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RESOURCE, CAPABILITIES, CORE COMPETENCIES, AND ACTIVITY ANALYSIS

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RESOURCE, CAPABILITIES, CORE COMPETENCIES, AND ACTIVITY ANALYSIS. The fundamental building blocks for building winning strategies. EXAMPLES. Disney Honda Dell Sony Apple. Key Elements of Business Strategies: Understanding Resources, Capabilities, and Competencies is the key.

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RESOURCE, CAPABILITIES, CORE COMPETENCIES, AND ACTIVITY ANALYSIS

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  1. RESOURCE, CAPABILITIES, CORE COMPETENCIES, AND ACTIVITY ANALYSIS The fundamental building blocks for building winning strategies

  2. EXAMPLES • Disney • Honda • Dell • Sony • Apple

  3. Key Elements of Business Strategies:Understanding Resources, Capabilities, and Competencies is the key • Selecting a business strategy that exploits valuable resources and core competences • Ensuring that all resources and capabilities are fully employed and exploited • Building and regenerating valuable resources and core competences

  4. Rationale for the Resource-based Approach to Strategy • Resources and capabilities are the primary source of profitability. Firm-specific strategic differences account for 50-70 percent of observed differences in firms’ profits

  5. Resources, Capabilities, and Competitive Advantage: The Basic Relationships INDUSTRY KEY SUCCESS FACTORS COMPETITIVE ADVANTAGE STRATEGY ORGANIZATIONAL CAPABILITIES RESOURCES Tangible Intangible Human

  6. Categories of Firm Resources • Financial $ ¥ £ • Physical • Human • Technological • Reputational

  7. Defining Organizational Capabilities Organizational Capabilities = firm’s capacity for undertaking a particular activity. (Grant) Distinctive Competence = things that an organization does particularly well relative to competitors. (Selznick) Core Competence = capabilities that are fundamental to a firm’s strategy and performance. (Hamel and Prahalad)

  8. What Makes a Resource Valuable? Scarcity Appropriability Demand Value creation zone The dynamic interplay of three fundamental market forces determines the value of a resource. Source: Collis and Montgomery, Corporate Strategy (1996)

  9. Resource Imitability Cannot be imitated: Patents Unique location Unique assets (e.g. Mineral rights) Difficult to Imitate: Brand Loyalty Favorable cost position Employee Satisfaction Reputation for Fairness Can be Imitated (but may not be): Capacity Pre-emption Economies of Scale Easy to Imitate: Cash Commodities Source: Collis and Montgomery, Corporate Strategy: Resources and the Scope of the Firm (1996).

  10. • Capability in basic Genentech, Google research • Ability to produce 3M innovative products Canon • Speed of new product development Identifying a Company’s Capabilities and Value Chain Identifying a Company's Capabilities Functional Area Capability Example • Corporate head office • Management information • Research and development • Manufacturing • Product design • Marketing • Sales and distribution Source: Robert M. Grant, Contemporary Strategy Analysis , Basil Blackwell, 1991.

  11. Summary: Key Elements of Resource-Based Strategy • Select a strategy that exploits principal resources and competencies. • Ensure that resources are fully employed and exploited. • Build and upgrade a resource base. Source : Hamel and Prahalad (1990)

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