INTERNAL ANALYSIS

Lesson 3

Instructor: Larry Wosk

QUESTIONS?

{ Why, do some companies do better

than others within the same
industry?

{ What factors influence durability?

RESOURCE BASED APPROACH TO

ORGANIZATIONAL ANALYSIS

{ The process of identifying an

organizations resources in order to
determine their fit with the
environment and strategy. (Wheelen et
al, 2005)

3
SOURCE:RESOURCES

{ FINANCIAL

{ PHYSICAL
z TANGIBLE

z INTANGIBLE (CAPABILITIES)

SOURCE: CAPABILITIES

{ A COMPANYS SKILLS AT
COORDINATING ITS RESOURCES
AND PUTTING THEM TO
PRODUCTIVE USE

COMPETENCY

Competencies

Core Competencies

Distinctive Competencies

6
STRATEGY-COMPETITIVE
ADVANTAGE

PRIMARY OBJECTIVE OF STRATEGY IS TO

ACHIEVE A COMPETITIVE ADVANTAGE,
THAT WILL ALLOW THE FIRM TO EARN
ABOVE-AVERAGE LEVELS OF PROFIT

REQUIREMENTS FOR A
COMPETITIVE ADVANTAGE

1. CUSTOMERS PERCEIVE AN
IMPORTANT DIFFERENCE

2. A RESOURCE GAP EXISTS

3. DIFFERENCES WILL ENDURE

VALUE CREATION
STRATEGY SHOULD FOCUS ON
CREATING VALUE FOR
SHAREHOLDERS, EMPLOYEES, AND
THE COMMUNITY - BY
SATISFYING THE NEEDS AND
WANTS OF CUSTOMERS BETTER
THAN ANYONE ELSE

9
GENERIC BUILDING BLOCKS OF A
COMPETITIVE ADVANTAGE

{ GENERIC
z because any company can adopt these
irrespective of the industry or the
product/service
{ EFFICIENCY
{ QUALITY
{ INNOVATION
{ CUSTOMER RESPONSIVENESS

10

EFFICIENCY

EFFICIENCY - minimize the cost of

inputs required to produce a given
output

11

QUALITY

DO THE JOB THEY WERE DESIGNED

TO DO - WELL

{ HOW DOES SUPERIOR QUALITY

BENEFIT?

12
INNOVATION
ANYTHING NEW
z PRODUCTS

z PRODUCTION PROCESSES

z MANAGEMENT SYSTEMS

z ORGANIZATIONAL STRUCTURES

z STRATEGIES

13

CUSTOMER RESPONSIVENESS

IDENTIFY AND SATISFY CUSTOMER

NEEDS BETTER THAN
COMPETITORS

14

VALUE CHAIN

A COMPANY IS A CHAIN OF
ACTIVITIES FOR TRANSFORMING
INPUTS INTO OUTPUTS THAT
CUSTOMERS VALUE

15
PRIMARY & SUPPORT
ACTIVITIES
PRIMARY ACTIVITIES
{ INBOUND LOGISTICS
{ OPERATIONS
{ OUTBOUND LOGISTICS
{ MARKETING
{ SERVICE
SUPPORT ACTIVITIES
{ FIRM INFRASTRUCTURE
{ HRM
{ TECHNOLOGY DEVELOPMENT
{ PROCUREMENT

16

VALUE CHAIN ANALYSIS

{ IDENTIFY VALUE ACTIVITIES

{ ASSIGN OPERATING COSTS AND ASSETS

TO ACTIVITIES

{ A SHARED PROCESS INVOLVING OTHER

MEMBERS OF THE CHAIN

17

DURABILITY OF C. A.

{ BARRIERS TO IMITATION

{ LIMITS ON COMPETITORS

{ INDUSTRY DYNAMISM

18
WHY DO COMPANIES FAIL?

{ INERTIA

{ PRIOR STRATEGIC COMMITMENTS

{ ICARUS PARADOX

19

AVOIDING FAILURE

What strategic choices can we take to

minimize the chance of failure?

20

Sources:
{ Grant, Robert M. (2005) Contemporary Strategy Analysis (5th ed)
Blackwell Publishing: Malden Maine
{ Hill, C.W.L., & Jones, G.R.(2004) Strategic Management, An
integrated approach. Boston, Mass Houghton Mifflin
{ Wheelen, T.I., Hunger, J.D., & Wicks, D. (2005) Concepts in
Strategic Management Toronto: Pearson Prentice Hall Canadian
ed.

21