Professional Documents
Culture Documents
Strategic Inputs
Chapter 2 The External Environment Strategic Intent Strategic Mission Chapter 3 The Internal Environment
Strategy Formulation
Strategic Actions Chapter 5 Chapter 4 Competitive Rivalry BusinessBusiness-Level and Competitive Strategy Dynamics Chapter 7 Acquisition and Restructuring Strategies Chapter 8 International Strategy Chapter 6 CorporateCorporateLevel Strategy
Strategic Outcomes
Feedback
By studying the external environment, firms identify what they might choose to do
How do we effectively manage current core competencies while simultaneously developing new ones? How do we assemble bundles of resources, capabilities and core competencies to create value for customers? How do we learn to change rapidly?
Three Conditions Affecting Managerial Decisions About Resources, Capabilities, and Core Competencies
Outsource
Resources are what a firm has to work with--its assets-with--its assets-including its people and the value of its brand name
Resources represent inputs into a firms production process... such as capital equipment, skills of employees, brand names, finances and talented managers
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Capabilities
Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage
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Capabilities
Capabilities are what a firm does, and represent the firms capacity or ability to integrate individual firm resources to achieve a desired objective
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Core Competencies
Core competencies are resources and capabilities that serve as a source of competitive advantage over rivals Core competencies distinguish a company competitively and make it distinctive McKinsey and Co. recommends using three to four competencies when framing strategic actions
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Discovering Core Competencies Four Criteria of Sustainable Advantages Valuable Rare Costly to Imitate Nonsubstitutable
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Discovering Core Competencies Four Criteria of Sustainable Advantages Valuable Rare Costly to Imitate Nonsubstitutable
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Discovering Core Competencies Four Criteria of Sustainable Advantages Valuable Rare Costly to Imitate Nonsubstitutable
Costly to imitate: capabilities that other firms cannot develop easily, usually due to Unique historical conditions Causal ambiguity Social complexity
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Discovering Core Competencies Four Criteria of Sustainable Advantages Valuable Rare Costly to Imitate Nonsubstitutable
Nonsubstitutable: capabilities that do not have strategic equivalents Invisible to competitors Firm specific knowledge Trust-based working relationships between managers Trustand nonmanagerial personnel
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The source of
Yes
No
Performance Implications
Competitive Consequences
No Yes No No No No Competitive Disadvantage Competitive Parity Temporary ComCompetitive Advantage Sustainable ComCompetitive Advantage
Performance Implications
Below Average Returns Average Returns Above Average to Average Returns Above Average Returns
Yes/ No No Yes/ No
Yes
Yes No
Yes
Yes Yes
Yes
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Firm Infrastructure
Support Activities
Service Marketing & Sales Procurement Outbound Logistics Operations Inbound Logistics Primary Activities
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Outsourcing
Technological Development
Support Activities
Firm Infrastructure
Outsourcing is the purchase of some or all of a valuevaluecreating activity from an external supplier Usually this is because the specialty supplier can provide these functions more efficiently
Service Procurement Marketing & Sales Outbound Logistics Operations Inbound Logistics
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Share Risks
reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities
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Outsourcing Issues
Greatest Value
outsource only to firms possessing a core competence in terms of performing the primary or support activity being outsourced
Outsourcing Issues
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Never take for granted that core competencies will continue to provide a source of competitive advantage All core competencies have the potential to become core rigidities Core rigidities are former core competencies that now generate inertia and stifle innovation
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