Professional Documents
Culture Documents
Learning Objectives
Learning Objectives
Question
Value-Chain Analysis
Example
Adapted from Exhibit 3.1 The Value Chain: Primary and Support Activities
Source: Adapted with permission of The Free Press, a division of Simon & Schuster, Inc., from Competitive Advantage:
Creating and Sustaining Superior Performance by Michael E. Porter.
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Support Activity:
General Administration
Typically supports the entire value chain and not
individual activities
- Effective planning systems
- Ability of top management to anticipate and act on key
environmental trends and events
- Ability to obtain low-cost funds for capital expenditures and
working capital
- Excellent relationships with diverse stakeholder groups
- Ability to coordinate and integrate activities across the
value chain
- Highly visible to inculcate organizational culture,
reputation, and values
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Support Activity:
Human Resource Management
Activities involved in the recruiting, hiring, training,
development, and compensation of all types of
personnel
- Effective recruiting, development, and retention
mechanisms for employees
- Quality relations with trade unions
- Quality work environment to maximize overall employee
performance and minimize absenteeism
- Reward and incentive programs to motivate all employees
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Support Activity:
Technology Development
Related to a wide range of activities and those
embodied in processes and equipment and the product
itself
- Effective R&D activities for process and product initiatives
- Positive collaborative relationships between R&D and other
departments
- State-of-the art facilities and equipment
- Culture to enhance creativity and innovation
- Excellent professional qualifications of personnel
- Ability to meet critical deadlines
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Two perspectives
- The internal analysis of phenomena within a company
- An external analysis of the industry and its competitive
environment
Three key types of resources
- Tangible resources
- Intangible resources
- Organizational capabilities
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Types of Resources:
Tangible Resources
Relatively easy to identify, and include physical and
financial assets used to create value for customers
Financial resources
- Firms cash accounts
- Firms capacity to raise equity
- Firms borrowing capacity
Physical resources
- Modern plant and facilities
- Favorable manufacturing locations
- State-of-the-art machinery and equipment
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Types of Resources:
Tangible Resources
Technological resources
- Trade secrets
- Innovative production processes
- Patents, copyrights, trademarks
Organizational resources
- Effective strategic planning processes
- Excellent evaluation and control systems
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Types of Resources:
Intangible Resources
Difficult for competitors (and the firm itself) to
account for or imitate, typically embedded in unique
routines and practices that have evolved over time
- Human
Experience and capabilities of employees
Trust
Managerial skills
Firm-specific practices and procedures
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Types of Resources:
Intangible Resources
Types of Resources:
Organizational Capabilities
Competencies or skills that a firm employs to
transform inputs to outputs, and capacity to combine
tangible and intangible resources to attain desired end
- Outstanding customer service
- Excellent product development capabilities
- Innovativeness of products and services
- Ability to hire, motivate, and retain human capital
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Adapted from Exhibit 3.7 Four Criteria for Assessing Sustainability of Resources and Capabilities
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Question
Exhibit 3.8 Criteria for Sustainable Competitive Advantage and Strategic Implications
Source; Adapted from J. Barney, Firm Resources a Sustained Competitive Advantage,
Journal of Management 17 (1991), pp. 99-120.
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Customer Perspective
Time
Quality
Performance and service
Cost
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Processes
- Cycle time
- Quality
- Employee Skills
- Productivity
Decisions
Actions
Coordination
Resources and capabilities
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Example
Financial Perspective
Profitability
Growth
Shareholder value
Increased market share
Reduced operating expenses
Higher asset turnover
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