3.strategic analysis- internal analysis, Apuntes de Administración de Empresas

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CHAPTER 3

STRATEGIC ANALYSIS (II): INTERNAL ANALYSIS

STRATEGIC MANAGEMENT

UAB

Index

3.1. Functional analysis and strategic profile of the firm

3.2. Value chain

3.3. Analysis of resources and capabilities

3.1. Functional analysis and strategic profile of the firm

The strategic profile of the firm is useful to identify its strengths and

weaknesses through the study of its functional areas (marketing,

production, finance…)

Steps:

1. Identify factors or key variables within each functional area.
2. Evaluate all the variables using a Likert scale (1, very negative; 5, very positive).

STRATEGIC PROFILE OF

THE FIRM

Identify strengths and weaknesses

Limitations

• Relative
• Subjective
• Static

3.1. Functional analysis and strategic profile of the firm

OBJECTIVE: Identify sources of competitive advantage, that can come from:

• Specific activities of the value chain -Interrelations of activities within the value chain (horizontal links)
• Interrelations between the value chain and the value system (vertical links)

3.2. Value chain

Suppliers value chain

Customers value chain

Value chain of the firm

Interrelations with the value system

3.3. Analysis of resources and capabilities

OBJETIVE: To identify the firm’s potential for obtaining competitive advantages through the identification and strategic evaluation of the resources and capabilities it possesses or to which it may have access.

BASIC IDEAS:

• Firm heterogeneity
• Imperfect mobility of R&C

COMPETITIVE ENVIRONMENT (industry structure)

FIRM’S INTERNAL ASPECTS

PROFITABILITY DIFFERENCES

RESOURCE-BASED VIEW OF THE FIRM:

Terms to use?

Resources, assets, skills, competencies, factors, capabilities…

TWO LEVELS

Resources: Factors and assets a firm

controls

Capabilities: Collective abilities to

perform a specific task

1) IDENTIFYING RESOURCES AND CAPABILITIES

3.3. Analysis of resources and capabilities

TANGIBLE

INTANGIBLE

Physical

Financial

Non-human

Human

Technological

Organizational

RESOURCES

1) IDENTIFYING RESOURCES AND CAPABILITIES

3.3. Analysis of resources and capabilities

DISTINCTION BETWEEN RESOURCES - CAPABILITIES

RESOURCES CAPABILITIES

Stock Flow

Things, elements How perform activities

Individual nature Collective nature

1) IDENTIFYING RESOURCES AND CAPABILITIES

3.3. Analysis of resources and capabilities

1) IDENTIFYING RESOURCES AND CAPABILITIES

FUNCTIONAL

CULTURAL

CAPABILITIES

Emerge from the combination and coordination of resources

3.3. Analysis of resources and capabilities

2) STRATEGIC EVALUATION OF RESOURCES AND CAPABILITIES

SCARCITY

RELEVANCE

ESTABLISHING A

COMPETITIVE

ADVANTAGE

Not available to all competitors

Usefulness of a specific resource or capability to compete in an industry (related to its key success factors)

3.3. Analysis of resources and capabilities

2) STRATEGIC EVALUATION OF RESOURCES AND CAPABILITIES

DURABILITY

TRANSFERABILITY

SUSTAINING THE

COMPETITIVE

ADVANTAGE

IMITABILITY

SUBSTITUTABILITY

COMPLEMENTARITY

It keeps its potential for generating a competitive advantage over time

Existence/not of a market to transfer assets between firms

Capability competitors have to replicate the R&C the firm possesses

Possibility of finding alternative R&C that provide the same service

R&C are complementary when their joint value exceeds the sum of their individual parts

3.3. Analysis of resources and capabilities

RESOURCES

Material tangible: Stadium Financial tangible: Cash Non human intangible: Prestige, management systems Human intangible: Players (skills, abilities)

RESOURCES AND CAPABILITIES IN A SOCCER TEAM Guerras y Navas (2013)

CAPABILITIES

• Playing as a team
• Use of off-side tactics
• Etc.

3.3. Analysis of resources and capabilities

 SCARCITY: Good players (“top goal scorers”, for example) are not abundant

 RELEVANCE: Players capable of winning games

 DURABILITY: The longer the trainning sessions, the better the team’s performance (skills development)

 TRANSFERABILITY: Players can be transferred. That’s not the case of collective capabilities.

 IMITABILITY: Other teams may try to reproduce the way a particular team plays (difficult)

 SUBSTITUTABILITY: Fans pressures

 COMPLEMENTARITY: (players)

 APPROPRIATION: The club seeks to “appropriate” players’ skills

3.3. Analysis of resources and capabilities