demands
• Environment – increases complexity
• Intraorganizational conflict
• Due to decisions about core competencies and how to nurture them
Conditions Affecting Managerial Decisions
About Resources, Capabilities, and Core
Competencies
Resources, Capabilities and Core
Competencies
• Competitive Advantage (CA) foundation includes
• Resources
• Bundled to create organizational capabilities
• Tangible and intangible (As seen in Figure 3.1)
• Capabilities
• Source of a firm’s core competencies and basis for CA
• Purposely integrated to achieve a specific task/set of tasks
• Core Competencies
• Capabilities that serve as a source of CA for a firm over its rivals
• Distinguish a company from its competitors – the personality
Building Core Competencies:
Criteria and Value Chain Analysis
• Two tools firms use to identify and build on their core competencies
• Four specific criteria of Sustainable CA
• Value Chain Analysis
Building Core Competencies:
Criteria and Value Chain Analysis
• Four specific criteria of sustainable competitive advantage –
capabilities that are:
• Valuable
• Rare
• Costly-to-imitate
• Nonsubstitutable capabilities
• Competitive consequences:
• Focus on capabilities that yield competitive parity and either temporary or
sustainable competitive advantage
• Performance implications include:
• Parity = average returns
• Temporary advantage = avg. to above avg. returns
• Sustainable advantage = above average returns
Building Core Competencies:
Criteria and Value Chain Analysis
• Value Chain Analysis
• Primary activities
• Involved with product’s physical creation, sales and distribution to buyers, and service
after the sale
• Service, marketing/sales, outbound/inbound logistics and operations
• Support activities
• Provide assistance necessary for the primary activities to take place
• Includes firm infrastructure, HRM, technologies development and procurement
The Basic Value Chain
Outsourcing

• Definition: Purchase of a value-creating activity from an external


supplier
• Effective execution includes an increase in flexibility, risk mitigation and
capital investment reduction
• Trend continues at a rapid pace
• Firms must outsource activities where they cannot create value or are at a
substantial disadvantage compared to competitors
• Can cause concerns
• Usually revolves around innovative ability and loss of jobs
Internal Organization Assessment and
Strategic Decisions
• Firms must identify their strengths and weaknesses
• Appropriate resources and capabilities needed to develop desired
strategy and create value for customers/other stakeholders
• Tools (i.e., outsourcing) can help a firm focus on core competencies as
the source for CA
• Core competencies have potential to become core rigidities
• Competencies emphasized when no longer competitively relevant can
become a weakness
• External environmental conditions and events impact a firm’s core
competencies

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