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The
Strategic
Position
3
Strategic Capability
LEARNING OUTCOMES
After reading this chapter you should be able to:
➔ Distinguish elements of strategic capability in organisations: resources, competences, core competences and dynamic capabilities.
➔ Recognise the role of continual improvement in cost efficiency as a strategic
➔ Analyse how strategic capabilities might provide sustainable competitive advantage on the basis of their value, rarity, inimitability and nonsubstitutability.
➔ Diagnose strategic capability by means of value chain analysis, activity mapping, benchmarking and SWOT analysis.
➔ Consider how managers can develop strategic capabilities of organisations. Photo: Glyn Kirk/Action Plus Sports Images
capability.
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94
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CHAPTER 3
3.1
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Page 94
STRATEGIC CAPABILITY
INTRODUCTION
Chapter 2 outlined how the external environment of an organisation can create both strategic opportunities and threats. However, Tesco, Sainsbury’s and Asda all compete in the same environment, yet Tesco is a superior performer. It is not the environment that distinguishes between them but their internal strategic capabilities. The importance of strategic capability is the focus of this chapter.
There are three key concepts that underpin the discussion. The first is that organisations are not identical, but have different capabilities; they are ‘heterogeneous’ in this respect. The second is that it can be difficult for one organisation to obtain or copy the capabilities of another. For example, Sainsbury’s cannot readily obtain the whole of Tesco’s retail sites, its management or its experience. The third arises from these: if an organisation is to achieve competitive advantage, it will do so on the basis of capabilities that its rivals do not have or have difficulty in obtaining. In turn this helps explain how some organisations are able to achieve superior performance compared with others. They have
10/15/07
14:23
Page 93
The
Strategic
Position
3
Strategic Capability
LEARNING OUTCOMES
After reading this chapter you should be able to:
➔ Distinguish elements of strategic capability in organisations: resources, competences, core competences and dynamic capabilities.
➔ Recognise the role of continual improvement in cost efficiency as a strategic
➔ Analyse how strategic capabilities might provide sustainable competitive advantage on the basis of their value, rarity, inimitability and nonsubstitutability.
➔ Diagnose strategic capability by means of value chain analysis, activity mapping, benchmarking and SWOT analysis.
➔ Consider how managers can develop strategic capabilities of organisations. Photo: Glyn Kirk/Action Plus Sports Images
capability.
ECS8_C03.qxd
94
10/15/07
CHAPTER 3
3.1
14:23
Page 94
STRATEGIC CAPABILITY
INTRODUCTION
Chapter 2 outlined how the external environment of an organisation can create both strategic opportunities and threats. However, Tesco, Sainsbury’s and Asda all compete in the same environment, yet Tesco is a superior performer. It is not the environment that distinguishes between them but their internal strategic capabilities. The importance of strategic capability is the focus of this chapter.
There are three key concepts that underpin the discussion. The first is that organisations are not identical, but have different capabilities; they are ‘heterogeneous’ in this respect. The second is that it can be difficult for one organisation to obtain or copy the capabilities of another. For example, Sainsbury’s cannot readily obtain the whole of Tesco’s retail sites, its management or its experience. The third arises from these: if an organisation is to achieve competitive advantage, it will do so on the basis of capabilities that its rivals do not have or have difficulty in obtaining. In turn this helps explain how some organisations are able to achieve superior performance compared with others. They have
References: related to strategy, see R. Perman and J. Scoular, Business Economics, Oxford University Press, 1999, pp Strategic Management Journal, vol. 5, no. 2 (1984), pp Journal, vol. 18, no. 7 (1997), pp. 509–534; and the introductory paper by D. Hoopes, T. Madsen and G. Walker, ‘Why is there a resource based view?’, to the special issue of the Strategic Management Journal, vol. 24, no. 10 (2003), pp management knowledge for the 21st century, Harper Collins, 2000, p Journal, vol. 13, no. 2, (1992), pp. 135–144; and also ‘A framework linking intangible resources and capabilities to sustainable competitive advantage’, Strategic Management Journal, vol. 14, no. 8 (1993), pp. 607–618. Harvard Business Review, vol. 67, no. 3 (1989), pp. 63–76; and G and leverage’, Harvard Business Review, vol. 71, no. 2 (1993), pp Competence-based Competition, Wiley, 1994. Wiley, 1990. Handbook of Strategy and Management, pp. 55–71, Sage, 2002. of firm differences in the early history of the semiconductor industry’, Strategic Management Journal, vol. 21, nos 10–11 (2000), pp Management Journal, vol. 22, no. 1 (2001), pp. 75–99. framework’, Strategic Management Journal, vol. 24, no. 10 (2003), pp