INTERNAL ANALYSISJames Akosah, Sanna Burton, Joseph Buyondo, Mohammed El Uharani, Lichi Elvis, Evgeni Kurten, Yaoyu Ma, Tikere Nhambo, Armando Pereira, Nora Uotila, Paulo Viera and Laura Wild

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Content Definition

The Resource-Based Model

Gary Hamel

Resources, Capabilities and Core Competencies

Value Chain Analysis (The Value Chain Model)

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Internal analysisA process of identifying and evaluating an

organisations specific characteristics

Internal analysis focus on the current situation; vision, mission, strategic objectives and strategies to be able to understand the needed changes.

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What is Resource-Based Model?

A concept that:

Adopts an internal perspective

Firm’s are unique bundles of resources

Firm’s resources are most important in getting and keeping competitive advantage

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What exactly are ”resources”?Any assets such as:Financial (cash reserves, investments…) Human (experience, knowledge, skills, abilities and competencies) Physical (equipment, office buildings, manufacturing, raw material or any other intangible materials)Intangible (Brand, patents, reputation, trademarks and databases)

An organisation can use to develop, produce and deliver prodcut/services.

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What makes them ”unique”?

Valuable, allowing the company to exploit opportunities or neutralise the external environment.

Rare or possessed by few, if any current and potential competitors.

Hard to imitate such that other competitors cant or build same or obtain only at cost disadvantage.

Ability to exploit take full advantage of the resources to develop competitive advantage.

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Gary HamelDr. Gary P. Hamel :American management

expert

Graduate of Andrews University (1975) and the Ross School of Business at the University of Michigan (1990).

Gary Hamel is the originator (with C. K. Prahalad) of the concept of core competencies

The Wall Street Journal recently ranked Gary Hamel as the world's most influential business thinker

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Gary HamelAs a consultant and management educator,

Hamel has worked for companies as diverse as General Electric, Time Warner, Nokia, Nestle, Shell, Best Buy, Procter & Gamble, 3M, IBM, and Microsoft. His pioneering concepts such as "strategic intent," "core competence," "industry revolution," and "management innovation" have changed the practice of management in companies around the world

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Gary HamelOver the past twenty years, Hamel has

authored 15 articles for the Harvard Business Review and is the most reprinted author in the Review's history. He has also written for the Wall Street Journal, Fortune, The Financial Times and many other leading publications around the world.

His latest book, The Future of Management, was published by the Harvard Business School Press in October 2007 and was selected by Amazon.com as the best business book of the year.

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Gary Hamel

Facebook Generation

All ideas compete on an equal footing

Contribution counts for more than credentials

Hierarchies are natural, not prescribed

Leaders serve rather than preside

Tasks are chosen, not assigned

Groups are self-defining and -organizing.

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Facebook Generation

Resources get attracted, not allocated

Power comes from sharing information, not hoarding it

Opinions compound and decisions are peer-reviewed

Users can veto most policy decisions

Intrinsic rewards matter most

Hackers are heroes

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Gary Hamel

Resources

Assets for carrying out what ever work activities/processes the organisation is doing in it’s business

Resources are the source of company’s competitive advantage

But more importantly determines the capabilities and core competencies

Resources alone are not productive->process

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Organizational CapabilitiesOrganizational routines and processes

turning input, i.e. resources, into output getting value out of the resources

Turning captured value into core competences distinctive organizational capabilities

Gaining competitive advantage

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Dynamic Organizational Capabilities

Tackling the challenges from changing environment

Sustainable competitive advantage

Ability to build, integrate and reconfigure capabilities timely responsiveness rapid and flexible product innovation management expertise in coordinating and

redeploying resources and capabilities

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Core Competencies and Distinctive Capabilities

Core competencies = any major value-creating capabilities organizations have that are essential to their business

Organizational capabilities are fundamental building blocks for developing core competencies

If core competencies are establishedCan improve and enhance other organizational capabilitiesCan contribute to developing distinctive capabilitiesLeads to a competitive advantage

Distinctive organizational capabilities = special and unique capabilities that distinguish an organization from its competitors

Three characteristics: Contributes to superior customer value Is difficult for competitors to imitate Can be used in a variety of ways

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Strategic Role of Organizational Resources and Capabilities

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OrganizationalCapabilities

OrganizationalResources

CoreCompetences

DistinctiveOrganizational

Capabilities

CompetitiveAdvantage

PerformanceResults

Value Chain ModelSystematic approach to examining the development of

competitive advantage

Created by M. E. Porter-Competitive Advantage (1980).

Activities that create and build value Primary activities and support activities

all together consist of activities that link together to develop the value of the business

Value Chain Activities

Primary activities

a) Inbound logistics

b) Operations

c) Outbound logistics

d) Marketing and sales

e) Service

Support activities

a) Procurement

b) Human Resource Management

c) Technology Development

d) Firm Infrastructure

Value chain activities are not independent from one another. one value chain activity often affects the performance of other ones.

Inbound

Logistics

>Operation

s>

OutboundLogistics

>

Marketing

&Sales

>Servi

ce>

MARGIN

Firm Infrastructure

HR Management

Technology Development

Procurement

 

Porter's Generic Value Chain    

                                                                                                                                                                                                                                                                                                                                                                                            

Porter's Generic Value Chain 

Steps in Value Chain Analysis

Break down a market

Assess the potential for adding value via cost advantage or differentiation,

Determine strategies built around focusing on activities where competitive advantage can be sustained.

Cost Advantage and the Value Chain

A firm may create a cost advantage, Reducing the cost of

individual value chain activities or

Reconfiguring the value chain.

cost drivers -value chain activities Economies of scale Learning Capacity utilization Linkages

among activities.etc.

Cost advantage: by better understanding costs and squeezing them out of the value-adding

activities.

Differentiation: core competencies and capabilities are the main objective of the activities so as to perform better than competitors do.

Technology and the Value Chain: Employed in almost every value creating activity; changes in technology have/can have an impact

on competitive advantage by increasingly changing the activities themselves or by making possible new configurations of the value chain.

Thank You!Any Questions?

Strategic Role of Organizational Resources and Capabilities

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Sources:

Coulter, M., Strategic Management in Action, 2002.

URL: http://blogs.wsj.com/management/2010/09/21/capitalism-is-dead-long-live-capitalism/ quoted 24/09/2010

The Facebook Generation by Gary HamelURL: http://www.garyhamel.com/ quoted 24/09/2010

URL: http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/ quoted 24/09/2010