Stakeholder and Capabilities

Analyses
Learning Objectives
Independently conduct Stakeholder and
Capabilities Analyses

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

76

The External
Environment
revisited

By studying the general and

industry environments, firms
identify the set of opportunities
and threats which guide what
they might choose to do
Studying the competitive
environment highlights relative
advantages

But now we narrow the strategic

decision set by considering:
What others prefer the firm
to do (Stakeholder Analysis)
And what a firm can do well
(Capabilities Analysis)

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

Demographic

Physical
Political/
Legal
GlobalTrade

Firm

Competitor

Sociocultural

Macroecono
mic

Technological

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Stakeholder Theory
The strategic management process unfolds within the context of stakeholders who have
conflicting goals
Stakeholders are individuals, groups and organizations who can affect a firms strategy, are
affected by strategic outcomes, and have a claim on firm performance

CapitalMarket
Stakeholders
Shareholders
Majorsuppliers
ofcapital(e.g.
banks)

ProductMarket
Stakeholders
Customers
Suppliers
Host
communities
Unions

Organizational
Stakeholders
Employees
Managers
Nonmanagers

Strategyinvolvesbalancing&managingconflictingstakeholdergoals
MGT 450: Business Policy & Strategy
Ranucci, Spring 2016

79

Stakeholder Analysis
Step1:Identify
Stakeholders

Step2:AnalyzeStakeholder
Interests

Examplesofpotential
stakeholders:
Suppliers
Buyers
Employees
CapitalMarkets
Communities
Government
SpecialInterestGroups

Identifyrelevantissues,suchas:
Profitability
Jobsatisfaction
Environmentalsustainability
Serviceavailability
Compliance
Ratetheimportanceofeachissuefor
eachstakeholder
Wherearestakeholdersalignedand
wheredotheyconflict?

Service
Quality

OSHA
Compliance

Employees

Medium

High

Shareholders

Medium

Medium

Government

Low

High

Buyers

High

Low

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

80

Step3:AssessImpactsof
StrategicActions
Foreachofyour
potentialstrategic
actionsassesstheimpact
oneverypossible
stakeholder(positiveor
negative,howso)
UsetheIssueratingsto
guidethisassessment
Againevaluatepotential
stakeholderalignment
andconflict

Resources & Capabilities

Firms have a set of resources:
Tangible resources (seen, touched and quantified)

Financial resources
Physical resources (e.g. facilities, inventory)
Technological resources (e.g. patents, copyrights, trademarks)

Intangible resources (accumulated over time and are difficult to

analyze)

Knowledge, skills, ideas

Organizational routines (the way people work together)
Brand, reputation
Organizational culture
Stakeholder relationships, relational networks

Capabilities use and combine resources to complete value-creating

organizational tasks

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

81

Capability Analysis
Determine
ValueChain

Identify
Capabilities

Evaluate
alignment

Evaluate
sustainability

Recall capabilities are used to complete valuecreating organizational tasks, so we need to

understand what those tasks are.
The value chain is the set of activities that create
& support customer value

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

82

Value

Finance

Chain

Human
Resources

Acquiringandmanagingfinancialresources,securing
capital,andmanagingrelationshipswithinvestors
(Example:Facebook)
Selecting,training,retaining,compensatingand
developinghumancapitalintheorganization(Example:
GE)

Obtaining,managing,linkinginformationandknowledge
Management
throughoutthefirmusuallyusingsophisticatedtechnologies
Information
(Example:Walmarts pointofpurchasedatacollectionto
Systems
manageinventories)

Research&
Development
Developingnew
products,enhancing
existingproducts
(Example:Apple)

SupplyChain
Management
Anyactivity
necessaryto
receiveraw
materials;e.g.
sourcing,
procurement,
logistics
management
(Example:
Amazon)

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

Operations
Changeraw
materialsinto
finishedproducts;
e.g.product
production
processesand
efficiency
management
(Example:Sonyin
miniaturization)

Distribution
Gettingthefinal
producttothe
customer;e.g.
handlingorders,
delivery,
arranging
payment
(Example:
Zappos)

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Marketing&
Sales
Customer
segmentation,
advertising,
promotions,
branding,sales
force
developmentand
training
(Example:Proctor
&Gamble)

Service
Gettingand
incorporating
feedbackfrom
customers,postsale
technicalsupport
(Example:LLBean)

StratSim Application
Now that you have
experience through the
practice round.
What domains in the value
chain can you manipulate
in the simulation? How?

Research&
Development
Innovating,
Developingnew
/Enhancing
productsand
processes

SupplyChain
Management
Anyactivity
necessaryto
receiveraw
materials

MGT 84
450: Business Policy & Strategy
Ranucci, Spring 2016

Finance

Human
Resources

Acquiringandmanagingfinancialresources,Capital
planning
Training,motivatinganddevelopinghumancapital
Strategicleadership

Management Obtaining,managing,linkinginformationandknowledge
Information throughoutthefirm
Systems

Operations

Distribution

Product
production
processesand
efficiency
management

Gettingthefinal
producttothe
customer

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Marketing&
Sales
Advertising,
promotions,
branding,sales

Service
Gettingand
incorporating
feedbackfrom
customers

What are your core set of

capabilities?
Determine
ValueChain

Identify
Capabilities

Evaluate
alignment

Evaluate
sustainability

Usually 3-6 that are most critical

Capabilities can be at a particular activity in the value chain or
integrate across activities.
Capabilities integrate across knowledge resources:
Processes

Routinesforhowtogetwork
done

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

People
Thepeople(positions,not
necessarilywhatparticular
person)criticaltoexecute
andimprovetheprocesses

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Systems
Informationsystemsand
databases
Proprietarytechnologies
Usedtoautomateprocesses
And/orconnectpeopleto
information

Completing your capability analysis

Determine
ValueChain

Identify
Capabilities

Evaluate
alignment

Internal Alignment
Are the People, Processes and Systems
aligned?
Are there any people, process or systems
gaps that degrade the capability?
External Alignment
What is your value proposition to the
customer? Why do they buy from you
(e.g. product differentiation, low cost,
customer experience)?
Are the people, processes and systems
aligned with the customer value
proposition?
MGT 450: Business Policy & Strategy
Ranucci, Spring 2016

Evaluate
sustainability

Imitation
Can the capability be easily imitated?
Capabilities are difficult to imitate when

use scarce resources,

were developed over a long history,
are causally ambiguous, OR
involve complex relationships (social dynamics such
as trust, friendships, interpersonal relationships)

Durability
How long can the capability continue to provide
value (e.g. a patent only is only protected for a
fixed period of time)?

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Take-Aways

An organization can have many stakeholders with

conflicting interests that need to be considered when
evaluating strategic actions.
Value chain analysis helps firms identify capabilities
that contribute to customer value
Capability Analysis helps an organization understand
what they do well and how sustainable it is
Important: Just because your firm is good at
something doesnt mean there is opportunity to exploit
it. That being said, some firms have a capability in
developing markets to exploit other capabilities.

MGT 450: Business Policy & Strategy

Ranucci, Spring 2016

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