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Strategy and Competition COMM 401: Internal Analysis

This document provides an overview of analyzing a company's internal organization. It discusses the importance of understanding a company's resources, capabilities, core competencies and competitive advantages. Key aspects covered include developing a global mindset, creating value, challenges in analyzing the internal organization, and using value chain analysis and criteria to identify core competencies. The goal is to help companies identify their strengths to develop strategies that create value and competitive advantages.

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Shruti Sankar
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48 views

Strategy and Competition COMM 401: Internal Analysis

This document provides an overview of analyzing a company's internal organization. It discusses the importance of understanding a company's resources, capabilities, core competencies and competitive advantages. Key aspects covered include developing a global mindset, creating value, challenges in analyzing the internal organization, and using value chain analysis and criteria to identify core competencies. The goal is to help companies identify their strengths to develop strategies that create value and competitive advantages.

Uploaded by

Shruti Sankar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Strategy and Competition COMM 401

Session 3

Internal Analysis
Pouya Seifzadeh Summer 2013

The Internal Organization: Resources, Capabilities, Core Competencies and Competitive Advantages

Overview: Eight content areas


Importance of understanding internal organization Value: Definition and importance Tangible vs intangible resources Capabilities: Definition and development Core competencies: Criteria Value Chain Analysis Outsourcing: Definition and why? Internal organization assessment and strategic decisions

Analyzing the Internal Organization (IO)


Context of Internal Analysis Creating Value The Challenge of Analyzing the IO

Analyzing the Internal Organization (IO)


(Contd)

Context of Internal Analysis


Global mind-set
Ability to study an internal environment in ways that do not depend on the assumptions of a single country, culture, or context

Analyze firms portfolio of resources and bundle heterogeneous resources and capabilities
Understand how to leverage these bundles

An organization's core competencies creates and sustains its competitive advantage

Creating Value The Challenge of Analyzing the IO

Components of Internal Analysis Leading to Competitive Advantage and Strategic Competitiveness

Analyzing the Internal Organization (IO)


(Contd)

Context of Internal Analysis Creating Value


Develop core competencies that lead to competitive advantage Value: measured by a product's performance characteristics and by its attributes for which customers are willing to pay

The Challenge of Analyzing the IO

Analyzing the Internal Organization (IO)


(Contd)

Context of Internal Analysis Creating Value The Challenge of Analyzing the IO


Strategic decisions are non-routine, have ethical implications and influence the organizations 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 firms 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

Resources, Capabilities and Core Competencies


Tangible Resources
Assets that can be seen, touched and quantified Examples include equipment, facilities, distribution centers, formal reporting structures Four specific types

Intangible Resources
Assets rooted deeply in the firms history, accumulated over time In comparison to tangible resources, usually cant be seen or touched Examples include knowledge, trusts, organizational routines, capabilities, innovation, brand name, reputation Three specific types

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 products 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 firms core competencies

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