Internal Scanning: Organizational Analysis
Chapter 4
Internal Scanning: Organizational Analysis
Resource-Based Approach
Internal strategic factors: Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats.
Resource-Based Approach
Resource: An asset, competency, process, skill, or knowledge controlled by the corporation.
1
Evaluating “Key Resources”
VRIO Framework
• Value: Does it provide competitive advantage? Rareness: Do other competitors possess it? Imitability: Is it costly for others to imitate? Organization: Is the firm organized to exploit the resource?
• • •
Sustainability of an Advantage
Durability: Rate at which a firm’s underlying resources and capabilities (core competencies) depreciate or become obsolete.
Sustainability of an Advantage
Imitability: Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others.
2
Core Competencies
Imitability of core competencies determined by:
• Transparency – Speed that others can understand the relationship between the resource and the underlying capabilities supporting the strategy.
•
Transferability – Ability of competition to gain similar resources. •
Replicability – Ability to duplicate resources.
Corporate Value Chain
“Differences among competitor value chains are a key source of competitive advantage!”
Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Support Activities Technology Development (R&D, product and process improvement) Procurement (purchasing of raw materials, machines, supplies) Profit Margin
Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.
Inbound Logistics (raw
Internal Scanning: Organizational Analysis
Resource-Based Approach
Internal strategic factors: Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats.
Resource-Based Approach
Resource: An asset, competency, process, skill, or knowledge controlled by the corporation.
1
Evaluating “Key Resources”
VRIO Framework
• Value: Does it provide competitive advantage? Rareness: Do other competitors possess it? Imitability: Is it costly for others to imitate? Organization: Is the firm organized to exploit the resource?
• • •
Sustainability of an Advantage
Durability: Rate at which a firm’s underlying resources and capabilities (core competencies) depreciate or become obsolete.
Sustainability of an Advantage
Imitability: Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by others.
2
Core Competencies
Imitability of core competencies determined by:
• Transparency – Speed that others can understand the relationship between the resource and the underlying capabilities supporting the strategy.
•
Transferability – Ability of competition to gain similar resources. •
Replicability – Ability to duplicate resources.
Corporate Value Chain
“Differences among competitor value chains are a key source of competitive advantage!”
Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Support Activities Technology Development (R&D, product and process improvement) Procurement (purchasing of raw materials, machines, supplies) Profit Margin
Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.
Inbound Logistics (raw