Description
It gives examples of core competencies and distinctive competencies. How to identify Resource Strengths and Competitive Capabilities
Internal Analysis
Resources, Capabilities
and
Competencies
Internal Analysis
The purpose of internal analysis is to pinpoint the strengths and weaknesses of the organization. Strengths lead to superior performance. Weaknesses lead to inferior performance.
Internal Analysis includes an assessment of: ? Quantity and quality of a company’s resources and capabilities ? Ways of building unique skills and company-specific or distinctive competencies
Internal Analysis: A Three-Step Process
1.
Understand the process by which companies create value for customers and profit for themselves. ? Resources ? Capabilities ? Distinctive competencies Analyze the sources of the company’s competitive advantage. ? Strengths – that are driving profitability ? Weaknesses – opportunities for improvement Understand the importance of superiority in creating value and generating high profitability.
?
?
2.
3.
Efficiency
Innovation
?
?
Quality
Responsiveness to Customers
Resources, Capabilities and Core Competencies
?
Resources
?
Are a firm’s assets, including people and the value of its brand name Represent inputs into a firm’s production process, such as: • Capital equipment • Skills of employees • Brand names • Financial resources • Talented managers
?
Resources, Capabilities and Core Competencies
?
Resources
?
Are the source of a firm’s capabilities Machines, buildings, production capacity Capital, cash, debtors/creditors, suppliers of money (shareholders, bankers etc)
?
Physical resources
?
?
Financial resources
?
?
Human resources
?
Number and mix of people, skills and knowledge
Patents, brands, business systems, customer databases, ?goodwill?
?
Intellectual capital
?
Resources, Capabilities and Core Competencies
?
Resources
?
Tangible resources • Financial resources • Physical resources • Human resources
?
Intangible resources • Organisational culture • innovation resources • Reputation resources
Resources, Capabilities and Core Competencies
?
Human Resources
? ? ? ?
Knowledge Trust
Managerial capabilities
Organizational routines Ideas Scientific capabilities Capacity to innovate
?
Innovation Resources
?
• •
? ?
Reputational Resources Reputation with customers Brand name •
•
•
Perceptions of product quality, durability, and reliability
Reputation with suppliers • For efficient, effective, supportive, and mutually beneficial interactions and relationships
Resources, Capabilities and Core Competencies
?
Capabilities
?
Are the firm’s capacity to deploy resources that have been purposely integrated to achieve a desired end state Emerge over time through complex interactions among tangible and intangible resources Often are based on developing, carrying and exchanging information and knowledge through the firm’s human capital
?
?
Resources, Capabilities and Core Competencies
?
Capabilities
?
The foundation of many capabilities lies in: • The unique skills and knowledge of a firm’s employees • The functional expertise of those employees
Core Competencies -A Valuable Company Resource
?
A competence becomes a core competence when the wellperformed activity is central to a company’s competitiveness and profitability Often, a core competence results from collaboration among different parts of a company Typically, core competencies reside in a company’s people, not in assets on a balance sheet A core competence gives a company a potentially valuable competitive capability and represents a definite competitive asset
?
?
?
Examples: Core Competencies
?
Expertise in integrating multiple technologies to create families of new products
Know-how in creating operating systems for cost efficient supply chain management Speeding new/next-generation products to market Better after-sale service capability Skills in manufacturing a high quality product System to fill customer orders accurately and swiftly
?
? ? ? ?
Distinctive Competence -A Competitively Superior Resource
?
A distinctive competence is a competitively significant activity that a company performs better than its competitors
A distinctive competence
? ? ?
?
Represents a competitively valuable capability rivals do not have Presents attractive potential for being a cornerstone of strategy Can provide a competitive edge in the marketplace —because it represents a competitively superior resource strength
Examples: Distinctive Competencies
?
Sharp Corporation
?
Expertise in flat-panel display technology
?
Toyota
?
Low-cost, high-quality manufacturing capability and short design-to-market cycles
?
Intel
?
Ability to design and manufacture ever more powerful microprocessors for PCs
?
Wal-Mart
?
Low-cost distribution and use of state-of-the-art retail technology
Competencies
?
A competence is the product of organizational learning and experience and represents real proficiency in performing an internal activity A core competence is a well-performed internal activity central to a company’s competitiveness and profitability A distinctive competence is a competitively valuable activity a company performs better than its rivals
?
?
Distinctive Competencies and Role of Resources and Capabilities
Resources
• Tangible (physical) and intangible (non-physical)
• Allow a company to create value for its customers • Must have skills to take advantage of the resources • Firm-specific and difficult-to-imitate resources as well as valuable resources that create strong demand for a company’s products lead to distinctive competencies
Capabilities
• Coordinating resources & putting to productive use • Skills reside in the organization’s rules, routines and procedures • Product of its organization, processes & controls • Firm-specific capabilities to manage its resources lead to distinctive competencies
Distinctive Competencies to Gain Competitive Advantage
Distinctive Competencies
Firm-specific strengths allow a company to differentiate its products and/or achieve substantially lower costs than its rivals in order to gain a competitive advantage.
What Are the Company’s Strengths, Weaknesses, Opportunities and Threats ?
For a company’s strategy to be well-conceived, it must be
? Matched
? Aimed
?
to its resource strengths and weaknesses
at capturing its best market opportunities and erecting defenses against external threats to its well-being
Identifying Resource Strengths and Competitive Capabilities
?
A strength is something a firm does well or an attribute that enhances its competitiveness ? Valuable competencies or know-how ? Valuable physical assets ? Valuable human assets ? Valuable organizational assets ? Valuable intangible assets ? Important competitive capabilities ? An attribute that places a company in a position of market advantage ? Alliances or cooperative ventures with partners
Resource strengths and competitive capabilities are competitive assets!
Determining the Competitive Value of a Company Resource
?
To qualify as competitively valuable or to be the basis for sustainable competitive advantage, a “resource” must pass 4 tests: 1. Is the resource hard to copy?
2. Does the resource have staying power – is it durable?
3. Is the resource really competitively superior? 4. Can the resource be trumped by the different capabilities of rivals?
Identifying Resource Weaknesses and Competitive Deficiencies
?
A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage Resource weaknesses relate to
? ?
?
Inferior or unproven skills, expertise, or intellectual capital Lack of important physical, organizational, or intangible assets
?
Missing capabilities in key areas
Resource weaknesses and deficiencies are competitive liabilities!
Identifying a Company’s Market Opportunities
?
Opportunities most relevant to a company are those offering
?
Good match with its financial and organizational resource capabilities
Best prospects for profitable long-term growth Potential for competitive advantage
?
?
Identifying External Threats
?
? ?
Emergence of cheaper/better technologies
Introduction of better products by rivals Entry of lower-cost foreign competitors
?
? ?
Onerous regulations
Rise in interest rates Potential of a hostile takeover
?
? ?
Unfavorable demographic shifts
Adverse shifts in foreign exchange rates Political upheaval in a country
Role of SWOT Analysis in Crafting a Better Strategy
?
The most important part of S W O T analysis is not developing the 4 lists of strengths, weaknesses, opportunities, and threats, but rather
?
Using the 4 lists to draw conclusions about a company’s overall situation and Acting on the conclusions to • Better match a company’s strategy to its resource strengths and market opportunities, • Correct the important weaknesses, and
?
• Defend against external threats
doc_428154478.pptx
It gives examples of core competencies and distinctive competencies. How to identify Resource Strengths and Competitive Capabilities
Internal Analysis
Resources, Capabilities
and
Competencies
Internal Analysis
The purpose of internal analysis is to pinpoint the strengths and weaknesses of the organization. Strengths lead to superior performance. Weaknesses lead to inferior performance.
Internal Analysis includes an assessment of: ? Quantity and quality of a company’s resources and capabilities ? Ways of building unique skills and company-specific or distinctive competencies
Internal Analysis: A Three-Step Process
1.
Understand the process by which companies create value for customers and profit for themselves. ? Resources ? Capabilities ? Distinctive competencies Analyze the sources of the company’s competitive advantage. ? Strengths – that are driving profitability ? Weaknesses – opportunities for improvement Understand the importance of superiority in creating value and generating high profitability.
?
?
2.
3.
Efficiency
Innovation
?
?
Quality
Responsiveness to Customers
Resources, Capabilities and Core Competencies
?
Resources
?
Are a firm’s assets, including people and the value of its brand name Represent inputs into a firm’s production process, such as: • Capital equipment • Skills of employees • Brand names • Financial resources • Talented managers
?
Resources, Capabilities and Core Competencies
?
Resources
?
Are the source of a firm’s capabilities Machines, buildings, production capacity Capital, cash, debtors/creditors, suppliers of money (shareholders, bankers etc)
?
Physical resources
?
?
Financial resources
?
?
Human resources
?
Number and mix of people, skills and knowledge
Patents, brands, business systems, customer databases, ?goodwill?
?
Intellectual capital
?
Resources, Capabilities and Core Competencies
?
Resources
?
Tangible resources • Financial resources • Physical resources • Human resources
?
Intangible resources • Organisational culture • innovation resources • Reputation resources
Resources, Capabilities and Core Competencies
?
Human Resources
? ? ? ?
Knowledge Trust
Managerial capabilities
Organizational routines Ideas Scientific capabilities Capacity to innovate
?
Innovation Resources
?
• •
? ?
Reputational Resources Reputation with customers Brand name •
•
•
Perceptions of product quality, durability, and reliability
Reputation with suppliers • For efficient, effective, supportive, and mutually beneficial interactions and relationships
Resources, Capabilities and Core Competencies
?
Capabilities
?
Are the firm’s capacity to deploy resources that have been purposely integrated to achieve a desired end state Emerge over time through complex interactions among tangible and intangible resources Often are based on developing, carrying and exchanging information and knowledge through the firm’s human capital
?
?
Resources, Capabilities and Core Competencies
?
Capabilities
?
The foundation of many capabilities lies in: • The unique skills and knowledge of a firm’s employees • The functional expertise of those employees
Core Competencies -A Valuable Company Resource
?
A competence becomes a core competence when the wellperformed activity is central to a company’s competitiveness and profitability Often, a core competence results from collaboration among different parts of a company Typically, core competencies reside in a company’s people, not in assets on a balance sheet A core competence gives a company a potentially valuable competitive capability and represents a definite competitive asset
?
?
?
Examples: Core Competencies
?
Expertise in integrating multiple technologies to create families of new products
Know-how in creating operating systems for cost efficient supply chain management Speeding new/next-generation products to market Better after-sale service capability Skills in manufacturing a high quality product System to fill customer orders accurately and swiftly
?
? ? ? ?
Distinctive Competence -A Competitively Superior Resource
?
A distinctive competence is a competitively significant activity that a company performs better than its competitors
A distinctive competence
? ? ?
?
Represents a competitively valuable capability rivals do not have Presents attractive potential for being a cornerstone of strategy Can provide a competitive edge in the marketplace —because it represents a competitively superior resource strength
Examples: Distinctive Competencies
?
Sharp Corporation
?
Expertise in flat-panel display technology
?
Toyota
?
Low-cost, high-quality manufacturing capability and short design-to-market cycles
?
Intel
?
Ability to design and manufacture ever more powerful microprocessors for PCs
?
Wal-Mart
?
Low-cost distribution and use of state-of-the-art retail technology
Competencies
?
A competence is the product of organizational learning and experience and represents real proficiency in performing an internal activity A core competence is a well-performed internal activity central to a company’s competitiveness and profitability A distinctive competence is a competitively valuable activity a company performs better than its rivals
?
?
Distinctive Competencies and Role of Resources and Capabilities
Resources
• Tangible (physical) and intangible (non-physical)
• Allow a company to create value for its customers • Must have skills to take advantage of the resources • Firm-specific and difficult-to-imitate resources as well as valuable resources that create strong demand for a company’s products lead to distinctive competencies
Capabilities
• Coordinating resources & putting to productive use • Skills reside in the organization’s rules, routines and procedures • Product of its organization, processes & controls • Firm-specific capabilities to manage its resources lead to distinctive competencies
Distinctive Competencies to Gain Competitive Advantage
Distinctive Competencies
Firm-specific strengths allow a company to differentiate its products and/or achieve substantially lower costs than its rivals in order to gain a competitive advantage.
What Are the Company’s Strengths, Weaknesses, Opportunities and Threats ?
For a company’s strategy to be well-conceived, it must be
? Matched
? Aimed
?
to its resource strengths and weaknesses
at capturing its best market opportunities and erecting defenses against external threats to its well-being
Identifying Resource Strengths and Competitive Capabilities
?
A strength is something a firm does well or an attribute that enhances its competitiveness ? Valuable competencies or know-how ? Valuable physical assets ? Valuable human assets ? Valuable organizational assets ? Valuable intangible assets ? Important competitive capabilities ? An attribute that places a company in a position of market advantage ? Alliances or cooperative ventures with partners
Resource strengths and competitive capabilities are competitive assets!
Determining the Competitive Value of a Company Resource
?
To qualify as competitively valuable or to be the basis for sustainable competitive advantage, a “resource” must pass 4 tests: 1. Is the resource hard to copy?
2. Does the resource have staying power – is it durable?
3. Is the resource really competitively superior? 4. Can the resource be trumped by the different capabilities of rivals?
Identifying Resource Weaknesses and Competitive Deficiencies
?
A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage Resource weaknesses relate to
? ?
?
Inferior or unproven skills, expertise, or intellectual capital Lack of important physical, organizational, or intangible assets
?
Missing capabilities in key areas
Resource weaknesses and deficiencies are competitive liabilities!
Identifying a Company’s Market Opportunities
?
Opportunities most relevant to a company are those offering
?
Good match with its financial and organizational resource capabilities
Best prospects for profitable long-term growth Potential for competitive advantage
?
?
Identifying External Threats
?
? ?
Emergence of cheaper/better technologies
Introduction of better products by rivals Entry of lower-cost foreign competitors
?
? ?
Onerous regulations
Rise in interest rates Potential of a hostile takeover
?
? ?
Unfavorable demographic shifts
Adverse shifts in foreign exchange rates Political upheaval in a country
Role of SWOT Analysis in Crafting a Better Strategy
?
The most important part of S W O T analysis is not developing the 4 lists of strengths, weaknesses, opportunities, and threats, but rather
?
Using the 4 lists to draw conclusions about a company’s overall situation and Acting on the conclusions to • Better match a company’s strategy to its resource strengths and market opportunities, • Correct the important weaknesses, and
?
• Defend against external threats
doc_428154478.pptx