CHARACTERISTICS OF RESOURCES

AND CAPABILITIES

Resource-Based View of the Firm

Four Characteristics of Resources and Capabilities

that are important in Sustaining Competitive Advantage

► Durability

► Transparency

► Transferability

► Replicability

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 CONTINUUM OF RESOURCE SUSTAINABILITY
Level of Resource Sustainability
High Low
(Hard to Imiate) (Easy to Imitate)

Slow – Cycle Standard – Cycle Fast – Cycle

Resources Resources Resources

► Strongly shielded ► Standardized mass production ► Easily duplicated

► Patents, brand name ► Economies of scale complicated ► Idea driven

► Gillette: Sensor razor proceeses ► Sony : Walkman

► Chrysler: Mini van

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 THE VALUE CHAIN
Firm Intrastructure
(general management, acounting, finance, strategic planning)

Human Resource Management

Support (recruiting, training, development)
Activities Technology Development
(R & D product and process improvement)

Procurement
Profit
(purchasing of raw materials, machines, supplies) Making
Inbound Operations Outbound Marketing Service
Logistics (machining Logistics and Sales (installation,
(raw materials assembling (ware-housing (adrertising, repair,
handling and testing) and distribu- promotion, parts)
ware-housing) tion of finished pricing,
product) channel
relations)

Primary Activities
Source: Adapted from Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior
Performance, (New York: Free Press, 1985), Reprinted with permission of Free Press, a Division of
Macmillan, Inc. Copyright © 1985, by Free Press.
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BASIC STRUCTURES OF CORPORATIONS: SIMPLE AND FUNCTIONAL

I. Simple Structure

Owner - Manager

Workers

II. Functional Structure

T
Top Management

Manufacturing Sales Finance Personnel

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 BASIC STRUCTURES OF CORPORATIONS: DIVISIONAL

III. Divisional Structure*

TOP MANAGEMENT

PRODUCT DIVISION PRODUCT DIVISION

A B

Manufacturing Finance Manufacturing Finance

Sales Personnel Sales Personnel

* Conglomerate structure is a variant of the division structure

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CORPORATE CULTURE

Collection of beliefs, expectations and values

learned and shared by members and transmitted
from one generation of employees to another

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FUNCTIONS OF CORPORATE CULTURE

1. Conveys sense of identity

2. Generates employee commitment
3. Adds to organizational stability
4. Serves as a frame of reference

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 MARKETING MIX VARIABLES

Product Place Promotion Price

Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns

Source: Philip Kotler, Marketing Management: Analysis, Planning and Control, 4th ed. (Englewood
Cliffs, N.J., Prentice-Hall, 1980), p.89. Copyright © 1980, Reprinted with permission of
Prentice Hall, Inc.

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 THE PRODUCT LIFE CYCLE
Sales

Introduction Growth Maturity Decline

Time

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R & D MIX

► Basic R & D

► Product R & D

► Process (Engineering) R & D

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PURPOSES OF INFORMATION SYSTEMS

1. Provide basis for early-warning signals

2. Automate routine clerical operations
3. Assist in making routing decisions
4. Provide information for strategic decision

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 INTERNAL STRATEGIC FACTOR ANALYSIS SUMMARY (IFAS)
Weighted
Internal Strategic Factors Weight Rating score Comments
Strengths 1 2 3 4 5

Weaknesses

Total Weighted Score 1.00

Notes: 1. List strenghts and weaknesses (5-10 each) in Column 1. 2. Weight each factor from 1.0 (most important) to 0.0 (not
important) in Column 2 based on the factor's probable impact on the company's strategic position. The total weights must
sum 1.00. 3. Rate each factor from 5 (outstanding) to 1 (poor) in Column 3 based on the company's response to that
factor. 4. Multiply each factor's weight time its rating to obtain each factor's weighted score in Column 4. 5. Use Column 5
(comments) for rationale used for each factor. 6. Add the weighted scores to obtain the total weighted score for the
company in Column 4. This tells how well the company is responding to the strategic factors in its external environment.
Sources: T.L. Wheelen and J.D. Hunger, "External Strategic Factors Analysis Summary (EFAS)." Copyright  1991 by Wheelen
Hunger Associates. Reprinted by permission.

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