Chapter 4: Evaluating A Company’s Resources, Capabilities, And Competitiveness Flashcards
Two best indicators of successful strategy
1) Recording gains in financial strength and profitability
2) Competitive strength and market standing is improving
Other indicators of successful strategy
Sales and earning growth, stock price, customer retention rate, rate of new customer acquisition, changes in image and reputation, internal processes (employee productivity, defect rate, order fulfillment, delivery time, etc.)
Resource and capability analysis
Tool for sizing up a firm’s competitive assets and determining if they can support a sustainable competitive advantage over market rivals.
1) Identify the firm’s resources and capabilities
2) Determine which are most important
Resource
A competitive asset that is owned or controlled by a firm (intangible + tangible)
Capability
The capacity of the firm to competently perform some internal activity, developed and enabled through resource deployment.
Competence
An activity that a firm performs proficiently
Core competence
Central to strategy and competitive success
VRIN test for sustainable competitive advantage
Ask if a resource or capability is Valuable, Rare, Inimitable, and Nonsubstitutable
Social Complexity and Causal Ambiguity
Two factors that inhibit the ability of rivals to imitate a firm’s most valuable resources and capabilities. Causal ambiguity makes it hard to figure out how a complex resource contributes to SCA and therefore what to imitate
Resource Bundles
Enable the superior performance of important cross-functional capabilities, even if a firm may lack a standalone resource that is competitively powerful
Dynamic capability
Ability to modify, deepen, or reconfigure the firm’s existing resources and capabilities in response to changes in the environment or market opportunities
SWOT Analysis
Strengths, weaknesses, Oppoirtunities, Threats
Value Chain
Identifies the primary activities that create customer value and related support activities
Primary value-chain activities and costs
Supply chain mgmt, operations, distribution, sales and marketing, service, profit margin
Support value-chain activities and costs
Product R&D, Tech & Systems devlopment, HR mgmt, General Admin
Supply chain mgmt
Activities, costs, and assets associated with purchasing fuel, energy, raw materials, parts and components, merchandise, and consumable bendor items, recieving, storing, and disseminating inputs from suppliers, inspection, and inventory mgmt
Operations
Activites, costs, and assets converting inputs into final product, production, packaging, equipment maintenance, facilities, quality assurance, environmental protection
Distribution
Activites, costs, and assets dealing with physically getting products to buyers
Sales and Marketing
Activites, costs, and assets related to sales force fforts, advertising and promotion, market research and planning, and dealer-distributor support
Service
Activites, costs, and assets associated with providing assistance to buyers
Benchmarking
Tool for learning which firms are best at performing particular activities and then using their techniques (or “best practices” to improve the cost effectiveness of a firm’s own internal activities
Best practice
Method of performing an activity that consistently delivers superior results compared to other approaches
Steps in competitive strength assessment
1) List key success factors
2) Assign weight to each ksf based on importance
3) Calc weighted strengths by scoring each competitor (1 very weak to 10 very strong)
4) Sum weighted rating of each ksf
5) Draw conclusions about the size and extent of a firm’s net competitive advantage/disadvantage and to take specfic notes on strengths/weaknesses
Worry List
What industry and competitive challenges confront the company, which internal weaknesses need fixing, and what specific problems merit front-burner attention by company mgmt
