Description
The structure & politics of an organisation affects the manner in which the organisation responds to environmental change. Furthermore, it can be difficult to change cultural attitudes when the nature of an organisation's business environment has changed.
The Internal Environment:
Resources, Capabilities and Core Competencies
Ch3-1
Strategic Inputs
Chapter 2 External Environment Strategic Intent Chapter 3 Internal Environment Strategic Mission
The Strategic Management Process
Strategy Implementation
Chapter 10 Corporate Governance
Chapter 12 Strategic Leadership Chapter 11 Structure & Control Chapter 13
Entrepreneurship
Strategy Formulation
Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 8 International Strategy Chapter 6 Corporate-Level Strategy Chapter 9 Cooperative Strategies
Strategic Actions
Chapter 7 Acquisitions & Restructuring
& Innovation
Outcomes
Strategic
Feedback
Strategic Competitiveness Above Average Returns
Ch3-2
Chapter 2
External Environment
What the Firm Might Do
Sustainable Competitive Advantage
Chapter 3
Internal Environment
What the Firm Can Do
Ch3-3
Discovering Core Competencies
Discovering Core Competencies
Competitive Advantage
Gained through Core Competencies
Strategic Competitiveness
Above-Average Returns
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages * * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
* Outsource
Resources
* Tangible * Intangible
Ch3-4
Key Questions for Managers in Internal Analysis
How do we assemble bundles of Resources, Capabilities and Core Competencies to create VALUE for customers? And... Will environmental changes make our core competencies obsolete? Are substitutes available for our core competencies? Are our core competencies easily imitated?
Ch3-5
Conditions Affecting Managerial Decisions About Resources, Capabilities and Core Competencies Uncertainty
regarding characteristics of the general and the industry environments, competitor’s actions, and customer’s preferences.
Complexity
regarding the interrelated causes shaping a firm’s environments and perceptions of the environments
Intraorganizational Conflicts
among people making managerial decisions and those affected by them
Ch3-6
Discovering Core Competencies
Resources
* Tangible * Intangible
Ch3-7
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Ch3-8
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process... such as capital equipment, skills of employees, brand names, finances and talented managers
Ch3-9
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers
“Some genius invented the Oreo. We’re just living off the inheritance.” F. Ross Johnson,
Former President & CEO, RJR Nabisco
Ch3-10
Resources
Tangible Resources
* * * * Financial Physical Human Resources Organizational
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers “Some genius invented the Oreo. We’re just living off the inheritance.” F. Ross Johnson,
Former President & CEO, RJR Nabisco
Ch3-11
Intangible Resources
* Technological * Innovation
* Reputation
Discovering Core Competencies
Capabilities
Teams of Resources
Resources
* Tangible * Intangible
Ch3-12
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Ch3-13
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Ch3-14
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective. Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage.
Ch3-15
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Resources
* Tangible * Intangible
Ch3-16
Core Competencies
What a firm Does... that is Strategically Valuable
“…are the essence of what makes an organization unique in its ability to provide value to customers.”
Leonard-Barton, Bowen, Clark, Holloway & Wheelwright
McKinsey & Co. recommends identifying three to four competencies to use in framing strategic actions.
Ch3-17
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Resources
* Tangible * Intangible
* Outsource
Ch3-18
Core Competencies
For a strategic capability to be a Core Competency, it must be:
What a firm Does... that is Strategically Valuable
Valuable
Rare Costly to Imitate Nonsubstitutable
Ch3-19
Core Competencies
What a firm Does... that is Strategically Valuable
Valuable
Capabilities that help a firm neutralize threats or exploit opportunities
Rare
Capabilities that are not possessed by many others
Costly to Imitate
Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Ch3-20
What Criteria Make Core Competencies Costly to Imitate?
Unique Historical Conditions
An unusual evolutionary pattern of growth may contribute to the development of competencies in a manner that is unique to those particular circumstances Example: Disney created Mickey Mouse at a time when animated motion pictures were new
Causal Ambiguity
This occurs when competitors are unable to detect how a firm uses its competencies as a foundation for competitive advantage
Social Complexity
Occurs when the firm’s capabilities are the result of complex social phenomena, such as interpersonal relationships, trust and friendships among managers or a firm’s reputation with suppliers and customers
Ch3-21
Core Competencies
Core Competencies must be:
Valuable
What a firm Does... that is Strategically Valuable
Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment
Capabilities that are possessed by few, if any, current or potential competitors
Rare
Costly to Imitate
Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Capabilities that do not have strategic equivalents, such as firmspecific knowledge or trust-based relationships
Nonsubstitutable
Ch3-22
Core Competencies
Resources
• Inputs to a firm’s production process
Core Competence
• A strategic capability
The source of
Capability
• Integration of a team of resources
Does the capability satisfy the criteria of sustainable competitive advantage?
YES
NO
Capability
• A nonstrategic team of resources
Ch3-23
Outcomes from Combinations of the Criteria for Sustainable Competitive Advantage
Valuable Rare Costly to Imitate Nonsubstitutable Competitive Performance Consequences Implications Competitive Disadvantage Competitive Parity Temporary Competitive Advantage Sustainable Competitive Advantage Below Average Returns Average Returns Aver./Above Average Returns
NO
NO
NO
NO
YES
NO
NO
YES/NO
YES
YES
NO
YES/NO
YE S
YE S
YE S
YE S
Above Average Returns
Ch3-24
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-25
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Primary Activities
Ch3-26
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Inbound Logistics
Primary Activities
Ch3-27
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Primary Activities
Operations
Inbound Logistics
Ch3-28
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Primary Activities
Outbound Logistics
Inbound Logistics
Ch3-29
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Outbound Logistics
Primary Activities
Marketing & Sales
Inbound Logistics
Ch3-30
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Outbound Logistics
Primary Activities
Marketing & Sales
Inbound Logistics
Service
Ch3-31
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-32
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-33
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-34
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-35
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-36
Outsourcing
Strategic Choice to Purchase Some Activities From Outside Suppliers
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-37
Outsourcing
Strategic Choice to Purchase Some Activities From Outside Suppliers
Firm Infrastructure
Human Resource Management
Support Activities
Human Resource Management Firms often purchase a portion
Technological Development Procurement
Technological
Procurement
Operations Inbound Logistics
of their value-creating activities from specialty external suppliers Development who can perform these functions more efficiently
Outbound Logistics
Marketing & Sales
Service
Service
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Primary Activities
Ch3-38
Strategic Rationales for Outsourcing
Improve Business Focus
Lets company focus on broader business issues by having outside experts handle various operational details
Provide Access to World-Class Capabilities
The specialized resources of outsourcing providers makes worldclass capabilities available to firms in a wide range of applications
Accelerate Business Re-Engineering Benefits
Achieves re-engineering benefits more quickly by having outsiders-who have already achieved world-class standards--take over process
Share Risks
Reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities
Free Resources for Other Purposes
Permits firm to redirect efforts from non-core activities toward those that serve customers more effectively Ch3-39
To capitalize on the usefulness of the Value Chain concept...
it is important to recognize that...
Ch3-40
Value Chains are part of a Total Value System
Supplier Value Chain
Firm Value Chain
Channel Value Chain
Buyer Value Chain
Ch3-41
Value Chains are part of a Total Value System
Firm Value Chain Channel Value Chain Buyer Value Chain
Supplier Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Ch3-42
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Buyer Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Channel Value Chain
Each firm must eventually find a way to become a part of some buyer’s value chain
Ch3-43
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Channel Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Each firm must eventually find a way to become a part of some buyer’s value chain
Buyer Value Chain
Ultimate basis for differentiation is the ability to play a role in a buyer’s value chain
This creates VALUE!!
Ch3-44
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Channel Value Chain Buyer Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Each firm must eventually find a way to become a part of some buyer’s value chain
Ultimate basis for differentiation is the ability to play a role in a buyer’s value chain
This creates VALUE!!
Value chains vary for firms in an industry, reflecting each firm’s unique qualities: • History • Strategy • Success at Implementation
Ch3-45
Core Competencies--Cautions and Reminders
Never take for granted that core competencies will continue to provide a source of competitive advantage
All core competencies have the potential to become Core Rigidities Core Rigidities are former core competencies that sow the seeds of organizational inertia and prevent the firm from responding appropriately to changes in the external environment
Strategic myopia and inflexibility can strangle the firm’s ability to grow and adapt to environmental change or competitive threats
Ch3-46
Discovering Core Competencies
Strategic Competitiveness
Core Competencies
Sources of Competitive Advantage
Discovering Core Competencies
Above-Average Returns
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-47
Chapter 2 External Environment Strategic Intent Chapter 3 Internal Environment Strategic Mission
The Strategic Management Process
Ch3-48
Chapter 2 External Environment Chapter 3 Internal Environment
Strategic Intent Strategic Mission
The Strategic Management Process
Strategic Intent
Ch3-49
Chapter 2 External Environment Chapter 3 Internal Environment
Strategic Intent Strategic Mission
The Strategic Management Process
Strategic Intent
Leveraging of a firm’s resources, capabilities and core competencies to accomplish what may appear to be unattainable goals in the competitive environment
Strategic Mission
A statement of the firm’s unique purpose and the scope of its operations in product market terms
Ch3-50
Discovering Core Competencies
Discovering Core Competencies
Competitive Advantage
Gained through Core Competencies
Strategic Competitiveness
Above-Average Returns
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-51
doc_868475132.ppt
The structure & politics of an organisation affects the manner in which the organisation responds to environmental change. Furthermore, it can be difficult to change cultural attitudes when the nature of an organisation's business environment has changed.
The Internal Environment:
Resources, Capabilities and Core Competencies
Ch3-1
Strategic Inputs
Chapter 2 External Environment Strategic Intent Chapter 3 Internal Environment Strategic Mission
The Strategic Management Process
Strategy Implementation
Chapter 10 Corporate Governance
Chapter 12 Strategic Leadership Chapter 11 Structure & Control Chapter 13
Entrepreneurship
Strategy Formulation
Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 8 International Strategy Chapter 6 Corporate-Level Strategy Chapter 9 Cooperative Strategies
Strategic Actions
Chapter 7 Acquisitions & Restructuring
& Innovation
Outcomes
Strategic
Feedback
Strategic Competitiveness Above Average Returns
Ch3-2
Chapter 2
External Environment
What the Firm Might Do
Sustainable Competitive Advantage
Chapter 3
Internal Environment
What the Firm Can Do
Ch3-3
Discovering Core Competencies
Discovering Core Competencies
Competitive Advantage
Gained through Core Competencies
Strategic Competitiveness
Above-Average Returns
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages * * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
* Outsource
Resources
* Tangible * Intangible
Ch3-4
Key Questions for Managers in Internal Analysis
How do we assemble bundles of Resources, Capabilities and Core Competencies to create VALUE for customers? And... Will environmental changes make our core competencies obsolete? Are substitutes available for our core competencies? Are our core competencies easily imitated?
Ch3-5
Conditions Affecting Managerial Decisions About Resources, Capabilities and Core Competencies Uncertainty
regarding characteristics of the general and the industry environments, competitor’s actions, and customer’s preferences.
Complexity
regarding the interrelated causes shaping a firm’s environments and perceptions of the environments
Intraorganizational Conflicts
among people making managerial decisions and those affected by them
Ch3-6
Discovering Core Competencies
Resources
* Tangible * Intangible
Ch3-7
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Ch3-8
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process... such as capital equipment, skills of employees, brand names, finances and talented managers
Ch3-9
Resources
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers
“Some genius invented the Oreo. We’re just living off the inheritance.” F. Ross Johnson,
Former President & CEO, RJR Nabisco
Ch3-10
Resources
Tangible Resources
* * * * Financial Physical Human Resources Organizational
What a firm Has...
What a firm has to work with: its assets, including its people and the value of its brand name
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers “Some genius invented the Oreo. We’re just living off the inheritance.” F. Ross Johnson,
Former President & CEO, RJR Nabisco
Ch3-11
Intangible Resources
* Technological * Innovation
* Reputation
Discovering Core Competencies
Capabilities
Teams of Resources
Resources
* Tangible * Intangible
Ch3-12
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Ch3-13
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Ch3-14
Capabilities
What a firm Does...
Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective. Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage.
Ch3-15
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Resources
* Tangible * Intangible
Ch3-16
Core Competencies
What a firm Does... that is Strategically Valuable
“…are the essence of what makes an organization unique in its ability to provide value to customers.”
Leonard-Barton, Bowen, Clark, Holloway & Wheelwright
McKinsey & Co. recommends identifying three to four competencies to use in framing strategic actions.
Ch3-17
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Resources
* Tangible * Intangible
* Outsource
Ch3-18
Core Competencies
For a strategic capability to be a Core Competency, it must be:
What a firm Does... that is Strategically Valuable
Valuable
Rare Costly to Imitate Nonsubstitutable
Ch3-19
Core Competencies
What a firm Does... that is Strategically Valuable
Valuable
Capabilities that help a firm neutralize threats or exploit opportunities
Rare
Capabilities that are not possessed by many others
Costly to Imitate
Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Ch3-20
What Criteria Make Core Competencies Costly to Imitate?
Unique Historical Conditions
An unusual evolutionary pattern of growth may contribute to the development of competencies in a manner that is unique to those particular circumstances Example: Disney created Mickey Mouse at a time when animated motion pictures were new
Causal Ambiguity
This occurs when competitors are unable to detect how a firm uses its competencies as a foundation for competitive advantage
Social Complexity
Occurs when the firm’s capabilities are the result of complex social phenomena, such as interpersonal relationships, trust and friendships among managers or a firm’s reputation with suppliers and customers
Ch3-21
Core Competencies
Core Competencies must be:
Valuable
What a firm Does... that is Strategically Valuable
Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment
Capabilities that are possessed by few, if any, current or potential competitors
Rare
Costly to Imitate
Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Capabilities that do not have strategic equivalents, such as firmspecific knowledge or trust-based relationships
Nonsubstitutable
Ch3-22
Core Competencies
Resources
• Inputs to a firm’s production process
Core Competence
• A strategic capability
The source of
Capability
• Integration of a team of resources
Does the capability satisfy the criteria of sustainable competitive advantage?
YES
NO
Capability
• A nonstrategic team of resources
Ch3-23
Outcomes from Combinations of the Criteria for Sustainable Competitive Advantage
Valuable Rare Costly to Imitate Nonsubstitutable Competitive Performance Consequences Implications Competitive Disadvantage Competitive Parity Temporary Competitive Advantage Sustainable Competitive Advantage Below Average Returns Average Returns Aver./Above Average Returns
NO
NO
NO
NO
YES
NO
NO
YES/NO
YES
YES
NO
YES/NO
YE S
YE S
YE S
YE S
Above Average Returns
Ch3-24
Discovering Core Competencies
Discovering Core Competencies
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-25
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Primary Activities
Ch3-26
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Inbound Logistics
Primary Activities
Ch3-27
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Primary Activities
Operations
Inbound Logistics
Ch3-28
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Primary Activities
Outbound Logistics
Inbound Logistics
Ch3-29
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Outbound Logistics
Primary Activities
Marketing & Sales
Inbound Logistics
Ch3-30
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Operations
Outbound Logistics
Primary Activities
Marketing & Sales
Inbound Logistics
Service
Ch3-31
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-32
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-33
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-34
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-35
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-36
Outsourcing
Strategic Choice to Purchase Some Activities From Outside Suppliers
Firm Infrastructure
Support Activities
Human Resource Management
Technological Development
Procurement
Operations Outbound Logistics Marketing & Sales Inbound Logistics Service
Primary Activities
Ch3-37
Outsourcing
Strategic Choice to Purchase Some Activities From Outside Suppliers
Firm Infrastructure
Human Resource Management
Support Activities
Human Resource Management Firms often purchase a portion
Technological Development Procurement
Technological
Procurement
Operations Inbound Logistics
of their value-creating activities from specialty external suppliers Development who can perform these functions more efficiently
Outbound Logistics
Marketing & Sales
Service
Service
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Primary Activities
Ch3-38
Strategic Rationales for Outsourcing
Improve Business Focus
Lets company focus on broader business issues by having outside experts handle various operational details
Provide Access to World-Class Capabilities
The specialized resources of outsourcing providers makes worldclass capabilities available to firms in a wide range of applications
Accelerate Business Re-Engineering Benefits
Achieves re-engineering benefits more quickly by having outsiders-who have already achieved world-class standards--take over process
Share Risks
Reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities
Free Resources for Other Purposes
Permits firm to redirect efforts from non-core activities toward those that serve customers more effectively Ch3-39
To capitalize on the usefulness of the Value Chain concept...
it is important to recognize that...
Ch3-40
Value Chains are part of a Total Value System
Supplier Value Chain
Firm Value Chain
Channel Value Chain
Buyer Value Chain
Ch3-41
Value Chains are part of a Total Value System
Firm Value Chain Channel Value Chain Buyer Value Chain
Supplier Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Ch3-42
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Buyer Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Channel Value Chain
Each firm must eventually find a way to become a part of some buyer’s value chain
Ch3-43
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Channel Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Each firm must eventually find a way to become a part of some buyer’s value chain
Buyer Value Chain
Ultimate basis for differentiation is the ability to play a role in a buyer’s value chain
This creates VALUE!!
Ch3-44
Value Chains are part of a Total Value System
Supplier Value Chain Firm Value Chain Channel Value Chain Buyer Value Chain
Upstream Value Perform valuable activities that complement the firm’s activities
Each firm must eventually find a way to become a part of some buyer’s value chain
Ultimate basis for differentiation is the ability to play a role in a buyer’s value chain
This creates VALUE!!
Value chains vary for firms in an industry, reflecting each firm’s unique qualities: • History • Strategy • Success at Implementation
Ch3-45
Core Competencies--Cautions and Reminders
Never take for granted that core competencies will continue to provide a source of competitive advantage
All core competencies have the potential to become Core Rigidities Core Rigidities are former core competencies that sow the seeds of organizational inertia and prevent the firm from responding appropriately to changes in the external environment
Strategic myopia and inflexibility can strangle the firm’s ability to grow and adapt to environmental change or competitive threats
Ch3-46
Discovering Core Competencies
Strategic Competitiveness
Core Competencies
Sources of Competitive Advantage
Discovering Core Competencies
Above-Average Returns
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-47
Chapter 2 External Environment Strategic Intent Chapter 3 Internal Environment Strategic Mission
The Strategic Management Process
Ch3-48
Chapter 2 External Environment Chapter 3 Internal Environment
Strategic Intent Strategic Mission
The Strategic Management Process
Strategic Intent
Ch3-49
Chapter 2 External Environment Chapter 3 Internal Environment
Strategic Intent Strategic Mission
The Strategic Management Process
Strategic Intent
Leveraging of a firm’s resources, capabilities and core competencies to accomplish what may appear to be unattainable goals in the competitive environment
Strategic Mission
A statement of the firm’s unique purpose and the scope of its operations in product market terms
Ch3-50
Discovering Core Competencies
Discovering Core Competencies
Competitive Advantage
Gained through Core Competencies
Strategic Competitiveness
Above-Average Returns
Core Competencies
Sources of Competitive Advantage
Capabilities
Teams of Resources
Criteria of Sustainable Advantages
* * * * Valuable Rare Costly to Imitate Nonsubstitutable
Value Chain Analysis
Resources
* Tangible * Intangible
* Outsource
Ch3-51
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