The Strategic Position

4.
The Strategic
Position (2)
– Strategic
Capability
International Strategic Management

Master in International Business Management
The Faculty of International Business and
Economics,
ASE Bucharest
Layers of business environment The Organization
Competitors
Industry (or sector)
The macro-environment
Analising strategic position
a. External analysis –> environment

b. Internal analysis –> strategic capability
Expectations
& Purposes
AGENDA for Today
The Strategic Position (2)
– Strategic Capability
1. Foundations of strategic capability
2. Cost efficiency
3. Capabilities for sustainable competitive advantage
4. Organizational knowledge
5. Diagnosing strategic capability
6. Managing strategic capability
7. Organization assessment / scan vs. departmental
analysis (HR, financial, operational)
4
• The resource-based view of strategy: the competitive advantage of an organization is
explained by the distinctiveness of its capabilities
• Strategic capability: the adequacy and suitability of the resources and competences of
an organization for it to survive and prosper
Strategic capabilities and competitive advantage
Resources Competences
Treshold Treshold resources Treshold

capabilities • Tangible competences
• Intangible
Capabilities
Unique resources Core competences
for
competitive • Tangible
advantage • Intangible
a. Resources & competences
Tangible resources – the Intangible resources – Competences – the

physical assets of an non-physical assets activities and processes
organization such as such as information, through which an
plant, labour and reputation and organization deploys its
finance knowledge resources effectively
b. Treshold capabilities & Unique resources and core competences
Core competences –
the activities and
Unique resources – processes through
Treshold capabilities - those resources that which resources are
essential for the criticaly underpin deployed in such a way
organization to be able competitive advantage as to achieve
to compete in a given and that others cannot competitive advantage
market easily imitate or obtain in ways that others
cannot imitate or
obtain
AGENDA for Today
2. Cost efficiency
9
2. Cost efficiency
Economies
Experience
of scale
Cost
efficiency
Product /
Supply costs
process design
AGENDA for Today
2. Cost efficiency
11
Criteria for the robustness of strategic capability:
Complexity Culture & history
▪ Taken for granted
▪ Internal linkages
activities
▪ External linkages
▪ Path dependency
Robustness of
strategic capability
Causal ambiguity
▪ Characteristic ambiguity
▪ Linkage ambiguity
AGENDA for Today
2. Cost efficiency
13
• The collective and shared experience accumulated through systems, routines and activities of sharing across
the organization
▪ Sharing of knowledge and experience is an essentially social process relying on

“communities of interest”
▪ Exchange of knowledge is more likely to occur in cultures of trust without strong
hierarchical or functional boundaries
▪ Explicit knowledge vs. tacit knowledge
▪ Improving the sharing of knowledge by setting up IT-based systems
▪ Danger of imitation
AGENDA for Today
2. Cost efficiency
15
The VALUE CHAIN within an organization
Support activities
Firm infrastructure
Human resource management
Technology development
Procurement
Inbound Outbound Marketing

Operations Service
logistics logistics and sales
Primary activities
The value chain within an organization
• Primary activities – directly concerned with the creation or delivery of a product or service
• Support activities – help to improve the effectiveness or efficiency of primary activities

The value network
Supplier Channel Customer

value chain value chain value chain
Organization’s
value chain
Example
Agri-food
networks
19
The value network
• The value network - the set of inter-organizational links and relationships that are necessary to create a
product or service
▪ Where cost and value are created?

▪ Which activities are centrally important?
▪ Where the profit pools (potential profits at different parts of the value network) are? It is
possible to focus on the areas of greatest profit potential?
▪ The “make” or “buy” for a particular activity or component (outsourcing) is critical?
▪ Who might be the best partners in the various parts of the value network? And what
kind of relationships are important to develop with each partner? Should they be
regarded as suppliers or should they be regarded as alliance partners?
Other ways to diagnose strategic capability
• Activity maps
• Benchmarking
SWOT Analysis
Strengths Weaknesses
Opportunities Threats
AGENDA for Today
2. Cost efficiency
23
Knowledge creation process:

TO
Tacit knowledge Explicit knowledge
Tacit Socialization Externalisation

knowledge (sympathised knowledge) (conceptual knowledge)
FROM
Explicit Internalisation Combination

knowledge (operational knowledge) (systematic knowledge)
AGENDA for Today
2. Cost efficiency
25
7. Organization assessment / scan vs. departmental analysis
(HR, financial, operational):
Organization assessment / scan: goals

• Assess the organizations degree of understanding and alignment with Top Management’s goals for the
organization
• Gain an understanding of the culture of your organization and how the culture supports or impedes
Management’s ability to achieve established goals
• Identify barriers to change within the organization
• Identify leverage points within the organization where readiness for change is high and success is likely
Organization assessment - COMPASS model:
Universals
Past Strategy
Standards
COMPASS model:
• Universals - Beliefs that drive behavior across the organization
• Past - We encouraged people to share experiences, concerns and frustrations
• Standards - What are the company expectations from their employees?
• Strategy - Is the future clear to the employees? Are they aligned with this future?
Organization assessment - 6 Key Areas
• System based on a questionnaire which allows us to understand the gaps between the desired perception
and the reality:
1.VISION AND DIRECTION

2.EFFECTIVE LEADERSHIP
3.INTERNAL COMMUNICATION
4.READINESS FOR CHANGE
5.COMPETENCIES & SKILLS
6.CLIENTS
Departmental analysis
HR Analysis
▪ Competences
▪ Knowledge
▪ Skills
▪ Attitude
Financial resources analysis:

▪ Financial analysis
▪ Financial data
▪ Financial index
Operational resources analysis

▪ Systems
▪ Processes
▪ Procedures
THANK YOU!

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4.

International Strategic Management

Industry (or sector)

a. External analysis –> environment

Treshold Treshold resources Treshold

Tangible resources – the Intangible resources – Competences – the

▪ Sharing of knowledge and experience is an essentially social process relying on

Human resource management

Inbound Outbound Marketing

• Support activities – help to improve the effectiveness or efficiency of primary activities

Supplier Channel Customer

▪ Where cost and value are created?

Knowledge creation process:

Tacit knowledge Explicit knowledge

Tacit Socialization Externalisation

Explicit Internalisation Combination

Organization assessment / scan: goals

• Identify barriers to change within the organization

• Past - We encouraged people to share experiences, concerns and frustrations

• Standards - What are the company expectations from their employees?

1.VISION AND DIRECTION

Financial resources analysis:

Operational resources analysis

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