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23 Cards in this Set
- Front
- Back
List tangible resources
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1. FINANCIALRESOURCES - thefirm’s capacity to borrow and generate internal funds
2. ORGANIZATIONALRESOURCES - formalreporting structures 3. PHYSICALRESOURCES - sophisticationand location of a firm’s plant and equipment; distribution facilities; productinventory 4. TECHNOLOGICALRESOURCES - stockof technology, such as patents, trademarks, copyrights, and trade secrets |
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List intangible resources
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1. HUMAN RESOURCES - knowledge;trust; skills; collaborative abilities
2. INNOVATIONRESOURCES -scientific capabilities; capacity to innovate 3. REPUTATIONALRESOURCES - brandname; perceptions of product quality, durability, and reliability; positivereputation with stakeholders, e.g., suppliers/customers |
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Name 2 tools firms use to identify and build core competencies
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1. Four specific criteria of Sustainable Competitive Advantagethat can be used to determine which capabilities are corecompetencies
2. Value Chain Analysis - this tool helps select the value-creating competencies that shouldbe maintained, upgraded, or developed and those that should be outsourced |
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The Four Criteria of Sustainable Competitive Advantage
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Capabilities must fulfillfour specific criteria in order to be CORE COMPETENCIES:
1. Valuable 2. Rare 3. Costly-to-imitate 4. Non-substitutable |
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Valuable capabilities
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Help a firm neutralizethreats or exploit opportunities
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Rare capabilities
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Are not possessed by manyothers
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Costly-to-imitate capabilities
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1. Historical: A unique and avaluable organizational culture orbrand name
2. Ambiguous cause: The causes and uses of acompetence are unclear 3. Social complexity: Interpersonalrelationships, trust, and friendship among managers, suppliers, and customers |
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Non-substitutable capabilities
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1. No strategicequivalent
2. Firm-specific knowledge 3. Organizational culture 4. Superior executionof the chosen business model |
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When does sustainable competitive advantage exist?
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1.Exists only when competitors cannot duplicate a firm’s strategy orwhen they lack the resources to attempt imitation
2.Exists until competitors can successfully imitate a good, service,or process 3.Lasts for a relatively long period of time if all four of the criteria discussed aresatisfied |
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Competitive consequences
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Focus on capabilities thatyield competitive parity and either temporary or sustainable competitiveadvantage
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Performance implications
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Parity = average returns
Temporaryadvantage = average to above average returns Sustainableadvantage = above average returns using valuable, rare, costly-to-imitate,and nonsubstitutable capabilities |
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Why do firms use Value Chain Analysis?
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•Understand their cost position
•Facilitate the implementation of a chosen business-level strategy |
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Name the main requirements of the Value Chain Analysis
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- Both value chain (primary) andsupport activities should be analyzed
- Competitive landscape demands thatvalue chains and supply chains be examined in a global context - Each activity should be examinedrelative to competitor’s abilities and rated as superior, equivalent, orinferior |
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Under which circumstances the capability can become a core competence and a source of competitive advantage
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1. to perform an activity in amanner that provides superior value relative to competitors, or 2.to perform a value-creating activity that competitors cannot perform
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Value chain activities
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Activities the firm completes inorder to produce products and then sell, distribute, and service those productsin ways that create value for customers
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Support functions
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Activities the firm completes inorder to support the work being done to produce, sell, distribute, and servicethe products the firm is producing
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List Support Functions
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1. Finance
2. Human Resources 3. Management Information System |
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List Value Chain Activities
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1. Supply-Chain Management
2. Operations 3. Distribution 4. Marketing (Including Sales) 5. Follow-Up Service |
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Outsourcing
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Purchase of a value-creatingactivity or support function from an external supplier
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Name the strategic rationals of the outsourcing
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1. Few organizations arecompetitively superior in all valuechain activities and support functions
2. By outsourcing activities where it lackscompetence, the firm can fully concentrate on those areas in which it cancreate value 3. Freeing resources for other purposesredirects efforts from non-coreactivities toward those that serve customers more effectively 4. Specialty suppliers can perform outsourced capabilities moreefficiently. 5. Sharing risks - reduces investment requirements and makes firm more flexible,dynamic, and better able to adapt to changing opportunities 6. Providing access to world-class standards –the specialized resources ofoutsourcing providers makes world-class capabilities available to firms |
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The main rule of the outsourcing
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Outsourcethose value chain activities and support functions that are NOT a source ofcore competence
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Conclusion:
How an internal organization influence a company? |
It answers the question: What a firm can do?
It helps to determine company's resources, capabilities and core competencies |
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Conclusion:
How an external environment influence a company? |
It answers the question: What a firm might do?
It helps to determine function ofopportunities in the firm’s external environment |