str. management chapter 4
Post on 10-Apr-2018
225 Views
Preview:
TRANSCRIPT
-
8/8/2019 Str. Management Chapter 4
1/40
Chapter 4
Resource Based Approach organizationalanalysis
Motiur Rahman
-
8/8/2019 Str. Management Chapter 4
2/40
Chapter 4 2
Resource Based Approach organizational analysis
Resources: VRIO Framework
Resource : an asset, competency, process,controlled by an corporation
1. Values: Does it provide competitive
advantage?
2. Rareness: Do other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit
the resources
-
8/8/2019 Str. Management Chapter 4
3/40
Chapter 4 3
Core Competencies and DistinctiveCompetencies
Core Competencies Things a corporation can do exceedingly well
Distinctive Competencies
Core competencies that are superior to those of
competitors
-
8/8/2019 Str. Management Chapter 4
4/40
Chapter 4 4
Using Resources to Gain CompetitiveAdvantage
1. Identify and classify firms resources in terms ofstrengths and weaknesses
2. Combine firms strength into core competencyand distinctive competency
3. Appraise the profit potential of these resourcesand capabilities for sustainable competitiveadvantage and the ability to harvest profitsresulting from the use these resources andcapabilities
4. Select the strategy that can best exploit thefirms resources and capabilities relative toexternal opportunities
5. Identify resource gaps in upgrading weaknesses
-
8/8/2019 Str. Management Chapter 4
5/40
Chapter 4 5
Determining The Sustainability Of An Advantage
1. Durability: The rate at which a firms underlying
resources and capabilities (core competencies)depreciate or become obsolete.
2. Imitability: The rate at which firms corecompetencies can be duplicated by others
Transparency: The speed with which other firmscan understand the relationship of resources andcapabilities supporting a successful firms strategy
Transferability: the ability of competitors to useduplicated resources and capabilities necessary to
support competitive challenge Replicability: is the ability of competitors to use
duplicated resources and to imitate the otherfirms success.
-
8/8/2019 Str. Management Chapter 4
6/40
Chapter 4 6
Types of Knowledge
1. Explicit knowledge:
Type of knowledge that can be easily articulatedand communicated
Competitive intelligence activities can easilyidentify and communicate
2. Tacit Knowledge:
Knowledge that cannot be easily communicated
It is deep rooted in employee experience andcorporate culture
-
8/8/2019 Str. Management Chapter 4
7/40
Chapter 4 7
Low(Easy to Imitate)
Level of Resource Sustainability
Slow-CycleResources
Standard-CycleResources
Fast-CycleResources
Strongly shieldedPatents, brand name
Gillette: Sensor razor
Easily duplicatedIdea driven
Sony: Walkman
Standardized massproduction
Economies of scaleComplicated processes
Chrysler: Mini-van
Continuum of Resources Sustainability
Source: Suggested by J. R. Wiliams, How Sustainable Is Your Competitive Advantage? CaliforniaManagement Review (Spring 1992), p. 33.
High
Hard to imitate
-
8/8/2019 Str. Management Chapter 4
8/40
Chapter 4 8
Typical Value Chain for a ManufacturedProduct
ProductProducer
Fabrication Distributor Retailer Raw
MaterialsPrimary
Manufacturing
-
8/8/2019 Str. Management Chapter 4
9/40Chapter 4 9
Corporate Value Chain
SupportActivities
Primary Activities
ProfitMargin
Firm Infrastructure(general management, accounting, finance, strategic planning)
Human Resource Management(recruiting, training, development)
Technology Development
(R&D, product and process improvement)
Procurement(purchasing of raw materials, machines, supplies)
InboundLogistics(raw
materialshandling andwarehousing)
Operations(machining,assembling,
testing)
OutboundLogistics(warehousing
anddistributionof finishedproduct)
Marketingand Sales(advertising,
promotion,pricing,channelrelations)
Service(installation,repair, parts)
Source: Adapted/reprinted with thepermission of the
The Free Press, an
imprint of Simon &Schuster, fromCompetitive
Advantage:Creating andSustaining SuperiorPerformance byMichael E. Porter, p.37. Copyright 1985 by Michael E.
Porter.
-
8/8/2019 Str. Management Chapter 4
10/40
Chapter 4 10
Steps in Corporate value chain analysis
1.Examine each product lines value chain in terms
of various activities involved in producing thatproduct or service.
Which activities can be considered corecompetency or weakness
Can any core competency be labeled asdistinctive competence
2.Examine the linkages within each productsvalue chain
Linkages are the connections between the way
one value activity is performed and the cost ofperformance of another activity
3.Examine the potential synergies among the valuechain different product lines/ businesses
-
8/8/2019 Str. Management Chapter 4
11/40
Chapter 4 11
Scanning Functional Resources
Functional resource includes: Financial
Physical
Human assets
Ability of people to formulate and implementfunctional objectives
Marketing
Operations
Human resources Information systems
Structure and culture
-
8/8/2019 Str. Management Chapter 4
12/40
Chapter 4 12
Basic Structures of Corporations:Simple and Functional
I. Simple Structure
II. Functional Structure
Owner-Manager
Workers
Top Management
Manufacturing Sales Finance Personnel
-
8/8/2019 Str. Management Chapter 4
13/40
Chapter 4 13
Basic Structures of Corporations: Divisional
III. Divisional Structure*
Manufacturing Finance Manufacturing Finance
Top Management
Product Division A Product Division B
Sales Personnel Sales Personnel
-
8/8/2019 Str. Management Chapter 4
14/40
Chapter 4 14
Strategic Business Unit
Independent product-market unit with:
1.Unique mission
2.Identifiable competitors
3.External market focus
4. Control of its business functions
-
8/8/2019 Str. Management Chapter 4
15/40
Chapter 4 15
Analyzing Corporate structure
1. How is the corporation structured at present:a) Is the decision making authority centralized ordecentralized
b) is it organized on the basis of functions,
projects, geography, or some combination of these
2. Is the current structure consistent with currentcorporate objectives, strategies, policies, as wellas with firms international operations
3. Summary : whether strength or weakness
-
8/8/2019 Str. Management Chapter 4
16/40
Chapter 4 16
Attributes of Corporate Culture
Corporate culture is the collection of beliefs,expectations, values learned and shared by acorporations members and transmitted from onegeneration of employees to another
Intensity: is the degree to which members of aaccept the norms, values, or other culture contentassociated with the unit
Integration: Is the extent to which units throughout an organization share a common culture.Breadth of culture
-
8/8/2019 Str. Management Chapter 4
17/40
Chapter 4 17
Functions of Corporate Culture
1. Conveys sense of identity
2. Generates employee commitment
3. Adds to organizational stability
4. Serves as a frame of reference
-
8/8/2019 Str. Management Chapter 4
18/40
Chapter 4 18
Analyzing Corporate Culture
1. Is there well defined or emerging culture composed
of shared beliefs, expectations and values
2. Is the culture consistent with current objectives,strategies, policies and programs
3. What is the cultures position on important issuesfacing the corporation ( that is, on productivity,quality of performance, adaptability to changingconditions, and internationalization
4. What is your overall assessment whether culture isan strength or weakness
-
8/8/2019 Str. Management Chapter 4
19/40
Chapter 4 19
Strategic Marketing Issues
Market position and segmentation(who are our customers)
Marketing mix
Product life cycle
-
8/8/2019 Str. Management Chapter 4
20/40
Chapter 4 20
Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment
periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs,N.J.: Prentice-Hall, 1980), p. 89. Copyright 1980. Reprinted by permission of Prentice-Hall, Inc.
h d if l
-
8/8/2019 Str. Management Chapter 4
21/40
Chapter 4 21
The Product Life Cycle
Introduction Growth* Maturity Decline
Time
Sa
les
*The right end of theGrowth stage is oftencalled Competitive
Turbulence because of
price and distributioncompetition that shakesout the weakercompetitors. For furtherinformation, see C. R.Wasson, DynamicCompetitive Strategy andProduct Life Cycles, 3rd ed.(Austin, Tex.: Austin Press,
1978).
-
8/8/2019 Str. Management Chapter 4
22/40
Chapter 4 22
Analyzing Marketing Function
1. What are the corporations current marketing objectives,strategies and programs.
2. Are they consistent with the corporations mission,objectives, strategies, policies and with environment
3. How well the corporation performing in terms of analysis of
market position and marketing mix in both domestic andinternational markets
4. What percentage of sales comes from foreign operations?What are the current products in product life cycle
5. What trends emerge from this analysis
6. Does marketing provide with competitive advantage7. What is your overall assessment of strengths and
weaknesses of marketing function
-
8/8/2019 Str. Management Chapter 4
23/40
Chapter 4 23
R&D Mix
Basic R&D : Focus: theoretical problem areas
Indicator of capability: number of patents and researchpublications
Product R&D
Focus: Products and /or packaging improvements
Indicator of capability: number of successful newproducts introduced and profits coming from productsintroduced within 5 years
Process (Engineering) R&D Focus: Engineering concentrating on quality control,
development of design specifications and productionequipment
Indicator of capability: Consistent reductions in unitmanufacturing costs, number of product defects
-
8/8/2019 Str. Management Chapter 4
24/40
Chapter 4 24
Analyzing R&D Function
1. What are the corporations R&D objectives,strategies, policies and programs
2. Are they consistent with the corporations mission,
objectives, strategies
3. Is the mix of basic, applied and engineeringresearch appropriate given the corporate mission
and strategies.
4. What is your overall assessment of strengths andweaknesses of R&D function
T h l i l Di i i
-
8/8/2019 Str. Management Chapter 4
25/40
Chapter 4 25
Technological Discontinuity
What the S-Curves Reveal
Research Effort/Expenditure
In the corporate planning process, it is generally assumed that incremental progress in technology will occur. But past
developments in a given technology cannot be extrapolatedinto the future, because every technology has its limits. The
key to competitiveness is to determine when to shift re-sources to a technology with more potential.
MatureTechnology
NewTechnology
ProductP
erformance
-
8/8/2019 Str. Management Chapter 4
26/40
Chapter 4 26
Strategic Operations Issues
Develop and operate a system that will produce therequired number of products or services with certainquality, at a given cost, within allotted time
Manufacturing can be intermittent shop or continuous
In intermittent systems (job shop) the items aregenerally processed sequentially, but the work andsequence of the process vary.
Usually can be labor intensive, little automatedmachinery and thus a small fixed costs.
-
8/8/2019 Str. Management Chapter 4
27/40
Chapter 4 27
Strategic Operations Issues
It has fairly low break-even point , but its variable
cost line has a relatively steep slope. Because most ofthe cost associated with the product are variable , ajob shops variable cost is higher than the automatedfirms
Its advantage over other firm that it can operate atlow levels and still be profitable. In terms of strategythe firm should look for a niche for which it canproduce and sell reasonably small quantity of goods
-
8/8/2019 Str. Management Chapter 4
28/40
Chapter 4 28
Continuous systems are those laid out as lines on which
product can be continuously assembled or processed A firm using continuous system invests heavily in fixed
assets investments.
Its labor force is relatively small but highly skilled, earnssalaries rather than piece rate wages
This firm has high amount of fixed costs and relatively highbreakeven point, but variable cost line rise slowly. Thiscalled operating leverage, the impact of specific change insales volume on net operating income
The advantage of high operating leverage is that once firms
reaches break even its profits rises heavily Continuous systems reap the benefit of economies of scale
Its strategy, the firm should find high demand niche in themarket place for which it should produce and sell largequantities of goods
-
8/8/2019 Str. Management Chapter 4
29/40
Chapter 4 29
Experience Curve
Suggest that unit production cost declines by fixedpercentage ( commonly 20 30%) each time the total
accumulated production volume in units doubles The actual percentage varies by industry and is based
on many variables: the amount of time it takes a personto learn a new task, scale economies, product andprocess improvements, lower material costs.
Management commonly uses the experience curve inestimating the production cost
(1)A product never made before with present techniquesand processes
(2)Current products being produced by newly introducedtechniques or processes
Many firms use experience curve extensively, anunquestioning it could be risky and the experiencecurve may not hold true for a particular company for avariety of reasons
Flexible Manufacturing For mass
-
8/8/2019 Str. Management Chapter 4
30/40
Chapter 4 30
Flexible Manufacturing For massCustomization
The use of computer aided designs, computer
aided manufacturing, robot technology meansthat learning times are shorter and productscould be manufactured economically in smallcustomized batches called mass customization the low cost of production of individually
customized goods or services Economies of scope : common parts of the
manufacturing activities of the variousproducts are combined to gain economies ofscale, even though small number of productsare made to replace economies of scale
Flexible manufacturing: permits low volumeoutput of custom tailored products at arelatively low cost through economies of scope
-
8/8/2019 Str. Management Chapter 4
31/40
Chapter 4 31
Economies of Scale versus Scope
Economies of Scaleversus
Economies of Scope
-
8/8/2019 Str. Management Chapter 4
32/40
Chapter 4 32
Analyzing Operations/ Logistic Function
What are the corporations current manufacturing/ serviceobjectives, strategies, policies
Are they consistent with corporations mission, objectives,strategies, policies and with environment
What is the type and extent of operations capabilities of the
corporation? How much is done domestically versus internationally? Is
the amount of outsourcing appropriate to be competitive?
What is your overall assessment of corporations operationsin terms of strength or weaknesses
-
8/8/2019 Str. Management Chapter 4
33/40
Chapter 4 33
Analyzing Finance Function
What are the corporations current financialobjectives, strategies and policies
Are they consistent with the mission, andstrategies
How well the corporation performing in terms offinancial analysis ( Ratios, common sizestatements)
What trends emerge from this analysis
Does finance provide the company withcompetitive strategy
What is your overall assessment of corporationsstrengths and weaknesses in finance function
-
8/8/2019 Str. Management Chapter 4
34/40
Chapter 4 34
Strategic Financial Issues Ascertaining the best sources of funds, uses of
funds and control of funds A firms capital structure can influence strategic
choices
( Increased debts increase risk aversion anddecrease the willingness of management to invest
in R & D) Financial Leverage:
The mix of externally generated short-term andlong-term funds in relation to the amount andtimings of internally generated funds should be
appropriate to corporate objectives Financial leverage is helpful in describing how debt
is used to increase the earnings available tocommon shareholder
-
8/8/2019 Str. Management Chapter 4
35/40
Chapter 4 35
> when the company finances its activities by sales of
bonds or notes instead through stock, earning pershares are boosted:
- The interest paid on debt reduces taxable income , butfewer shareholders share profits than if the companyhad sold more stock to finance its activities
- The debt however raise the breakeven point abovewhat it would have been than if the firm had financedthrough internally generated funds
- High leverage may be perceived as corporate strengthin times of prosperity and ever increasing sales orweakness in times of recession and falling sales
- Research indicates that greater leverage has positiveimpact on performance for firms in a stableenvironment, but a negative impact on firms in dynamicenvironment
-
8/8/2019 Str. Management Chapter 4
36/40
Chapter 4 36
Capital Budgeting
Analyzing and ranking of possible investmentsin fixed assets in terms of additional outlaysand additional receipts that will result fromsuch investments
A good finance department will prepare such
capital budgets and rank them on someaccepted hurdle rate for the purpose ofstrategic decisions
Many firms will have more than one hurdlerate and vary as a function of the type of
projects being considered Projects with high strategic significance, such
as entering new markets or defending marketshare will often have low hurdle rates
-
8/8/2019 Str. Management Chapter 4
37/40
Chapter 4 37
Analyzing Information Systems
What are the corporations current ISobjectives, strategies, policies
Are they consistent with corporation smission objective, strategies and policies
How well the corporations IS performing interms of providing useful data base
What is your overall assessment of
corporations strengths and weaknesses ininformation systems
Internal Factor Analysis Summary (IFAS)
-
8/8/2019 Str. Management Chapter 4
38/40
Chapter 4 38
Internal Factor Analysis Summary (IFAS)
Internal Factors Weight Rating
Weighted
Score Comments
1 2 3 4 5
1.00
Strengths
Weaknesses
Total Weighted Score
Notes: 1. List strengths and weaknesses (510 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (NotImportant) in Column 2 based on that factors probable impact on the companys strategic position. The total weights must sum to1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the companys response to that factor. 4. Multiplyeach factors weight times its rating to obtain each factors weighted score in Column 4. 5. Use Column 5 (comments) for rationaleused for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells howwell the company is responding to the strategic factors in its internal environment.Source: T. L. Wheelen and J. D. Hunger, External Strategic Factors Analysis Summary (EFAS). Copyright 1991 by Wheelen and
Hunger Associates. Reprinted by permission.
-
8/8/2019 Str. Management Chapter 4
39/40
Prentice Hall,2000
Chapter 4 39
Internal Factor Analysis Summary (IFAS):
Maytag as Example
4.17Internal Factor Analysis Summary (IFAS): Maytag as Example (Table4.2)
Internal Factors Weight Rating
Weighted
Score Comments
1 2 3 4 5
1.00
Strengths
Quality Maytag culture
Experienced top management
Vertical integration Employee relations
Hoovers international orientation
Weaknesses
Process-oriented R&D
Distribution channels
Financial position
Global positioning
Manufacturing facilities
Total Weighted Score
Quality key to success
Know appliances
Dedicated factoriesGood, but deteriorating
Hoover name in cleaners
Slow on new products
Superstores replacing
small dealers
High debt load
Hoover weak outside the
United Kingdom and
Australia
Investing now
3.05
.15
.05
.10
.05
.15
.05
.05
.15
.20
.05
5
4
43
3
2
2
2
2
4
.75
.20
.40
.15
.45
.10
.10
.30
.40
.20
-
8/8/2019 Str. Management Chapter 4
40/40
Thank you
top related