1. Strategic Management Organisation Internal Environment Scanning (1)

2. Organisation Environment Scanningand SWOT Analysis • Strengths ) Analyses organisational ) resource ) capability. • Weaknesses ) Internal Analysis • Opportunities ) Analyses business ) environment. • Threats ) External Analysis

3. Strategic Fit and Strategic Stretch • External environment • Market opportunities and threats • Internal environment • Resource strengths and weaknesses • Resources enable organisations to succeed by: Matching strategic capabilities to opportunities and threats in existing market (Strategic Fit) or Leveraging strategic capabilities to gain competitive advantage in new markets (Strategic Stretch)

4. Resource-based View of Strategy • Competitive advantage derives from the distinctivenessof an organisation’s capabilities • Some businesses achieve extraordinaryprofits compared with others in the same industry • Their resources or competences permit • production at lower cost or • generation of superior product or service at standard cost

5. Strategic Capability • Resources • Tangible resources – physical, financial and human assets of an organisation • Intangibles – reputation, brand, intellectual capital • Competences • The activities and processes through which an organisation deploys its resources effectively Strategic capability is the adequacy and suitability of the resources and competences of an organisation for it to survive and prosper

6. Strategic Capabilities andCompetitive Advantage

7. Strategic Capability- the terminology

8. Resources • Physical resources • Machines, buildings, production capacity, customer databases, business systems • Financial resources • Capital, cash, debtors/creditors, suppliers of money (shareholders, bankers etc) • Human resources • Number and mix of people, skills and knowledge • Intangibles • Patents, brands, reputation, goodwill, intellectual capital

9. Resource Audit Physical Resources Human Resources Financial Resources Intellectual Capital

10. Physical Resources(Plant, equipment, land and buildings, technology, systems) • Age • Condition • Location • Capability relative to Market Opportunities and Threats

11. Human Resources • Number of staff • Adaptability of staff • Leadership/Management • Competencies of staff relative to Market Opportunities and Threats

12. Financial Resources • Profitability • Solvency • Liquidity • Efficiency • Capability of Financial Resources relative to Market Opportunities and Threats

13. Intangibles • Goodwill • Reputation • Brand names • Culture and Structure • Knowledge/Intellectual Capital • Capability of Intangibles relative to Market Opportunities and Threats

14. Competences • How an organisation employs and deploys its resources • Efficiency and effectiveness of physical, financial, human and intellectual resources • How they are managed • Cooperation between people • Adaptability • Innovation • Customer and supplier relationships

15. Threshold Competences • Threshold competences: those essential to compete in a given market • Required to be“in the game” • Threshold levels change over time • changes in Critical Success Factors • new entrants • competitor activity

16. Unique Resources and Core Competences • Unique resources • Critically underpin competitive advantage and cannot be imitated or obtained by others • Are often intangible (e.g. and individual’s unique knowledge or a firm’s reputation) • Core competences • Activities and processes through which resources are deployed to achieve competitive advantage in ways which others cannot imitate or obtain

17. Competences for Sustainable Competitive Advantage (1) • Value • Rarity • Robustness • Non-substitutability

18. Competences for Sustainable Competitive Advantage (2) Value • Ability to deliver what the customer values (Critical Success Factors) Rarity • Unique resources, rare competences • Who owns the competence and how easily transferable is it? • Preferred access to customers/suppliers

19. Competences for Sustainable Competitive Advantage (3) • Robustness • Complexity • Culture and history • Causal Ambiguity • Non-Substitutability • Risk of substitution • At product/service level by other products or services • At competence level by a different approach

20. Kay’s Sources of Unique Competences and Sustainable Competitive Advantage Architecture Reputation Innovation

21. Strategic Capability – Key Points • Competitive advantage derives from strategic resource capabilities and competences • Strategic capability comprises tangible and intangible resources deployed via competences • For sustainable competitive advantage strategic competences must give value and be rare, robust and non-substitutable