Chapter 6 - Strategic capability Flashcards
(44 cards)
what is internal analysis used for?
Used to identify an organisation’s strengths and weaknesses. Part of this analysis should be to understand the competences which need to be developed in order to achieve success.
What are critical success factors?
a small number of key goals vital
to the success of an organisation.
(Those product features that are particularly valued by a group of
customers, and, therefore, where the organisation must excel to
outperform the competition)
Why is identifying CSFs important?
It will help the organisation to identify the resources
and competences that are needed to succeed.
what is next once CSF is identified?
What resources and competences will enable the organisation to achieve its critical success factors?
what are the two types of resources? + define
Threshold resources are the basic resources needed by all firms in
the market.
Unique resources are those resources which are better than those of the competition and difficult to replicate, giving the firm a sustainable competitive advantage. (differentiation)
What model to use when performing a resource audit (evaluating internal capabilities or analysis)?
9M model.
What is the measure of CSFs?
KPIs
What are the 9 Ms
Men (human resource: Number, skills, motivation, potential)
Machines (Premises, location, productive capacity)
Money (Existing finance available and access to future funding from investors)
Materials (Relations with suppliers, access to key inputs.)
Markets (Existing customers [LOYALTY], locals where represented, distribution systems.)
Management (Governance, NEDs)
Methods (Process and controls of the business)
Management information systems (Quality of systems to assist in marketing, production R&D.)
Make-up (Structure de/centralised, culture, attitudes)
Why are processes and controls important
ensure compliance with laws and regs, reputation.
What is human capital
It considers the collective attributes of an organisation’s
human resources. This includes the capabilities, creativity, skills and knowledge of the workforce and how these combine to create economic value.
Organisations develop specific programmes to enhance value attained from workforce.
what are the benefits of a flexible workforce?
Helps to maximise the benefits generated from workers.
Flexibility can include:
Flexible workplace arrangements
Home/hybrid working
Improvements in technology, such as cloud computing.
Freelancers, tech and WFH
What are the benefits of technological resources?
Used correctly, they can improve profit margins.
Apply to the business.
What are core competencies?
The critical activities and processes which enable the firm to meet the critical success factors and therefore achieve a sustainable competitive advantage.
The core competences must be better than those of competitors and difficult to replicate.
What is the core competency model?
Kay’s core competences model.
Used to assess the core competences of an organisation
What are the three main sources of competences, according to Kay?
Reputation: The reason that
customers are attracted to the organisation
Competitive architecture: the network of relationships within and around a business. (stakeholders)
Innovative ability: The ability to develop new products and services. (attract new and meet needs of existing customers)
what comes under competitive architecture?
relationship with stakeholders
Internal - employees
External - suppliers and customers [PORTERS 5 FORCES]
Network - between collaborating businesses.
What is a value chain?
A value chain identifies the relationships between the company’s resources, activities and processes that link the business together and
create a profit margin.
what is the use of value chain analysis
used to analyse the sequence of business activities which add value to the products or services produced by a company.
What is value measured by?
The value (or margin) is measured by the difference between the cost of the activities and sales revenue created by sales to customers.
Also, non-value adding activities can be identified and reduced or eliminated.
What is the internal analysis cheat code?
Porter’s value chain analysis
The upside down rocket
Describe the upside down rocket
Support activities at the top:
(top departments/functions, create value through support of primary)
Firm infrastructure (planning + QC)
HR management
Technology development
Procurement
Primary activities at the bottom:
(the core competencies that provide value, and are directly concerned with providing G/S)
Inbound logistics (think raw materials)
Operations (transforming RM)
Outbound logistics (final goods)
Marketing and sales
Services (after sales services)
What is the first step to performing a value chain analysis?
What does porter say about this first choice?
What should cost leader/differentiator be looking for?
Identify the generic strategy.
- Cost leadership OR
- Differentiation
Should be seeking different things throughout the value chain.
(cost leader should seek cost advantages throughout, differentiator should seek quality advantages throughout)
Porter says there must be a choice, cant be both.
optimising cost drivers, (factors that result in cost being incurred)
Optimising value drivers, (potential sources of value)
Importance of linkages in value chain. (a number of activities working together in Value Chain)
Can be a source of sustainable competitive advantage.
Harder to copy.
Examples of internal linkages
Co-ordination: Activities should be consistent with each other and work together to support the generic strategy.
Optimisation: Strength in one area may enable the firm to commit fewer resources to another area e.g. high quality product design may enable fewer resources to be spent on after sales service as the likelihood of product faults is lower.
